CMS launches demo on emergency Medicaid psychiatric care

The three-year program is designed to help inpatient psychiatric hospitals treat adult enrollees.

By Doug Trapp — Posted Aug. 19, 2011

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A demonstration program under the health system reform law will help some states reduce a decades-old gap in emergency mental health care payment for working-age Medicaid enrollees.

The Centers for Medicare and Medicaid Services on Aug. 9 announced the availability of up to $75 million in federal matching funds over three years to pay for emergency inpatient psychiatric care at private psychiatric hospitals. Medicaid never has paid these facilities for this care. In the 1960s, most states operated their own psychiatric hospitals, and Congress declined to approve federal payment for what was considered a state responsibility. Since then, however, states greatly reduced their number of inpatient psychiatric hospital beds.

"The Affordable Care Act was clear in its charge that we must continuously strengthen our commitment to mental health parity," said CMS Administrator Donald M. Berwick, MD.

The Medicaid Emergency Psychiatric Demonstration matching funds are restricted to paying for inpatient emergency psychiatric care provided to Medicaid recipients ages 21 to 64 at private psychiatric hospitals with 17 or more beds.

Medicaid psychiatric patients often end up in emergency departments at hospitals that may not have a sufficient number of inpatient psychiatric beds -- if any at all. Some of these patients wait for hours, days or even weeks to be transferred to private inpatient psychiatric facilities, said Mark Covall, president and CEO of the National Assn. of Psychiatric Health Systems, an organization of more than 700 behavioral health facilities based in Washington.

However, the Emergency Medical Treatment and Active Labor Act of 1996 requires hospitals, including certain psychiatric hospitals, to stabilize psychiatric patients. "You effectively have a smaller emergency department," said Stephen Epstein, MD, an emergency physician in Boston and spokesman for the American College of Emergency Physicians.

"One law says that you have to treat them, another law says that you have insurance but you can't use it in this particular facility," Covall said.

In contrast to Medicaid, the Mental Health Parity and Addiction Equity Act of 2008 requires most private health insurance plans that offer mental health benefits to make them equal to their physical health benefits.

Stabilizing psychiatric patients is a significant burden on hospital emergency departments even though they are eligible for Medicaid payment. For example, an average of 16% of Massachusetts hospital beds were occupied by psychiatric patients on July 11, according to a Massachusetts College of Emergency Physicians survey representing three-quarters of hospital emergency departments in the state. A third of the psychiatric patients had stayed for more than 24 hours, 6% for more than three days and 2% for more than five days. Medical directors reported similar statistics on March 21 and April 11.

"The system is getting bottlenecked more and more at that [emergency department] level," Covall said.

The burden also is difficult for freestanding psychiatric hospitals, said Steven Sharfstein, MD, president and CEO of the Sheppard Pratt Health System, the largest nonprofit health system in Maryland. In 2010, Sheppard Pratt's two freestanding psychiatric hospitals had 9,000 admissions, 1,500 of which were for adult Medicaid patients.

But Maryland -- unlike many states -- covers about 60% of the cost of these Medicaid psychiatric admissions. Overall, Sheppard Pratt had about $8 million in uncompensated care in 2010 on a budget of $120 million, Dr. Sharfstein said.

More information about the CMS demonstration grants is available online (link).

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