Medicaid and CMHCs

To the Editor: Community mental health centers (CMHCs) depend on revenue from Medicaid to create systems of community support for persons with acute and chronic mental illnesses. Medicaid gives this vulnerable population access to a full continuum of mental health care that may exceed the level of care available to insured, working individuals. However, the current strong U.S. economy, combined with welfare-to-work initiatives, has moved adults with both acute and chronic mental illnesses into the workforce, thereby making them ineligible for Medicaid coverage.

This phenomenon has had the unanticipated effect of reducing Medicaid funding for CMHCs without reducing the demand for services. This ironic situation can be summarized as "When the economy is bad, CMHCs that are heavily dependent on Medicaid do better, but when the economy is good, CMHCs suffer." Obviously, we don't wish for high unemployment, but the strong economy has had some negative consequences for the centers.

Several other trends are also affecting the fiscal health of CMHCs. As states have become more dependent on Medicaid, they have decreased the amount of general revenue allocated to the support of CMHCs. The downturn in Medicaid funding with no increase in state support has created a lose-lose situation for the centers.

The threat of Medicaid audits or paybacks has led centers that have accurately and ethically billed for Medicaid services in the past to implement corporate compliance plans. These plans formalize internal audit practices and develop internal-external fraud-abuse reporting mechanisms to reduce the risk of paybacks or fines from the Medicaid agency. The real fear that these agencies communicate to staff has in turn led to more careful and conservative billing. Most would agree that the overall impact is underbilling.

CMHCs are often expected to have an open door for charity care and usually do serve poor, uninsured, or underinsured individuals and families for free or on a sliding fee scale. Most CMHCs receive community funding to cover care for these individuals. Managed care companies, sometimes in concert with private providers, refer patients to CMHCs when maximum annual benefit levels are reached. The centers are then faced with even more unfunded patients, placing stress on already tight budgets. In a sense, the money the centers receive from state grants, local government, United Way, and their own fundraising efforts is being used to reinsure both Medicaid and managed care companies.

The number of insured patients with inadequate or no mental health benefits continues to increase. Employers are choosing health plans that manage or limit the number of behavioral health sessions to reduce their premium cost. In the past 11 years, according to the Hay Group (1), behavioral health expenditures as a percentage of the total health care benefit dropped 50 percent, and signifcantly more health plans have placed limits on all types of mental health care benefits.

These are policy issues that should immediately be evaluated by state mental health authorities throughout the country. CMHCs have traditionally been viewed as a safety-net system for mental health care. We need to ensure that policy makers don't assume that the safety net is intact because of the general economic good times.