Bazelon Center Mental Health Policy Reporter

Volume VI, No. 1, February 22, 2007

In this issue:

• President’s FY 2008 Budget Would Cut Human Services
  
• Congress Finalizes FY 2007 Appropriations
  
• Mental Health Parity Bill Headed for Passage at Last         
  
• Genetic Non-Discrimination Bill Approved by Committees

Newsbytes:
SAMHSA Releases Solicitations for Jail Diversion Grants

After passing a spate of legislation promised by members during the 2006 campaign, the 110th Congress has settled down to consider budgetary issues, current and future. In current (FY 2007) funding, programs that help people with disabilities gained a little. But they would lose if Congress were to enact the budget President Bush proffered for next year. The Bazelon Center and other advocates will watch closely as Congress considers the President’s proposals and will alert you when it’s time for action. We also report some good news, in the introduction of two bills to counter discrimination by health insurers.

President’s FY 2008 Budget Would Cut Human Services

The President’s $29-trillion spending plan for fiscal year 2008, starting October 1, 2007, emphasizes funding for defense and homeland security and would, if enacted, restrict funding of human services programs, including Medicaid and mental health programs. The President aims to balance the federal budget by fiscal year 2012 and achieves this by setting forth a range of funding cuts and freezes to myriad domestic discretionary programs. The President’s FY 08 budget proposal is available at: http://www.whitehouse.gov/omb/budget/

Mental Health Services

The Center for Mental Health Services (CMHS) within the Substance Abuse and Mental Health Services Administration (SAMHSA) is facing a huge $76-million cut in its Program of Regional and National Significance (PRNS). PRNS funds are used for programs that move the field forward, build new service capacity and translate research into practice at the community level. The following PRNS programs are slated for elimination or significant cuts: the State Incentive Grants for Transformation ($6.2 million reduction); school violence prevention ($17.4 million reduction); jail diversion (reduced by $3 million), seniors mental health (eliminated); and consumer support technical assistance centers (eliminated).

Beyond these steep cuts in PRNS, the budget would freeze funding for core CMHS programs at fiscal 2007 levels. The mental health block grant would be level funded at $428 million, the children's mental health services program at $104 million, the protection and advocacy program at $34 million, and the PATH program at $54 million. No inflationary increase is proposed.  

Medicaid

The President’s budget repeats his earlier proposals to reduce Medicaid spending on certain vital services (see the Bazelon Center’s August 2005 Policy Reporter).  Most services provided by public mental health systems are funded under Medicaid’s Rehabilitation or Targeted Case Management category. The President’s budget would cut approximately $25 billion over five years through a combination of legislative and regulatory proposals.

Among the legislative proposals is reducing the federal contribution toward the cost of targeted case management for Medicaid recipients, including those with serious mental disorders. This is accomplished by shifting payment for case management from the service-matching rate to the administrative rate (50 percent).

This would save the federal government $200 million in fiscal year 2008 and $1.2 billion over five years. But it would increase state costs and/or reduce services for Medicaid beneficiaries. Medicaid targeted case managers serve as a vital link for beneficiaries receiving medical, social, educational, housing and other necessary services. 

The President’s budget also announces a plan to restrict allowable services under the rehabilitation services category, to save the federal government $230 million in fiscal year 2008 and $2.3 billion over five years. Again, states will either be forced to pay more to cover these services or individuals will be left without access to care.

Rehabilitative services are the critical services that enable people with mental illnesses to live in the community. They include skills training, illness self-management, peer services, intensive in-home services, therapeutic foster care services for children and other interventions that promote recovery.

Finally, the Administration proposes to prohibit federal Medicaid reimbursement for school-based administration or transportation costs, to save $625 million in FY 2008 and $3.6 billion over five years.

States’ Children's Health Insurance Program (SCHIP)

The President proposes a reauthorization of SCHIP with the addition of approximately $5 billion more over the next five years. SCHIP serves children in families whose incomes, albeit low, are too high for Medicaid. States currently face very large funding shortfalls for their SCHIP programs, but this proposal falls short of the amount needed to maintain current benefits for children who are currently enrolled. The proposal would also limit the program to children in families at or below 200 percent of the federal poverty level. Currently, 18 states have eligibility levels that exceed this limit, some up to 350 percent of poverty.

Congress has begun reviewing the SCHIP program and hearings have been held by the Senate Finance and House Energy and Commerce committees. Much of the debate has focused on core funding issues and expanding outreach and enrollment.

The Bazelon Center and other mental health groups are calling for additional changes. SCHIP plans are based on benchmark private health plans that have limited mental health benefits. Mental health advocates are seeking to require a parity mental health benefit in all SCHIP plans.

Congress Finalizes FY 2007 Appropriations

The 110th Congress has completed action on fiscal year 2007 appropriations by approving a Continuing Resolution (PL 110-5) that covers spending in a number of departments and agencies through the end of the fiscal year. This was necessary because the 109th Congress failed to enact funding for these departments before adjourning.

