On August 13, 2007, the Centers for Medicare and Medicaid Services (CMS) published proposed new regulations to govern Medicaid’s rehabilitation service category. The rules are comprehensive and would significantly affect public systems’ provision of services to children and adults with serious mental disorders and people with physical or developmental disabilities. The combined effect of the changes would be to save the federal government an estimated $180 million in one year and $2.2 billion over a five-year period. 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.
In addition to this new, formal proposed regulation, CMS has also sent a policy letter to state Medicaid directors clarifying that states may provide peer support services under the Medicaid program.
Service Planning
Each individual must have a rehabilitation plan. For people with mental illnesses or substance abuse disorders, the plan is expected to include recovery goals.
The planning process must ensure:
CMS recommends that states use a person-centered planning process, and that the individual be at the center of the planning process. The plan must be developed by a qualified provider with input from the individual, family, health care decisionmaker and/or others of the individual’s choosing. The plan must include:
If, after review, it is determined there is no measurable improvement, a new plan needs to be drawn up with a different rehabilitation strategy and revised goals, services and/or methods.
Settings
Rehabilitation services can be provided in a facility, home or other setting. Specifically included are schools and mobile crisis vehicles.
Excluded settings are residential Institutions for Mental Diseases (IMDs), unless the state has opted to cover IMD services for individuals 65 years of age or older. Residential programs with fewer than 16 beds are not considered IMDs and reimbursement for rehabilitation services (but not room and board or other non-service costs) can be claimed.
Psychiatric inpatient services to children (under age 21) are covered under a different Medicaid service category. Any services provided in a psychiatric hospital or a psychiatric residential treatment facility for children must be billed as inpatient psychiatric services and cannot be billed under the rehabilitation service category.
Services furnished to inmates living in the secure custody of law enforcement and residing in a public institution are not reimbursable. This means that no federal financial participation is available for individuals in prison, jail, detention or other penal facilities that are under the responsibility of a government unit or over which a government unit exercises administrative control.
However, federal funding for covered services is available for people on parole, probation or home release or in foster care, a group home or other community placement.
Rehabilitation Services Defined
The proposed rule defines when a service can be considered a rehabilitative service under Medicaid. The ultimate goal of rehabilitation services is to reduce the level of services to the least intrusive level which sustains health. Services must be:
Rehabilitation services are not custodial care. They should result in a change of status over time. However, the rule does not preclude coverage of services to maintain a current level of functioning, provided this is necessary to help the individual achieve a rehabilitation goal defined in the plan of care.
Rehabilitation services are to focus on the ability to perform a function, regardless of whether the individual performed that function in the past. This is an important provision for children, who may have had (and lost) the ability to function at an age-appropriate level, but would not have previously have been expected to perform certain specific tasks because of their age.
Types of Services Covered
The proposed rule does not list specific services as covered. Rather, the key factor in determining whether a service can be covered under this category is its purpose. Services must be provided for the maximum reduction of physical or mental disability and restoration of the individual to the best possible functional level. The service must be directed toward a specific rehabilitation goal in the person’s plan of care and focused on equipping the individual with specific skills aimed at reducing disability and restoring functioning.
CMS gives examples of services that can be covered, based on their purpose, but which may not be covered if provided for a different purpose. For mental health, these examples are:
Non-Covered Services
Specifically excluded as rehabilitation services are:
The proposed rule describes therapeutic foster care as a model of care, not a separate service—although children in therapeutic foster care remain eligible for all covered rehabilitation services.
To reimburse services for children in therapeutic foster care, states must specifically define the services, provider qualifications and payment method. States may not package services and pay a single rate for therapeutic foster care. 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.
In addition to paying for services furnished directly to a child in therapeutic foster care, Medicaid can also pay for psychoeducation services to the therapeutic foster care parents. Under the proposed regulation, services such as psychoeducation are covered even when provided to a non-eligible individual (in this case. the therapeutic foster parents) as long as they are furnished exclusively for the benefit of a Medicaid-eligible individual (in this case, the child).
