Executive Summary: Use our model letter (attached) to contact congressional offices by fax and letter to oppose elimination of Medicaid funding for case management and rehabilitation services and to urge your Representative and Senators to preserve funding for mental health services as Medicaid cuts are defined in budget reconciliation legislation.

On August 5, 2005, Health and Human Services (HHS) Secretary Michael Leavitt sent congressional leaders proposed legislation that would achieve substantial cuts in the Medicaid program. This proposed legislation is intended to guide Congress as it crafts legislation to achieve $10 billion in Medicaid cuts as part of the budget reconciliation process that must be completed this fall.

Restrictions on Funding for Medicaid Case Management Services

The proposed legislation would affect how case management services are funded under both the targeted case management (TCM) and rehabilitation options in Medicaid. A number of restrictions would be imposed, essentially eliminating Medicaid funding of case management services:

Services must achieve “specific, measurable outcomes for specific individuals.” This provision appears to require providers to document measured outcomes for specific individuals in order to bill Medicaid for case management services. At minimum, this requirement will result in serious service disruptions for consumers currently using case management services, since it is unlikely that states will quickly increase reimbursement rates to cover new evaluation activities.

Additional requirements for reimbursement of activities. Case management activities could not be billed to Medicaid if the activities are not billed under a fee schedule, if they are not provided “with respect to a specific individual,” or if any other state or county program provides the same type of service to non-Medicaid state residents without charge.

Reduction of reimbursement rate for services provided under a targeted case management (TCM) Medicaid state plan option. In states that receive a greater than 50 percent federal match for services, federal coverage of services funded under TCM would be reduced to 50 percent. Thirty-nine states use the TCM option to provide case management to adults with mental illnesses, and 41 use TCM for children and adolescents with serious emotional disturbance.

Restrictions on Funding for Rehabilitation Services

Reimbursement for rehabilitation services (including case management programs that are funded under the Medicaid rehabilitation option) would be subjected to many of the severe restrictions that would apply to case management. Rehabilitation services would also face additional requirements. The end result of these requirements would be the elimination of funding for rehabilitation services under Medicaid.

Funding eliminated for duplicated services. As would hold for case management programs under Medicaid, the legislation would prohibit reimbursement for any activity provided as part of a rehabilitation service that was also provided by any other government agency or program. For example, if a county jail provided medication management services to inmates, no rehabilitation provider in the state could bill for these services.

Services must be “intended…for the restoration of an individual to the best possible functional level.” This provision in the legislation would threaten reimbursement for services that maintain consumers at an improved level of functioning and would instead only provide funding for services intended to increase functioning levels.

Services must be “prescribed by a physician or other licensed practitioner of the healing arts” and be “provided by, or under the direction of” such a practitioner. Under current federal statute and regulations, rehabilitation services must only be recommended by a licensed practitioner of the healing arts in order to receive Medicaid reimbursement. Requiring a higher level of involvement by licensed practitioners would undermine the financial viability of many rehabilitation programs, since reimbursement rates are not expected to increase to accommodate the need to employ these practitioners. In addition, it is likely that the recovery-oriented culture of many rehabilitation programs would shift toward a medical model orientation in providing services.

Services must achieve “specific, measurable outcomes for specific individuals.” Documentation of measured outcomes for specific individuals would be necessary to bill for rehabilitation services.

Additional requirements for reimbursement of activities. As would hold for case management, rehabilitation activities could not be billed to Medicaid if the activities are not billed under a fee schedule, if they are not provided “with respect to a specific individual,” or if any other state or county program provides the same type of service to non-Medicaid state residents without charge.

URGENT: Take Action Now!

Attached is a model letter for your members of Congress. Send it by fax and email.