Trump Budget Proposes Medicaid Exception for Some Residential Care Programs

President Trump’s fiscal 2021 budget asks Congress to allow Medicaid dollars to be spent on a newly created class of residential foster care, a move that it expects to open up half a billion dollars for mental health treatment over the next decade.

The Department of Health and Human Services (HHS) portion of the budget would exempt accredited qualified residential treatment providers (QRTP) from the rule that bans Medicaid funds for institutions for mental diseases, commonly referred to as the “IMD exclusion.” The QRTP designation was established as part of the Family First Prevention Services Act, which among other things limits the amount of federal funds to support group homes and other residential programs.

The shift “would remove the biggest barrier for states that have been waiting for financing clarity before reforming their congregate care systems, and allow providers to invest in a new paradigm with some confidence,” said Pat Johnston, director of national policy for the National Association for Children’s Behavioral Health.

This is a fairly complicated corner of the child welfare funding world, and Youth Services Insider did its best over the summer to break it all down – you can click here for that long read. Here’s an attempt at a shorter explanation.

The Family First Act amended Title IV-E, the big federal child welfare entitlement program, in two ways. It opened up IV-E for spending on efforts to prevent the use of foster care in some child welfare cases, and it also limited federal funds for group homes and other congregate care placements to two weeks. So if a system wants to keep a child in congregate care for a long time, that is its right, but it will do so without federal IV-E dollars.

There were some exceptions to the time limits for niche residential care models, one of which is the newly created QRTP. These are accredited providers that employ a nursing staff, use a trauma-informed model and plan for several months of after-care in the home of the child.

But QRTP status only enabled a longer period of time for a provider to be paid through IV-E, and that money pays only for the actual housing of a child. The actual treatment and services rendered are paid for separately – and over the summer, CMS said it would consider the new QRTPs to be institutions of mental disease – meaning Medicaid would not be a payer.

The administration proposes a “legislative fix” to “make QRTPs exempt from the IMD payment exclusion allowing children in IV-E foster care … to have Medicaid coverage in these placements.” It estimates this would increase Medicaid spending by $500 million over 10 years.

It will be interesting to see if this request prompts some public discussion, perhaps a hearing, on the role of Medicaid in child welfare services. Advocates for this rule change argue that an overreliance on institutions, the original purpose of the IMD exclusion, is not nearly the problem it once was in America. But problems with institutionalization continue – the Bazelon Center for Mental Health Law is currently suing the District of Columbia for its alleged failure to provide community-based mental health options, and for most of the early millennium, California was embroiled in a lawsuit centered on the state’s overuse of psychiatric facilities to treat youth who were in or at risk of entering foster care.

If Congress approves Trump’s request on this, QRTPs would be included as an exception to the rule alongside a few other locations: psychiatric hospitals, psychiatric wings at regular hospitals, and Psychiatric Residential Treatment Facilities (PRTF), a clinical model with much more stringent criteria than a QRTP.

The inclusion of this proposal in the budget means that at least on paper, it has the support of leadership at the Centers for Medicare and Medicaid and the Administration for Children and Families, both divisions of HHS.

“It’s very encouraging to see support from both CMS and ACF for the change, and executing it would resolve the largest conflict between Medicaid and IV-E,” Johnston said.

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New York wants to use a fund for #FamilyFirst Act prep to prevent youth from aging out of #fostercare, but some counties say the money is already spent or earmarked https://bit.ly/3fU39MW #childwelfare