Medicaid Covered Rehabilitative Services Related to Child Welfare
What are rehabilitative services?
As defined in federal regulation (42 CFR 440.130), rehabilitative services include any medical or remedial services recommended by a physician or other licensed practitioner of the healing arts, within the scope of his practice under State law, for maximum reduction of physical or mental disability and restoration of a recipient to this best possible functional level.
How could the 2006 Congressional reconciliation bill affect the use of rehabilitative services for children in child welfare?
In an effort to reduce overall federal spending for Medicaid, Congress is considering an option to restrict the use of Medicaid to provide rehabilitative services for children in child welfare. HHS is also already scrutinizing many states spending through audits that focus on Medicaid expenditures for rehabilitative services.
Do all states include rehabilitative services in their array of covered Medicaid services?
No. Coverage for rehabilitative services is a state option.
For those states that do cover rehabilitative services, is the program the same from state to state?
No. Each state designs its program within the parameters set by its state plan. Each state defines its conditions of participation, conditions of eligibility, and the scope of service.
The provision of rehabilitative services is generally discussed in the context of services for children in the custody of the state in foster care. Most conversations about foster care funding focus on federal Title IV-E. Is there a relationship between Title IV-E and Medicaid covered rehabilitative services?
For many states, Title IV-E and Medicaid are each significant federal funding sources for the care and treatment of children in the state's custody. By law, Title IV-E Foster Care and Adoption Assistance is available for the care and support of eligible children. This 'care and support' includes room, board, school supplies, supervision, and transportation. It does not include treatment of a child's medical condition or the provision of social services. Medicaid covered services are those that treat a recipient's medical condition, with 'medical' encompassing both physical and mental health conditions. It does not include meeting the child's physical needs. Simply put, Title IV-E may pay for food, clothing, and shelter, but not treatment; Medicaid may pay for treatment, but not food, clothing, and shelter. (Nursing facilities and accredited psychiatric residential treatment facilities being the exception.) Children who are victims of physical and/or sexual abuse and neglect are likely to be in foster care for safety reasons and need treatment for mental/behavioral health conditions related to their being abused or neglected.
Some states claim Medicaid reimbursement for both Targeted Case Management and rehabilitative services. Are these companion programs? Are they the same program?
No, to both questions. Each program is discrete. States may have either or both programs. Targeted Case Management (TCM) is defined as assisting eligible recipients access needed medical, social, educational, or other services, while rehabilitative services is the provision of medical or remedial services to reduce a physical or mental disability and restore the individual to the best possible functional level.
What stake do private providers have in the apparent tightening of Medicaid rules related to the provision of rehabilitative services?
Few public child welfare agencies are in the business of directly providing behavioral/mental health treatment services. Instead they contract with private child-caring, child-serving agencies for the provision of those services. In those states where rehabilitative services for the child welfare population are Medicaid covered services, the provider is compensated for providing those services either by (a) direct billing Medicaid or (b) having the compensation included in the per diem the public agency pays on behalf of the child. In either scenario, the Medicaid compensation constitutes a significant portion of the provider's revenue related to the provision of treatment services. Any tightening of the rules about allowable services or the rates attached to those services would likely reduce the amount of compensation.
There has been some activity by the federal agency that administers Medicaid (the Centers for Medicaid and Medicare Services within the U.S. Department of Health and Human Services) that suggests they are not comfortable with bundled rates. What are bundled rates?
A bundled rate is one which includes a single reimbursement rate for an array of services. For example, a program structured around milieu treatment would likely include individual and group counseling, individual therapy, life skills development, treatment planning and support, and psychological evaluation or assessment. Rather than bill for each particular service at a unique rate, a single rate is created based on the accumulated costs for all the included services, thus it "bundles" all those services into one package. The unit in a bundled rate is a day of service versus each discrete instance of any single service.
Why the unease with bundled rates?
It is incumbent upon state and federal Medicaid programs to ensure payments are for services that are being provided in accordance with a state's plan. It is more difficult to monitor compliance with the delivery of a service package than it is to verify the provision of a discrete service on a particular date.
Why is the bundled rate approach prevalent in programs serving emotionally disturbed children?
Children whose treatment needs are so great that they require more than out-patient care are frequently placed in residential or group care programs. It is common for these programs to operate in a therapeutic milieu where the whole of activities and interactions are therapeutic, rather than relying on discrete instances of service. It is when this is the prevalent type of program providing Medicaid covered rehabilitative services that a bundled rate is most commonly employed.
Does the rate structure have to be approved by the state and/or federal Medicaid agency?
State plans (and relevant amendments) include a description of the methodology upon which the payment rate for any covered Medicaid service will be based. State plans and amendments are subject to approval or denial by the federal Medicaid agency through the applicable regional office.
What would be the fiscal impact if the ability to claim Medicaid reimbursement for rehabilitative services is diminished?
A reduction in the amount of federal support for the treatment of children would cause states to have to make a choice between continuing treatment at the same level at a greater cost in state/local dollars; decreasing the amount of treatment children receive; decreasing the number of children receiving treatment; decreasing the per diem reimbursement paid to the providers; or some combination of all of the above. The majority of providers already supplement their local/state/federal reimbursements which fall short of actual costs. A reduction in federal support for treatment would mean providers would have to choose between altering/reducing their programs; tapping deeper into their donor base (which raises the issue of whether a state is obligated to pay for the care of children in its custody); or both.
For further information, please contact John Sciamanna, 703/412-3161, or Tim Briceland Betts, 703/412-2407.
Child Welfare League of America
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