States Slow to Implement Community-Care Mandate

On June 22, 1999, in Olmstead v. L.C., the U.S. Supreme Court ruled that states are required to place persons with mental disabilities in community settings when the treatment professionals deem that setting appropriate, the individual does not object, and the placement can be “reasonably accommodated.”

Now, nearly three years after that decision, what progress has been made to implement the ruling? What problems have surfaced?

Answers to those questions are particularly timely in light of President George W. Bush’s decision to create the New Freedom Commission on Mental Health to address the “problems and gaps in our current system of treatment” (see page 1). That commission is part of his New Freedom Initiative, which was his response to the Olmstead decision.

According to the Supreme Court, states can demonstrate compliance with a “comprehensive, effectively working plan for placing qualified persons with mental disabilities in less-restrictive settings and a waiting list that moved at a reasonable pace not controlled by the state’s endeavors to keep its institutions fully populated.”

The problems of compliance are exacerbated by the fact that states are undertaking implementation at a time when Medicaid and other public programs are under severe financial pressure (Psychiatric News, December 7, 2001).

In fact, www.kaisernetwork.org reported in April that Massachusetts was considering a $2 million cut in community residential programs for people with mental illness, and Mississippi was confronting severe restrictions in access to nursing home care and prescription drugs because of shortfalls in Medicaid funding.

Tony Records, consultant to the Office for Civil Rights of the Department of Health and Human Services, gave a mixed report on states’ progress at “Fulfilling the Promise of Community Living,” a conference sponsored by the Centers for Medicaid and Medicare Services (CMS) in March.

Eight states have not begun planning, but the remaining states and the District of Columbia have established task forces to address Olmstead implementation. Fifteen bills related to Olmstead were considered by state legislatures in 2001, and four bills were enacted.

On July 25, 2000, the National Association of Protection and Advocacy Systems (NAPAS) issued a report based on responses from its members and disability advocates on progress in implementing the Olmstead decision.

Its conclusion was that most states had taken preliminary steps toward plan development, but additional funding for community supports and services had been minimal and states had not sought sufficient consumer involvement. Planning was focused primarily on individuals with developmental disabilities.

In October 2001 NAPAS issued a follow-up report that found that fewer than half of the reporting states had increased the percentage of individuals moving out of institutions into the community. Other problems were lack of time frames for moving people to community settings and limited efforts to tie plan recommendations to legislative or budget requests.

An analysis of NAPAS Olmstead documents by the Bazelon Center for Mental Health Law found that planning for children is weak. Only four states out of 18 responding used a needs assessment specifically designed for children. Only half of the states responding indicated that children in residential treatment centers were specifically identified and addressed by the plan, and no states addressed the needs of the children in the juvenile justice system.

Jay Cutler, J.D., director of APA’s Division of Government Relations, told Psychiatric News, “The Olmstead decision could have represented a wake-up call to the country about the need for more money for mental health services in communities. Instead, state officials must struggle with pressures to fund antiterrorism initiatives and to balance their budgets. People with mental illness are again getting short-changed.”

On June 18, 2001, President Bush used the Olmstead decision as a basis for Executive Order 13217, in which he called on heads of federal departments to evaluate the policies, programs, statutes, and regulations of their agencies to determine whether any should be revised to increase the availability of community-based services for people with disabilities.

The lead agency, the Department of Health and Human Services, solicited public input through a notice in the Federal Register requesting comments, a national teleconference in which individuals were invited to call a toll-free number, and a day-long national listening session.

The HHS report, “Delivering on the Promise,” released on March 25, describes more than 400 ideas that agencies could implement to promote increased access to community care settings.

CMS reported that “a significant proportion” of comments from public respondents identified barriers resulting from the structure and financing of Medicaid and Medicare.

Approximately 75 percent of Medicaid’s long-term-care funding goes to pay for institutional care, with the remaining 25 percent directed toward home- and community-based services.

The “inadequacy of mental health and substance abuse services” was one of the most serious gaps identified by respondents, according to the report.

A study funded by the Center for Mental Health Services (CMHS), “Advocates for Human Potential, Overcoming Barriers to Community Integration for People With Mental Illness (2001),” found that “individuals with mental illness lack access to appropriate trauma care, new antipsychotic medications, treatment for co-occurring disorders, and services for general and mental health.”

Mental health treatment is not a category of coverage within Medicaid. Instead, according to the report, treatment is a “patchwork of Medicaid mandatory services, such as physician services, and optional services such as prescription drugs and clinic, rehabilitation, and personal care options.”

A Catch 22-like provision of the Social Security Act has the effect of limiting federal dollars available for noninstitutional care. Title 19 of the act prohibits federal payments for persons 21 to 65 years old living in an “Institution for Mental Diseases.” Therefore, few federal dollars support people with serious mental illness in state hospitals.

A state that wants to use a Medicaid waiver to provide home- or community-based care to people with serious mental illness must demonstrate that those services are budget neutral in terms of federal dollars. Since scant federal support has been directed to institutions, however, the waiver generally is denied.

A companion CMHS-funded report, “Advocates for Human Potential, Overcoming Barriers to Serving Our Children in the Community” (2001), found that for children with mental illness whose families want community-based care, “there are few places in the United States where availability and use of mental health services approach the level of need.”

In fact, another Catch 22-like provision has the effect of encouraging families to put their children in institutions. If the child lives at home, family income is counted to determine Medicaid eligibility, but it is not counted if the child is institutionalized. Therefore, if a family exceeds Medicaid income requirements, the only way to get help might be to institutionalize the child.

Other respondents to the NAPAS survey cited lack of compliance with requirements of Medicaid’s Early, Periodic, Screening, Diagnosis, and Treatment Program (EPSDT) as a concern. In 1996 only 37 percent of the 22.9 million children eligible for EPSDT received a medical screening. If such a screening uncovers mental illness, the state is required to pay for treatment.

Finally, respondents criticized the lack of parity between treatment for mental health disorders and other medical disorders in the Medicare program. Medicare pays only 50 percent of the allowable amount for mental health services, but it covers 80 percent of the allowable amount for other medical treatment.

Howard Goldman, M.D., a psychiatrist and director of Mental Health Policy Studies at the University of Maryland School of Medicine, told Psychiatric News, “The Supreme Court provided further impetus to the community mental health movement with the Olmstead decision. In the process of trying to comply, states discovered many barriers to moving people with mental illness to community settings. I hope that President Bush’s New Freedom Commission on Mental Health will address those barriers that result from federal legislation and policy.”

[Olmstead, Commissioner, George Department of Human Resources, et al. v. L.C., No. 98-536] ▪