A pair of senators have proposed legislation that would enable states to draw Medicaid funding for foster youth living in certain residential treatment programs, a rare exception to the rules barring Medicaid funding for institutional care.
The bill, introduced this week by Sens. Dianne Feinstein (D-Calif.) and Richard Burr (R-N.C.), is sure to spark a sharp discussion on Capitol Hill as most states prepare for the Family First Prevention Services Act’s limits on congregate care funding to take effect. Here’s a basic explanation of what’s happening.
Since 1965, the government has prohibited the use of Medicaid funds for institutions for mental disease, or IMD, a policy put in place to promote community-based mental health interventions and to prevent states from warehousing people with mental illness in locked facilities with federal dollars footing much of the bill.
There are several exceptions to the IMD exclusion, the largest being to allow for senior facilities that care for people over 65. Other exceptions to the Medicaid ban include psychiatric facilities and hospital wings that serve youth and young adults up to age 21 with serious mental illnesses.
Historically, very few congregate care settings that serve foster youth fit that description: most are group homes, or residential treatment centers. But for decades, many states have figured out ways to bill Medicaid for services to support youth in these settings, even though it might not have been permissible for the programs with more than 16 beds. Youth Services Insider wrote a long piece about this a few years back, which you can read here.
Enter the Family First Act, which became law in 2018, and caps federal support for congregate care placements in foster care to just two weeks. Most states took a two-year delay offered on those limits, and the delay ends on September 30.
But there are some exceptions to the limits in Family First, and one of them is for foster youth who a judge agrees is in need of continued residential care due to health needs. To deliver such services, a congregate care program needs to become licensed and accredited as a qualified residential treatment program (QRTP), a new designation that was established by Family First.
But QRTPs are not an exception to the Medicaid ban in institutions, which means states would be on the hook to pay for the mental health care of those youth with their own money or other federal resources, of which there are few.
Kentucky raised this question with the U.S. Centers for Medicare and Medicaid Services (CMS) in 2019: Can we bill Medicaid for services for youth at a QRTP? The answer came back swiftly: No, and there were no plans to amend the rules around Medicaid and institutions.
More recently, in the summer of 2020, California sent a letter to CMS, making the case that its residential therapeutic programs — the providers most likely to become QRTP — are not institutions of mental disease. The answer again was swift from the feds: We cannot provide a “blanket assurance” that your programs are not IMDs. So under two administrations, the Medicaid policy office of the executive branch has made clear that it would not be wading into this fight, leaving Congress as the only option.
Into this breach step Sens. Feinstein and Burr, offering a bill with a name that belies the controversy within: the Ensuring Medicaid Continuity for Children in Foster Care Act of 2021. While the bill text has yet to post on the congressional website, a press release from Burr describes the central change: it would “provide a narrow exemption from the IMD exclusion to ensure children in foster care receiving care in QRTPs can continue to receive care provided in these settings without losing their federal Medicaid coverage.”
The co-sponsors received a letter in late July signed by 500 organizations, many of which provide residential care to foster youth. Other signatories included the Alliance for Strong Families and Communities and Council on Accreditation, which recently merged; the National Association for Children’s Behavioral Health; the National Indian Child Welfare Association; and the National Network for Youth.
The letter, which was spearheaded by the Association of Children’s Residential Centers, argues that without an exception, some states are facing a fiscal cliff “so devastatingly steep that we are seeing states prolonging” implementation of the Family First Act. The fiscal strain would not hit the child welfare agency directly; by removing the Medicaid eligibility of the child, it is the health services agencies at the state or county level that could now foot the entire bill.
“With the loss of federal Medicaid, the payment for outpatient psychiatry, well-child visits, ER visits, dental care, all falls to the state if a child is placed in a program that is designated as an IMD,” said Lisette Burton, chief policy and practice advisor for the Association of Children’s Residential Centers, in an email to Youth Services Insider.
The result, authors of the letter argue, could be the use of less therapeutic group settings and youth who will “bounce from placement to placement.”
But there is also stiff opposition to expanding the use of Medicaid dollars inside for group settings in foster care, particularly among those organizations and advocates who wish to see congregate care eliminated entirely or pared down in favor of family preservation and therapeutic foster homes. The Family First Act also includes new federal funding for states to deliver community-based mental health services to children, their parents, or both.
In May, William Bell — CEO of Casey Family Programs, one of the most influential philanthropic entities focused on child welfare — sharply criticized the idea of expanding the IMD exceptions in written testimony before the House Committee on Ways and Means.
“Please stand firm against any proposed modifications to the Institutions for Mental Disease (IMD) rule or delays in implementing the qualified residential treatment program (QRTP) Standards,” Bell said. “Investing in proven prevention strategies makes considerably more sense than allowing for the ongoing use of these facilities as placement settings.”