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Information Alert

Proposed Medicaid Rule Could Exclude Some Rehabilitation Services

August 16, 2007—The Centers for Medicare and Medicaid Services (CMS) has published proposed new regulations to govern Medicaid’s rehabilitation service category (Federal Register, August 13, 2007, Vol. 72, No. 155, 45201-45213).

This Medicaid category funds most community mental health services provided through the public mental health system to children and adults with serious mental disorders, as well as services for people with physical or developmental disabilities. The changes in the proposed rule would affect all of these populations. 

These regulations are proposed. They are open to public comment and could be changed before taking effect. Comments are therefore very important. Watch for an Action Alert announcing the Bazelon Center’s draft comments, which can be used as a model.

Longstanding Policies Restated

In addition to adding new requirements and restrictions, the comprehensive new regulations restate long-held CMS policy regarding rehabilitation services. Restated policies include:

• Rehabilitation services can be furnished in any setting.

• Rehabilitation services are to be recommended by a licensed health care professional and designed to lead to the goal of maximum reduction of physical or mental disability and restoration to best possible functional level

• The key factor in determining whether a service can be covered is, as under prior policy, its purpose. Thus, services that may appear recreational or social can be reimbursed if they are part of a plan of care to meet a rehabilitation goal.

• Job training, academic education and room-and-board costs are not included (although certain job-related and education-related rehabilitation services are covered).

• Services to individuals residing in a public institution (such as jail, prison or detention center) are not reimbursable.

• States must ensure that rehabilitation services meet requirements for statewideness, comparability and freedom of choice.

The proposed rule also clarifies that rehabilitation services must focus on the ability to perform a function, regardless of whether the individual performed that function in the past (this is particularly relevant for children but also distinguishes rehabilitation services for people with mental illnesses from habilitation services for people with developmental disabilities).

Some New Policies Are Consumer-Centered, Others Present Problems

New policy in the regulations would require active participation by the individual or parent of a child (and individuals of the consumer’s choosing) in setting recovery goals and in developing, reviewing and modifying the services plan. CMS recommends a person-centered planning process.

Another important new provision would require periodic (at least annual) re-evaluation of rehabilitation plans with the consumer to determine whether goals are being met. If not, the plan and services must be revised.

However, some significant new policy statements in these proposed rules are not entirely clear and are even problematic.

• Recent CMS policy regarding payment methodology is reinforced. The rule specifically excludes the option of paying for therapeutic foster care (or similar programs, such as ACT) through a single daily rate, case rate or similar payment to the provider. Instead, individuals in these programs can receive all covered rehabilitation services, but each service must be billed separately, requiring detailed accounting by all providers.

• To qualify for reimbursement, therapeutic foster parents must be defined as providers under the state plan. Some therapeutic foster care activities are specifically not covered under this regulation, including provider recruitment, foster-parent training and other services “if they are the responsibility of the foster care system.” The regulation is silent about how these restrictions apply if the child is not in foster care.

A second problematic part of the new rule prohibits federal payment for services that CMS deems “intrinsic elements” of other programs. The list of programs included under this rule includes foster care, child welfare, education, child care, vocational and prevocational training programs, housing, parole and probation, juvenile justice and public guardianship. Individuals in these programs would remain eligible for Medicaid and covered rehabilitation services could be provided to them and reimbursed—but only if the services are not intrinsic elements of the other programs. “Intrinsic elements” is undefined. In 2004, Congress rejected a CMS proposal to include similar language in the Medicaid law. It is questionable whether the agency can do this under regulation and without specific legal authority.

The proposed changes would save the federal government an estimated $180 million in one year and $2.2 billion over a five-year period—all resulting from that last problematic provision. None of those dollars would accrue to states and localities, which would have to either reduce services or pick up the slack for the lost federal revenue.

Comments Due October 12th

The public has 60 days to submit comments on the new rule. Comments from consumers, advocates, states, localities and providers are important in order to ensure the most appropriate rule possible when the regulation is issued in final form. Government agencies must count each comment letter. Weight is given to the points that attract numerous comments (note that letters with multiple signers are counted as only a single letter).

Comments must be received by 5:00 pm on October 12, 2007. They may be submitted electronically to http://www.cms.hhs.gov/eRulemaking (click on the link ``Submit electronic comments on CMS regulations with an open comment period.'') For postal mail and faxing instructions, see the first page of the proposed regulations. The Bazelon Center is preparing its comments, and will post them as soon as they are drafted.


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  Judge David L. Bazelon Center for Mental Health Law
1101 15th Street, NW, Suite 1212
Washington, DC 20005

Phone: 202-467-5730
Fax: 202-223-0409
Email: webmaster @ bazelon.org

 
Judge David L. Bazelon Center for Mental Health Law
1101 15th Street, NW, Suite 1212
Washington, DC 20005

Phone: 202-467-5730
Fax: 202-223-0409
Email: webmaster@bazelon.org