Vocational services that are not covered are those that teach a specific skill or to perform a task associated with performance on a job and that are not for the primary purpose of reducing disability and restoring function. (Job-related services that are aimed at restoring living skills or re-establishing functioning are covered.)
Education services that are not covered are those with the primary purpose of academic enhancement. (Education-related services provided for the purpose of equipping the individual with specific skills that will decrease disability and restore the person’s functioning level are covered.)
CMS requires that states define covered services in their state plan, which must then be approved by CMS.[1]
For people with mental retardation and developmental disabilities, the rule clarifies that the rehabilitation service category does not cover habilitation services. These services can be covered under a home- and community-based services waiver or state plan option, but not under rehabilitation. The rule makes clear that this provision is not relevant for people with mental illnesses (CMS does not consider services to this population to be habilitative).
Providers of Services
CMS requires that providers of rehabilitation services:
Nothing in the proposed rule would prevent peer specialists from being providers of rehabilitation services, provided that the state defines them as providers (and lists required qualifications) in the state plan.
CMS requires that individuals be given a free choice of providers, to the extent that qualified providers are available, and that the state permit all qualified providers to enroll as Medicaid providers of rehabilitation services.
Medicaid providers of rehabilitation services must maintain a copy of the individual’s rehabilitation plan and document:
State Obligations
States must ensure that their rehabilitation services meet the Medicaid requirements for statewideness, comparability and freedom of choice (of providers). This means that any covered Medicaid rehabilitation service must be available to all, based on need, and states may not limit certain services to certain settings. (For example, it is not permissible for services to be available only when furnished in a school and not when furnished by the same provider in the community.)
The state plan must describe rehabilitation services to be covered and specify the provider type and provider qualifications and the payment methodology. (This does not negate the state’s obligation to provide Early and Periodic Screening, Diagnosis and Treatment—EPSDT—to children, regardless of what is described in the state plan.)
Medicaid services must be coordinated with services made available under other programs for meeting social and education development goals.
New Proposed Limits
For the first time in federal policy, this proposed rule would prohibit federal financial participation for services deemed “intrinsic elements” of other programs. Under this rule, Medicaid would not pay for services furnished through a non-medical program as a benefit or administrative activity. The list of programs included under this term is long, and includes foster care, child welfare, education,[2] child care, vocational and prevocational training programs, housing, parole and probation, juvenile justice and public guardianship.
People in those programs retain their Medicaid eligibility. They also can receive rehabilitation services if the service in question is not the responsibility of the other program and if all other Medicaid requirements are met.
CMS estimates that this rule on other programs’ intrinsic elements will save the federal government $180 million in 2008 and $2.2 billion over a five year period. None of those savings will accrue to states and localities, which will have to pick up the slack.
Peer Support Services Letter
CMS, on August 15, 2007, sent a policy letter (#07-011) to state Medicaid directors affirming that states may cover peer support providers as a distinct provider type for the delivery of counseling and other support services to Medicaid-eligible adults with mental illnesses and/or substance use disorders.
CMS describes peers support services as an evidence-based mental health model of care, which consists of a qualified peer support provider who assists individuals with their recovery from mental illness and substance use disorders. Peer support providers, as consumers of services, can be an important component in a state’s delivery of effective treatment. Accordingly, states have the option to offer peer support services as a component of mental health and substance use service delivery systems and may cover these services through the rehabilitation services category of Medicaid, as part of a home- and community-based waiver (1915(c) or through the 1915(b) waiver authority (relating to managed care).
Peer support services must be provided in accordance with an approved plan of care and reimbursed based on a unit of service. States must provide assurance that they have mechanisms to prevent over-billing, such as prior authorization and other utilization-management methods, and must describe those mechanisms.
Minimum requirements include:
States are also encouraged to use a person-centered planning process to engage and empower the Medicaid individual in leading and directing the design of his or her service plan in order to ensure that the plan reflects the individual’s needs and preferences in achieving goals.
The statements regarding CMS policy on peer support services become effective as federal policy immediately. Unlike the rehabilitation regulations, the letter is not a proposal, nor is it open to public comment.
August 15, 2007