This resolution funds programs in SAMHSA generally at the previous year’s (FY 2006) levels. It made no changes to the funding reported out of the House and Senate Appropriations Committees last year (see the Bazelon Center’s December 2006 Policy Reporter).

Senator Tom Harkin (D-IA), chair of the Labor, Health and Human Services and Education Appropriations Subcommittee in the Senate, was able to secure an additional $2 billion for increases to certain health and education programs, including the Individuals with Disabilities Education Act (IDEA) grants to states ($200 million increase) the No Child Left Behind law ($250 million over FY 06 for Title 1 programs), the Center for Disease Control and the National Institutes of Health.

Mental Health Parity Bill Headed for Passage at Last 

The new Congress seems poised to finally address the disparity between surgical/medical and mental health/substance abuse coverage by private insurers. After many years of effort by the mental health community, a Senate committee has approved a bill for mental health parity in the private health insurance market. The Senate Health, Education, Labor and Pensions Committee approved, by an 18-3 vote, the “Mental Health Parity Act of 2007” (S. 558).

The bill, sponsored by Senators Edward Kennedy (D-MA) and Pete Domenici (R-NM),  reflects a number of compromises made with groups representing employers and insurers that have in the past strongly opposed mental health parity.

S. 558 builds on the Mental Health Parity Act of 1996, which required parity in lifetime limits, to require parity between medical/surgical benefits and mental health/substance abuse benefits with respect to day and visit limits, co-payments, deductibles and other financial and treatment limitations. The bill applies to businesses with 50 or more employees, but would not require any employers to offer mental health or substance abuse coverage. However, if a plan does include a mental health/substance abuse benefit, then that benefit must be at parity.

When a plan includes a mental health/substance abuse out-of-network benefit, that benefit must also be at parity (however, the health plan may limit coverage to in-network services and need not include any out-of-network benefits). The mental health benefit may also be subject to separate reimbursement or provider-payment rates and service delivery systems and can be managed in order to ensure the medical necessity of the service.

The bill includes language allowing an exemption for plans that experience significant increases in costs due to implementation of this parity benefit. In such a case, if a plan’s total costs increase by 2 percent or more, the parity requirements would not apply to the plan for one plan year. Following that initial year, if the parity rules increases total costs by 1 percent in any later year, the plan would again be exempt for one plan year.

In addition to creating this uniform parity requirement across all plans, S. 558 would override some aspects of state parity laws. Pre-empted would be aspects of state parity laws that address day and visit limits, payment rates, medical necessity/managed care issues and cost-exemption provisions.

However, the bill would not pre-empt other aspects of state law, particularly laws that mandate mental health coverage. Plans that are required by state law to have a mental health benefit would not only have to continue to meet that requirement but would also have to meet the requirements of S. 558 with respect to day/visit limits, co-payments, deductibles, and other financial and treatment limitations. The rules in S558 regarding payment rates, service delivery systems and managed care would also apply to those  benefits in those states.

S. 558 does not address a politically difficult issue, the definition of mental health and substance abuse benefits. Instead, it allows these terms to be defined in each plan. Where these terms are defined in state law, this bill does not pre-empt them.

In the House, Representatives Patrick Kennedy (D-RI) and Jim Ramstad (R-MN) continue to champion mental health parity and are expected to re-introduce their parallel legislation, The Paul Wellstone Mental Health Parity Act.

Genetic Non-Discrimination Bill Approved by Committees 

House and Senate Committees have recently approved legislation to prohibit discrimination by employers and insurers based on genetic information. Insurers would be barred from denying coverage or increasing financial costs (such as co-payments or deductibles) based on data obtained from genetic tests. Employers would be prohibited from making employment decisions (such as promotion, firing or hiring) based on such information. The Genetic Information Non-Discrimination Act (S. 358, H.R. 493), sponsored by Senator Olympia Snowe (R-ME) and Representative Louise Slaughter (D-NY), has been approved by the House Energy and Commerce Committee and the Senate Health, Education, Labor and Pensions Committee. President Bush has also supported enactment of a genetic privacy bill.

The legislation would help millions of Americans who currently forego, because of insurance and employment consequences, testing that could lead to treatment of critical diseases and disorders. 

NewsByte 

SAMHSA Releases Solicitation for Jail Diversion Grants

The Center for Mental Health Services of the Substance Abuse and Mental Health Services Administration is soliciting applications for its jail diversion program for fiscal year 2007. The jail diversion program has provided grants to 32 communities since 2002. The program is designed to address the increasing criminalization of individuals with mental illnesses. The program provides funds to help divert an individual who has a mental illness from the criminal justice system to appropriate mental health treatment and support services.

Applications are due March 27, 2007. Visit http://www.samhsa.gov/Grants/2007/SM_07_004.aspx  for information on applying.