Problems prevent Medicaid and SCHIP from funding adolescent substance-abuse treatment

While there has been a significant increase in substance abuse and addiction among adolescents, providers are experiencing difficulties in offering treatment because of barriers built into the Medicaid and State Children’s Health Insurance Program (SCHIP) funding streams.

That’s the conclusion of research conducted by Robert Wood Johnson Foundation senior program officer Katherine Kraft with independent researcher Cassandra O’Neill and Legal Action Center director of policy research Gwen Rubinstein.

Ms. Kraft tells State Health Watch that as the researchers talked with providers and provider associations about the challenges they faced in treating adolescents, they found barriers in making use of existing funding streams and that providers had trouble implementing benefits that are available. States use a number of strategies, she says, to block the flow of funds for substance-abuse treatment for adolescents, and providers don’t have the administrative capacity to keep up with the paperwork so they can pursue payment.

Ms. Kraft says that the number of Americans needing treatment for alcohol and drug problems far surpasses the number of treatment services and slots available. Several studies that have attempted to quantify the problem don’t agree on numbers, but all have concluded that the treatment system does not have the capacity to meet the demand.

Other studies, according to Ms. Kraft’s report, indicate that alcohol and drug treatment is effective and cost-effective despite limitations in the availability of services. Treatment has been shown to reduce alcohol and drug use and also to lower health care costs. Ms. Kraft tells State Health Watch the researchers believe that treatment saves money in the long run because adolescents with substance abuse problems often end up in the corrections system and also often have higher health care costs later in life. "Providing treatment to adolescents saves money for society, and for the kids, it saves lives."

Funding problems likely have arisen, Ms. Kraft says, because states need to keep their costs under control. There is an incentive to keep information about available services away from people if the services are expensive to provide. Barriers can be administrative and also can be clinical in terms of requiring that those who receive treatment for substance abuse have a co-occurring medical problem.

And Ms. O’Neill tells State Health Watch that the problem of adolescent substance abuse cuts across so many state and federal agencies and funding streams that no one takes responsibility for pulling it together.

"We couldn’t find any states to cite as an example of doing something great," she says. "They may be out there, but we couldn’t find them."

The major policy and implementation barriers to using Medicaid and EPSDT (Early and Periodic Screening, Diagnosis, and Treatment) identified in the research include (1) lack of clarity in state policies and practices about EPSDT funding for alcohol and treatment services; (2) low EPSDT screening rates and lack of behavior health screening; (3) lack of utilization of screening and referral protocols for adolescents with alcohol and drug problems; (4) false distinctions between EPSDT children and Medicaid-eligible children; and (5) widespread confusion about eligibility and coverage levels.

Barriers identified for CHIP funding include: limited enrollment; retention; and lack of eligibility and coverage for certain children residing in institutions for mental diseases.

Common implementation barriers for both funding streams are: (1) low provider reimbursement; (2) reimbursement levels not covering the cost of care; (3) increasing costs due to higher requirements for staff training, certification, education levels, and accreditation; (4) alcohol- and drug-treatment providers being denied access to managed care provider panels; and (5) a reduction in the treatment supply and reduced capacity of the treatment system.

Potential solutions listed

While the report is stark in its depiction of the problem, potential solutions are cited by the researchers as well. Things could improve, they say, if there were: (1) increased enrollment and retention of adolescents in CHIP; (2) increased utilization of publicly funded insurance programs to fund substance abuse treatment; (3) improved screenings for physical and behavioral health problems and screening rates; (4) development of contracts for alcohol- and drug-treatment services for youth who are identified through EPSDT screenings with adequate reimbursement levels; and (5) training of Medicaid providers on the EPSDT mandate and effective substance abuse screening, identification, and referral protocols.

Of particular interest is the EPSDT mandate provision of Medicaid that is intended to identify emerging problems at earlier stages and provide corrective interventions. Medicaid, the authors say, is required to provide all medically necessary treatments regardless of state approved benefits covered. EPSDT is designed to cover prevention and treatment services for children and adolescents under age 22. Under EPSDT, states must screen and then furnish appropriate medically necessary treatment to "correct or ameliorate defects and physical and mental illness and conditions discovered by the screening services."

Promising practices were identified by the researchers in three state Medicaid programs:

  • Oregon — Through implementation of the Oregon Health Plan with capitation and integration of physical health and most alcohol- and drug-treatment services, Oregon more than tripled Medicaid reimbursement for alcohol and drug treatment between 1991 and 1996. It also increased consumer access to a range of physical health and alcohol- and drug-treatment services.
  • Washington — Strategic decision making and advocacy by leaders of the state alcohol and drug agency led to a maximization of Medicaid dollars for treatment. Medicaid funding for alcohol- and drug-treatment services increased five-fold between 1991 and 1996, a growth five times faster than the overall rate of public treatment funding in the state.
  • Iowa — Implementation of managed care, where Medicaid and non-Medicaid dollars are managed, has resulted in more community-based providers receiving Medicaid reimbursement and more low-income individuals being served in the treatment system in a broader range of settings.

Ms. Rubinstein tells State Health Watch that for many adolescents the only way to achieve access to needed substance-abuse treatment services is to be arrested. "Sadly, for some people there is more access to treatment in the justice system than in the community, although even in the justice system, the level of treatment services is not sufficient. The basic problem is a lack of treatment capacity in the community and a lack of a dedicated funding stream for adolescents."

She is reluctant to forecast improvement in the situation in the near term because of state fiscal problems. "The more that treatment programs close and capacity shrinks, the more that people will become involved with the justice system and the greater the strain on families, As more youth are involved in the criminal justice system for untreated addiction, the harder it is for them to become the kind of productive citizens we want them to be. If you have a drug felony conviction, you can have a problem with student financial aid, jobs, and even the right to vote in some states. It’s very damaging. We’re setting people up for a lifetime of not being able to participate in civil society. I can’t overstate the concern we feel about this issue."

Ms. O’Neill says the question of what individuals can do to change the situation will vary by locale. But the first steps always are to find out what’s going on and what steps can be taken to improve the situation.

"There aren’t any high-profile advocates for this cause," she says. "This is just a little piece of two huge programs. And this isn’t a good time to suggest starting a new program. We need to focus on the consequences of ignoring the problem."

[Contact Ms. Kraft at (609) 627-5960, Ms. Rubinstein at (202) 544-5478, and Ms. O’Neill at (520) 888-2545.]