Medicaid Services for Adults

Federal Medicaid law gives states several important options for covering community services for people with mental illness. These are:

• rehabilitation services option—covers a wide array of individualized community services;
• targeted case management—can be specifically targeted to individuals with a serious mental illness, and can be even more specifically targeted to individuals with a serious mental illness who are also being discharged from an institution or who are in a group at high risk of unnecessary institutionalization (as defined by the state);
• assertive case management, including outreach and 24-hour-a-day access to community services; and
• group homes of fewer than 16 beds (covers services but not room and board, which must be offset through other means, such as SSI benefits).

Rehabilitation Services

Nearly all states already cover psychiatric rehabilitation services under the Medicaid option for "other diagnostic, screening, preventive and rehabilitative services (Section 1905(a)(13) of the Social Security Act). However, according to the latest (1998) data, 11 states have not elected to cover such services.⁽⁵⁾ The following states could secure additional resources to comply with L.C. by adding psychiatric rehabilitation to their state Medicaid system:

States that do provide the psychiatric rehabilitation services option often do not have the services available statewide or have a restricted definition of covered activities. All states should re-examine their Medicaid psychiatric rehabilitation option, since these services are key to successful community living for people with serious mental illnesses.

Targeted Case Management Services

Targeted case management is one of the most flexible options in Medicaid. It can be targeted to a specific population and does not have to be offered statewide. Federal law explicitly states that such services can be targeted to individuals who are "chronically mentally ill." Twenty-four states do not target intensive case management services toward adults with mental illnesses.⁽⁶⁾ These states are:

These states could better meet their obligations under L.C. by providing targeted case management services.

Assertive Case Management And Assertive Community Treatment

Intensive case management and its variations, such as assertive community treatment (ACT), are important services for individuals with serious mental illnesses, particularly in their transition from institutional placements.⁽⁷⁾ Intensive case management is a term encompassing a range of programs, and at its best exemplifies good community care based on person-centered planning and the individual's full participation.

On June 7, 1999, Sally Richardson, Director of Medicaid Services for the federal Health Care Financing Administration (HCFA), issued a letter to state Medicaid Directors informing them that assertive community treatment and assertive case management "can be supported under existing Medicaid policies and a number of states currently include ACT services as a component of their mental health service packages." The letter further emphasizes that "consumer participation in program design and the development of operational policies is especially key in the successful implementation of ACT programs."⁽⁸⁾

In support of these programs, HCFA took note of the evidence of the effectiveness of assertive case management and assertive community treatment in reducing inpatient care among high-risk individuals, making these programs particularly relevant to the population effected by L.C. Several studies support improvements in clinical and social outcomes as a result of intensive case management programs; these studies suggest that both assertive community treatment and assertive case management are superior to conventional case management for high-risk cases.⁽⁹⁾

The 33 states that have been identified as providing ACT programs at this time are shown in the table below. Other states should review their Medicaid rules to ensure that intensive case management services are covered.

States with ACT Programs as of October 1999

Group Homes

Many of the individuals covered under L.C. have been confined in institutions for years. A number have quite serious disorders that may require the services and supports of a community group home. While the majority of people with mental illness can live in independent housing with appropriate services and supports, some will require 24-hour-a-day programming in small community residences.

Although Medicaid law specifically excludes from coverage services in psychiatric institutions for adults ages 22-64, group homes are not covered by this "Institutions for Mental Diseases" (IMD) rule. As IMDs, state mental hospitals, private psychiatric hospitals and nursing homes that serve a disproportionate number of individuals with mental illnesses are not eligible for Medicaid reimbursement for services to adults. However, at the state's option, adults over age 64 may be covered in such facilities, and children under age 22 have access to psychiatric hospital services.

Facilities of 16 or fewer beds, such as group homes, are not considered IMDs under Medicaid law. Accordingly, while group homes are not a separately defined Medicaid service and states may not claim reimbursement for the cost of room and board, they may bill Medicaid for necessary group home staff and for other mental health services provided to group home residents.⁽¹⁰⁾

States can increase their resources for community services, avoiding unnecessary institutionalization, if they make these policy changes to secure Medicaid funding for services in group homes.

Coverage Of Newer Medications

An important part of the treatment for a mental illness is access to the newer "atypical" medications for psychiatric disorders. These drugs have significantly fewer and less severe side effects; they are also more effective than older antipsychotics.

On February 12, 1998, Sally Richardson sent a letter to state Medicaid directors regarding the advantages of using newer medications for persons with schizophrenia on Medicaid. In June 7, 1999, she pointed out that this directive applies equally when states contract for services under Medicaid, such as with managed care entities.

In the February 12 letter, HCFA informed states that they must respond within 24 hours to prescription requests for the newer atypical antipsychotic medications. The letter also said that states must have procedures to ensure that in emergencies at least a 72-hour supply of the requested medication is made available.

In addition to being in violation of the Medicaid statute, a state that fails to provide adequate access to the atypical medications in compliance with these federal Medicaid rules will have weakened its defense under the ADA that it is unable to provide necessary services for all individuals who are or are at risk of unnecessary institutionalization.

Nursing Home Placements

Under the Nursing Home Reform Act,⁽¹¹⁾ states are required to screen individuals being considered for nursing home placement to ensure that they need that level of intensive nursing care. Individuals who do not need such a level of care should be diverted into appropriate community placements. In many states, there are individuals residing in nursing homes who may be eligible for community care.

L.C. applies to Medicaid-financed nursing facilities just as it does to state hospitals, and states must ensure that individuals unnecessarily institutionalized in these facilities (or those at risk of such unnecessary institutionalization) are included in their planning for L.C. compliance.

Next: Home- and Community-Based Services Options