This Web site is a component of the SAMHSA Health Information Network
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This Web site is a component of the SAMHSA Health Information Network. |
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Medicaid Financing of State and County Psychiatric HospitalsEndnotes1 An IMD is defined as "a hospital, nursing facility, or other institution of more than 16 beds that is primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases, including medical attention, nursing care, and related services" (U.S. Department of Health and Human Services (USDHHS)1992, 1994). Further, "[a]n institution is an IMD if its overall character is that of a facility established and maintained primarily for the care and treatment of individuals with mental diseases" (USDHHS 1994). When Congress created the Medicaid program in 1965 and subsequently amended it in 1972, it relaxed the IMD rule. The rule allowed funding for inpatient psychiatric care rendered in general hospitals as well as certain services for IMD residents age 65 years and older and persons under age 21 (USDHHS 1992). Medicaid reimbursement for inpatient psychiatric care provided by IMDs is available for individuals under age 21 and for individuals age 65 years and older if the State elects these optional services under its Medicaid State plan. Back 2 Among these laws are the Omnibus Budget Reconciliation Act of 1993 (OBRA) and the Balanced Budget Act of 1997 (BBA) (National Association of Public Hospitals and Health Systems 2001a; National Association of State Mental Health Program Directors 2001b, 2001c; USGAO 2000). Back 3 Some States, such as Iowa, specify that IMD residents can be covered through age 22 if they are hospitalized in an IMD before their 21st birthday (Center for Health Services Research and Policy 2001; OIG 2001b). Back 4 According to the State Medicaid Manual, the key criteria for a facility to be designated as an IMD include the following: has more than 16 beds; specializes in the treatment of persons with mental illness; the current need for institutionalization for at least 50 percent of the residents results from mental diseases; is licensed and/or accredited as a psychiatric facility; and operates under the jurisdiction of a State mental health authority. The manual further specifies guidelines in the event of ambiguity about a particular facility—for example, whether a general hospital psychiatric ward is considered a component of the hospital or an independent institution (USDHHS 1994). Back 5 Over the years, there has been considerable debate about what other facilities fit the IMD definition. For example, some of that debate has focused on whether nursing homes can be designated as IMDs. According to a 1995 Supreme Court ruling, they can be if they meet the criteria (USDHHS 1992). The IMD exclusion has led to the growth of non-IMD facilities such as psychiatric facilities with 16 or fewer beds and psychiatric hospitals that have become affiliated with a general hospital to bypass the 50 percent rule, and to the shifting of persons with mental illness into non-IMD nursing homes (Administration for Children and Families 1999; OIG 2000). Back 6 The court ruled on the case in June 1999. It held that "in appropriate circumstances, the ADA [Americans with Disabilities Act] requires the placement of persons with disabilities in a community-integrated setting whenever possible" (White House 2002). Back 7 Appendix A presents a list of the expert panel members. Back 8 The characteristics considered in selecting States for inclusion in the case studies were (1) geographic location; (2) population size; (3) number of State psychiatric hospitals; (4) existence of county psychiatric hospitals; (5) IMD participation in the DSH program; (6) IMD optional services for the population under age 21 and/or the population age 65 and over; (7) Medicaid waivers with provisions for IMDs such as IMD expenditure authority; and (8) inclusion of public psychiatric hospitals in Medicaid managed care organizations' provider networks. Back 9 CMS regional office staff who participated in interviews were those who work directly with the five case study States. Back 10 Whether services received by IMD residents outside the IMD are Medicaid-reimbursable has been the subject of considerable discussion between the States and the Federal government. The Federal Government recently conducted a series of audits through the Office of the Inspector General in which it found States improperly claiming Medicaid reimbursement for adult and child IMD residents temporarily released to receive care in acute care hospitals (OIG 1995, 2001a, 2001b, 2001c); however, some States have resisted such an interpretation. Back 11 Members of the expert panel confirmed that if inpatient hospital services are included in the State's capitation payment to BHOs, then these organizations could potentially purchase services from public facilities such as State and county psychiatric hospitals. Back 12 According to the U.S. General Accounting Office (1998), "[H]ospitals must receive DSH payments if their Medicaid utilization rate is at least one standard deviation greater than the average