Fact Sheet
Access to Services for Children with Serious Mental Disorders
Families Need Choices: Lack of Access Results in Custody
Relinquishment to the State
Issue
Families of children with mental and physical disabilities are often
unable to obtain the specialized and intensive services their children
need through their private insurance policy. Most policies limit coverage
of the rehabilitative and other care needed by individuals with disabilities
and chronic illnesses, and few families can afford to pay out-of-pocket.
This problem is especially acute for children with mental and emotional
disorders. Insurance coverage of mental health services is extraordinarily
limited. Coverage of acute hospital and physician care is generally far
below what these children require and private insurance does not pay at
all for many essential rehabilitative services. The result is that most
children with mental or emotional disorders have no access to the services
they need. Their families then face the choice whether to leave their
child untreated—with horrible, even fatal, consequences—or give
up custody to the child welfare system so their child can access services
through Medicaid.
Medicaid’s Role
Medicaid can be a lifesaving resource for these families because it
covers the range of services that children with disabilities need. Families
whose children with physical or mental disabilities are on Medicaid are
much more satisfied with their child’s care than are families with
only private insurance coverage. Seventy-one percent of families rated
Medicaid good or excellent and 54 percent had no problems getting the
mental health services their child needed. In contrast, only 51 percent
of families with private insurance thought their plan was good or excellent
and only 38 percent reported no problems getting mental health services
for their child. 1
State Options
Federal Medicaid law gives states two policy options that allow children
with a mental or physical disability to be enrolled in Medicaid even when
their family income would normally exclude eligibility. These children
can qualify if the state adopts either:
- the eligibility option authorized by the Tax Equity and Financial
Responsibility Act of 1988, TEFRA (also known as the Katie Beckett option)
Sect. 1902(a)(ii)(VI) of Medicaid law; or
- a Home- and Community-Based Services waiver under Section 1915(c).
TEFRA
The Medicaid TEFRA eligibility option permits states to enroll children
with disabilities who live at home and need extensive care but who would
not otherwise qualify for Medicaid due to their family income and resources.
2 In order to be eligible:
- The child must be a child with a disability as defined in federal
disability rules (Supplemental Security Income, SSI, program).
- The child must need the level of care normally provided in a medical
institution.
- Home care for the child must be appropriate and the cost of home care
must not exceed the cost of the alternative institutional care.
Compared to the total enrollment in the Medicaid program, the TEFRA option
covers a small number of children and enrollment varies widely between
states. The average number of children qualifying under TEFRA per state
is 1, 230 (the range is from 10 to 4, 300 children). The average number
of children with a primary diagnosis of mental or emotional disorders
is 250, or between 3% and 21% of total TEFRA enrollment, except in Vermont,
where 52% of the TEFRA children are estimated to have a primary diagnosis
of serious emotional disturbance. 3
A study of Minnesota’s TEFRA option4 found that,
while costs for children with physical disabilities averaged $43, 000,
costs for children with mental health diagnoses averaged only $17, 900.
Since TEFRA is the payer of last resort and many children have other insurance,
the cost per child for Medicaid was only $8, 100. 5 Children
on TEFRA with a mental disorder come from families with lower incomes
and were also less likely to have supplemental insurance than other TEFRA
children.
Home- & Community-Based Waiver
The home- and community-based waiver, authorized under Section 1915(b),
allows states to cover under Medicaid children who would otherwise be
excluded because of their parents’ income and resources and to expand
services beyond those listed in federal law. For a child to be eligible
under this waiver, certain conditions must be met:
- The child must require care in a medical institution (a hospital,
nursing home or institution for mental retardation, but excluding residential
treatment centers).
- Home- and community-based services must be an appropriate option for
the child.
Families in states with these waivers are very pleased with the array
of community services available to them. For example, Kansas offers respite
care, independent living skills services and parent training and support.
Vermont offers various flexible supports, include respite and other services.
New York provides individualized care coordination, respite and family
support services.
Although federal rules require that states show the waiver to be budget
neutral for the Medicaid program, federal rules are not onerous. States
need only show that the average cost of community care for all children
in the waiver will not exceed the average cost of the alternative institutional
care otherwise payable by Medicaid. It is not necessary for the state
to require such a showing for every waiver child.
Federal rules also provide another level of flexibility for states, in
that children need not be placed in an institution to qualify under the
waiver. The costs of institutional care for children at risk of placement
may also be used to offset the costs of community services.
One limiting factor for home- and community-based waivers for children
needing mental health care is that federal rules do not allow states to
consider the costs of institutionalizing the child in a residential treatment
facility. In many states children with mental or emotional disorders are
at risk of long-term placement in residential treatment centers. But because
these facilities are not considered a medical institution under the law,
home- and community-based waivers cannot be used to divert children from
such a placement.
States may limit the number of children in the waiver in order to reduce
their costs. Funding for the waiver may also be linked to state appropriations
for services. As a result, states can control the number of children in
a home- and community-based waiver and costs are readily controlled.
Notes
1 Your Voice Counts! The Health Care Experiences of Children
with Special Health Care Needs, Brandeis University, Center for Child
and Adolescent Health Policy, MassGeneral Hospital for Children and Family
Voices, Boston, MA. 1999.
2 The Tax Equity and Fiscal Responsibility Act (TEFRA)
of 1982 created the TEFRA state option. This replaced a waiver authority
that had accomplished the same goal (and was known as the Katie Beckett
waiver after a child whose plight came to the attention of President Reagan).
3 Bazelon Center for Mental Health Law (2002) Report to
the Center for Mental Health Services on the Implementation of the TEFRA
Option.
4 Chan, Benjamin. , Jahnke, Lola. , Thorson, Sarah. ,
Vanderberg, Nancy (1988). Caring for Our Children: A Study of TEFRA in
Minnesota. Minnesota Children with Special Health Needs. St. Paul, MN:
Minnesota Department of Health.
5 Chan, Benjamin. , and Vanderburg, Nancy. (1999). Children
with Disabilities, Managed Care Plans, and Medicaid TEFRA Option in Minnesota–
Implications for Patients’ Rights. Paper presented at the 16th Annual
Meeting, Academy for Health Services Research and Health Policy, Washington,
DC.
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