Medicaid Financing of State and County Psychiatric Hospitals

Appendix D. Data Limitations

The financing role that Medicaid assumes with regard to State and county psychiatric hospitals is highly complex, and is made more so because of severe data limitations. Despite the existence of several publicly available national datasets on Medicaid, mental health, and psychiatric hospitals, each has limitations that may conceal the "true" magnitude of Medicaid funds received by public psychiatric hospitals (see Table D.1).

First, the data tend to express Medicaid expenditures in the aggregate, making it impossible to identify funds apportioned specifically to public psychiatric hospitals. The exception is in the accounting for DSH spending through the Medicaid DSH files, but those data are available only for 1998. In accounting for Medicaid reimbursements, HCFA-64 reports "mental health" (non-DSH) expenditures, but the data cover all providers within States, not just public psychiatric hospitals.

Second, even if it were possible to "back out" expenditures on public psychiatric hospitals, the existence of IGTs complicates the determination of the amount of Medicaid dollars that remain with these facilities. No information exists on the extent of funds flowing through IGTs, which States use IGTs, or the purposes for which States use the funds (e.g., other mental health services, offsets of State appropriations made to the hospitals, or other State-designated use).

In addition, States vary substantially in their portfolio of Medicaid funding sources and the extent of their use. For example, Wisconsin does not use IGTs in its DSH program for public psychiatric hospitals (personal communication, 11/12/01, D. Zimmerman at the Wisconsin Department of Health and Family Services; Coughlin and Liska 1998) but is heavily involved in enhanced payments to county nursing facilities (GAO 2001; personal communication, 11/12/01, D. Zimmerman at the Wisconsin Department of Health and Family Services). Delaware, on the other hand, runs all its DSH funds through one State psychiatric hospital.

Finally, CMS cannot verify the use of upper-payment limit strategies for IMDs or for county-owned psychiatric hospitals in particular. State plan amendments altering payment methodologies to take advantage of enhanced payment strategies are too general to reveal whether the payments apply to IMDs (personal communication, 11/14/01, L. Reed at CMSO). Further, it is difficult to identify county-owned psychiatric hospitals along with the set of States in which they are located. Overall, data limitations have exacerbated a thin knowledge base on Medicaid financing of State and county psychiatric hospitals.

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