for hospitals participating in Medicaid or if their low-income utilization exceeds 25 percent…[and] [s]tates may designate other hospitals to receive DSH funding if the hospital's Medicaid utilization rate is at least 1 percent of its total bed days." Back 13 The Federal Government consistently has used the term "IMD" in relation to DSH program participation; however, evidence indicates that the "IMDs" participating in the DSH appear to be only psychiatric hospitals under State, county, and/or private ownership (CMS Medicaid DSH Files 1998–2000; Coughlin, Ku, and Kim 2000). Back 14 The Federal match applies to qualified State Medicaid expenditures, with the current matching rates ranging from 50 percent for the "richest" States up to 76 percent for the "poorest" States (Federal Register 2000a). Back 15 Coughlin et al. (2000) attempt to estimate where DSH funds end up by using State surveys on revenue and expenditures for their DSH programs overall. Across the 40 responding States, the researchers found that the total gain to States and hospitals through the DSH program was $8 billion, $2 billon of which went to State hospitals, $1.2 billion of which States retained in residual funds, and the remainder of which went to non-State hospitals. However, the estimates aggregate both psychiatric and acute care hospitals and cannot distinguish whether the $2 billion to State hospitals funded services or was offset by lower appropriations from the State budget. Back 16 "High-DSH" States were those whose DSH payments exceeded 12 percent or more of their total Medicaid expenditures; "low-DSH" States were those with less than 12 percent (Coughlin and Liska 1997). Back 17 The 15 States, according to Table II.4, are Alaska, Delaware, Florida, Kansas, Maine, Maryland, Michigan, Missouri, New Jersey, North Carolina, North Dakota, Oregon, Pennsylvania, South Dakota, and Washington. Back 18 The use of enhanced payment programs for public psychiatric hospitals was also explored. Although some of the States have used upper payment limit arrangements for general hospitals and/or nursing homes, none were found to be using these arrangements for their public psychiatric hospitals. Back 19 Appendix C contains profiles of the public psychiatric hospitals in the case study States, including the role played within the public mental health system, the hospital admission process, operational changes in recent years, and expected changes at the time of the site visits. Back 20 Services for children admitted through the criminal justice system are not reimbursed through Medicaid. Back 21 The State is responsible when the patient cannot establish "legal settlement" in a county. Legal settlement is established when a resident has lived in a county for 12 or more months. Back 22 Only one of the county psychiatric hospitals accepts forensic patients. Back 23 Every county receives "realignment funds" from the State sales tax and vehicle license fee. It uses the funds to lease beds from the State psychiatric hospitals on an annual basis per expected need. If one of the county's beds is not needed, the county may sublease it to another county. Back 24 The hospital is legally obligated to bill all patients, but few patients actually pay. The hospital does not use a collection agency, but the billing department performs a State income tax intercept in cases where the patient clearly has the ability to pay. Back 25 The State also has six privately owned PHFs. Back 26 The amount of DSH funding public psychiatric hospitals receive also reflects, to some degree, the length of time the facilities have been participating in their State's DSH program. For example, public psychiatric hospitals in New Jersey have participated in the State's DSH program for many years. Back 27 This compares to an earlier estimate of 10 percent based on 1990 data (Manderscheid et al. 2001) Note: The 1990 estimate is from the same source as the 1994 estimate. Back 28 Although the $7.4 billion estimate pertains to State psychiatric hospitals only, it is assumed that because so few county psychiatric hospitals exist, as noted earlier in this report, it provides a reasonable base on which to develop the national estimate of Medicaid funding for public psychiatric hospitals overall—State and county facilities. Back 29 These totals are derived from Table II.3, which is based on various data, including CMS Medicaid DSH files and reflect combined Federal and State DSH payments. Appendix D details data sources and limitations. Back 30 California has selected optional IMD services for both the under-21 population and the 65 and older population. Back 31 Fresno County Human Services System Web site: http://www.fresnohumanservices.org/AdultServices/PsychiatricHealthFacility/TargetPopulation.htm. Accessed November 17, 2002. Back 32 County residency is established by residing in the county for at least 5 years. Back 33 According to respondents, the per diem rate is currently higher than the Medicaid rate of reimbursement. Back 34 The screening centers are always located in a general hospital. Back 35 Acute is defined as requiring 30 days of treatment or less. Back |
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