Psych Demo to Test Medicaid Exclusion
by Stephanie Bouchard, Managing Editor, Healthcare Finance News
Healthcare Finance News, June 13, 2012 - A new psychiatric demonstration project administered by the Center for Medicare and Medicaid Innovation seeks to test if changing a 47-year-old Medicaid exclusion can lead to better care and lower costs.
When Medicaid was enacted in 1965, the majority of people living with severe mental illness were housed in state and local psychiatric hospitals paid for with state and local dollars. To avoid the chance of state and local governments shifting the costs of caring for mentally ill patients to the federal government, the drafters of Medicaid added the Institutions for Mental Disease (IMD) exclusion.
The IMD exclusion prohibits federal Medicaid matching payments for medically necessary inpatient care of Medicaid beneficiaries between ages 21 and 64 receiving care at an IMD, which is defined as a “a hospital, nursing facility or other institution of more than 16 beds that is primarily engaged in providing diagnosis, treatment or care of persons with mental diseases, including medical attention, nursing care and related services.”
The Centers for Medicare & Medicaid’s new demonstration project, the Medicaid Emergency Psychiatric Demonstration, will test whether or not providing Medicaid reimbursement to treat psychiatric emergencies in IMD settings will allow states to improve the quality of care of patients with mental illness at lower costs. The demonstration also seeks to learn if such reimbursement will ultimately reduce the burden on emergency departments and the readmission rate.
“The reason, I think, it came to the top, and really, became something that I think policy makers became more interested in, is that over the last couple of decades we’ve seen a real shrinking of inpatient psychiatric capacity … at the same time demand has been increasing,” said Mark Covall, president and CEO, the National Association of Psychiatric Health Systems, one of the organizations that worked with CMS to shape the demonstration. “So over the last several years now, there’s been a growing number of people who have a crisis – a psychiatric crisis – and they have been going to emergency departments and this is where this has become a crisis – and that is, there’s more and more people that have no place to turn … (so) they go to the emergency department.”
A stay in the emergency department is expensive points out Dennis King, CEO of Spring Harbor Hospital in Westbrook, Maine, one of two private psychiatric hospitals in the state taking part in the demonstration. The sooner patients get out of the ER the better, both in terms of care and cost, he said.
One day’s stay at Spring Harbor is around $1,200, King said, while a visit to the ED starts at around $1,000 “and you don’t get therapy at the ER.”
Eleven states and the District of Columbia are participating in the demonstration. CMS is providing the states and Washington, D.C. with up to $75 million in federal Medicaid matching funds over three years.
No set amounts are being given to the states said Kevin Flanigan, MD, the medical director of MaineCare Services, the state’s Medicaid program. Flanigan is serving as the state’s medical director for the demonstration.
“They will process claims on a quarterly basis,” Flanigan said. “When the funds are gone, the funds are gone. Hopefully it’ll make the full three years … but if they run out of funds in the first quarter, then the project’s done.”
Maine’s Department of Health and Human Services hasn’t set a goal for what it would like to see in terms of cost savings from the demonstration, Flanigan said, but the agency is excited about the opportunity and the possibility of positive outcomes.
“The intent is to have a positive impact on other high cost services in reduction of those services,” he said.
“So, if appropriate interventions can be delivered through this project other costs will not be incurred. This is really an attempt to match funding with a patient receiving the right care in the right place.”