Federal Government's Restrictions on Medicaid Mental Health Funds Affect Children's Services, Sen. Collins, Rep. Waxman Say

Main Category: Medicare / Medicaid / SCHIP
Article Date: 10 Mar 2005 - 0:00 PDT


USA - The federal government's misinterpretation of a Medicaid law is potentially harming children's access to mental health services, Sen. Susan Collins (R-Maine) and Rep. Henry Waxman (D-Calif.) said on Tuesday in a letter to... CMS Administrator Mark McClellan and HHS Acting Inspector General Dan Levinson, the AP/Long Island Newsday reports. Recently, the federal government audited state Medicaid programs to determine whether federal funds had been used to pay for care of children living in mental institutions, AP/Newsday reports. According to the audit, federal law prohibits Medicaid funds to be used for any services provided in state-operated psychiatric hospitals for people under age 65; an exception exists for inpatient psychiatric services for those younger than age 21. However, other medical treatment provided to such children cannot be paid for with Medicaid funds, the audit says. As a result of the audit, the federal government has asked California, New Jersey, New York, Texas and Virginia to repay more than $10 million in federal funds that were used to pay for care of children in institutions, according to AP/Newsday. But Collins and Waxman in the letter said that Congress in 1972 approved an exemption that allows Medicaid to fund children's "inpatient psychiatric hospital services," which, according to Collins and Waxman, includes medical treatment. They said, "Because the loss of these funds could threaten the viability of institutions that provide critical mental health services, these audits are a direct threat to the health of needy children." CMS spokesperson Mary Kahn said the agency is "looking into the situation" (AP/Long Island Newsday, 3/9).

Letter to Bush
A March 7 letter from House and Senate Democrats to President Bush states that lawmakers will work with the president on changes to Medicaid, but they will not support proposals that would shift more program costs to the states, CQ HealthBeat reports. According to the letter, the lawmakers said that changes to Medicaid "must not be guided by arbitrary goals for savings and reconciliation targets" and must "protect beneficiaries from losing access to needed and affordable benefits." Senate Minority Leader Harry Reid (D-Nev.); House Minority Leader Nancy Pelosi (D-Calif.); Reps. John Dingell (D-Mich.) and Sherrod Brown (D-Ohio); and Sens. Max Baucus (D-Mont.) and Jay Rockefeller (D-W.Va.) signed the letter (CQ HealthBeat, 3/8).

Governors' Involvement
In related news, CQ HealthBeat examines a resolution adopted at the National Governors Association annual winter meeting that encourages regulatory and legislative changes regarding the so-called "clawback" provision (CQ HealthBeat [2], 3/8). Under the clawback provision, states in 2006 will be required to pay the federal government 90% of dual eligibles' prescription drug costs. Because states previously covered all of those costs, the Bush administration says that they will save 10% on drug costs (Kaiser Daily Health Policy Report, 3/7). States' clawback payments eventually will drop to 75% of the cost of dual eligibles' drug coverage, CQ HealthBeat reports. According to CQ HealthBeat, governors are concerned that details of the provision actually would lead to higher costs for states. The NGA resolution states, "Because states never stop paying less than 75% of a baseline number that is too high to begin with, many feel that they will never be held harmless from the negative impacts of the clawback." A CMS spokesperson said states will "have to go to Congress" if they would like to alter details of the baseline (CQ HealthBeat [2], 3/8).

The Economist Looks at Medicaid Debate
The March 5 issue of The Economist examines the Medicaid debate, which it calls the "real budget battle" in 2005. Although governors attending the NGA meeting said they are concerned about "allowing short-term budget concerns to drive Medicaid policy," the "rhetoric about more fundamental reform" without "the specter of budget cuts" is "unlikely to go anywhere," The Economist reports. According to The Economist, "Bush's proposed cuts are pretty feeble, but they might set that ball rolling" (The Economist, 3/5).

"Reprinted with permission from kaisernetwork.org kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation . © 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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