[T]he federal government is loosening restrictions on funding for inpatient psychiatric treatment, and that could have big implications for Vermont’s overburdened mental health system.
The Centers for Medicare & Medicaid Services announced this week that states will be able to seek waivers to use federal Medicaid money for inpatient treatment of “serious mental illness.”
Vermont already does that – to the tune of more than $20 million per year – but it’s happening via a special arrangement that’s set to expire soon. So the new federal announcement could be a major development both for Vermont’s existing mental health beds and for the state’s plans to expand treatment capacity.
But there are caveats, and state Human Services Secretary Al Gobeille said Thursday that state officials have just begun asking questions about the new federal funding possibilities.
“This gives us flexibility that we really need, if it works,” Gobeille said. “I’m concerned about the details.”
At issue is federal funding for what are called “institutions for mental disease.” That term, from federal law, refers to standalone psychiatric hospitals with more than 16 inpatient beds.
There is a long-standing prohibition against federal Medicaid money going to such facilities. Vermont has gotten around that restriction via a special waiver, but that waiver is scheduled to be phased out between 2021 and 2025.
Currently, the waiver is worth about $23 million a year.
That’s why the pending expiration of the so-called “IMD waiver” is the elephant in the room during every discussion of Vermont’s psychiatric treatment capacity. The state’s mental health system already is straining to care for an increasing number of patients, and losing the Medicaid waiver would jeopardize existing inpatient beds at the Brattleboro Retreat and at Vermont Psychiatric Care Hospital in Berlin.
State officials are finalizing a plan for how to deal with the loss of the waiver.
So the U.S. government’s announcement this week that there might be a new, federally approved way to access Medicaid funding while getting around the “IMD” problem could be good news for states like Vermont.
The federal government says it is offering a “new opportunity for states to receive authority to pay for short-term residential treatment services in an institution for mental disease.” States have to apply for that opportunity via a waiver process, and as part of that process, they also must promise to beef up psychiatric care that’s not provided in inpatient settings.
“We will strongly emphasize that inpatient treatment is just one part of what needs to be a complete continuum of care, and participating states will be expected to take action to improve community based mental health care,” U.S. Health and Human Services Secretary Alex Azar said in announcing the new waiver plan.
“There are effective methods for treating the seriously mentally ill in the outpatient setting, which have a strong track record of success and which this administration supports,” Azar said. “We can support both inpatient and outpatient investments at the same time. Both tools are necessary, and both are too hard to access today.”
The news has received some applause on the national level, given the need for more mental health care and Medicaid’s big role in funding that care. CMS says Medicaid “is the single largest payer of behavioral health services” and estimates that “more than a quarter of adults with a serious mental illness rely on Medicaid.”
At the same time, only 65 percent of U.S. adults with serious mental illness received mental health care in 2016, federal officials say. “More treatment options for serious mental illness are needed, and that includes more inpatient and residential options,” Azar said.
But at this point, Vermont officials’ reaction to the federal announcement is tempered by unanswered questions.
For one thing, Gobeille said the state is in a “unique position” because of its current – albeit expiring – permission to use tens of millions of dollars in federal Medicaid funding for inpatient psychiatric treatment. Gobeille said the state will “definitely enter into discussions immediately with CMS” to try to figure out the details of how the current waiver and the new waiver might fit together.
“I’m not sure how (the federal announcement) will impact Vermont yet,” Gobeille said. “I’m hopeful that this will give us some breathing room and some flexibility, but I won’t know until we begin to talk to them more about our waiver that we currently have vs. what we could do in the future.”
Also, Gobeille underscored the fact that the federal government’s new funding offer comes with conditions.
For example, CMS says it won’t approve a Medicaid waiver for inpatient psychiatric treatment unless a state can show that the initiative will be “budget neutral to the federal government.” That could require some complicated math, and some potential cost-shifting or cost-cutting, in order for a state to qualify.
Also, the new federal money is meant only for “short-term” psychiatric patients with a 30-day average inpatient stay. That’s a change from Vermont’s current Medicaid waiver, which doesn’t have any limitations on a patient’s time in treatment.
Additionally, federal officials say they won’t pay for the psychiatric care of “inmates who are involuntarily residing in the facility by operation of criminal law.” Some of those so-called “forensic” patients are lodged at Vermont Psychiatric Care Hospital, and they are not excluded from the state’s current Medicaid waiver.
Given all of those issues, state officials aren’t the only ones taking a wait-and-see approach to the possibility of new federal funding for psychiatric treatment.
“We welcome the loosening of federal IMD rules so that more Vermonters can have access to quality inpatient psychiatric and addiction care,” a Brattleboro Retreat spokesperson said Thursday. “We will be reviewing the specifics of this announcement and consulting with our state partners to understand how this may impact the work we do and the patients we serve.”
