National Alliance on Mental Illness
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October 26, 2005

Senate Committee Completes Action on Medicaid Legislation; House Committee Action Set for October 27; Proposals to Curb Targeted Case Management Rejected

On October 25, the Senate Finance Committee formally reported important legislation making changes to the Medicaid program in order to achieve a net $10 billion in reductions over the next five years.   The legislation, known as “budget reconciliation” is expected to reach the full Senate as early as next week.  The House Energy & Commerce Committee will take up its version of the Medicaid “reconciliation” bill on October 27. 

Targeted Case Management and Rehabilitation Services Proposals Rejected

Of enormous concern to NAMI as part of this Medicaid legislation are proposals that would have significantly curbed the ability of states to integrate evidence-based programs such as assertive community treatment (ACT) into their Medicaid programs through the existing options of Targeted Case Management (TCM) and Rehabilitation.  Earlier this year the Bush Administration proposed changes to the definitions of both TCM and Rehabilitation under Medicaid, changes that would make it difficult for states to qualify intensive case management and ACT programs managed by public mental health agencies and CMHCs for Medicaid funding.

Both the Senate Finance Committee bill and a preliminary draft of the House Energy & Commerce bill exclude the Bush Administration’s recommendations for redefining TCM and the Rehabilitation option.  The apparent rejection of this proposal is a major victory for Medicaid recipients with mental illness.  NAMI is extremely grateful to Finance Committee member Senator Gordon Smith (R-OR) and others for their leadership in pushing to ensure that these proposals were rejected.

New Waiver Proposal to Examine Access to Acute Care and the IMD Exclusion Approved

In its deliberations, the Senate Finance Committee endorsed a proposal from Senator Olympia Snowe (R-ME) to create a new demonstration program allowing states greater flexibility to avoid current restrictions on Medicaid funding for acute inpatient psychiatric care.  This amendment would allow for waiver of the so-called Institutions for Mental Disease (IMD) exclusion for acute psychiatric care.  NAMI supports the Snowe Amendment.  This important waiver program would allow states the ability to waive the restrictions of IMD and invest Medicaid funds in acute inpatient care.  The demonstration will measure the efficacy of acute inpatient care in improving outcomes and reducing reliance on other high cost services such as emergency room care.

House Legislation Likely to Include Higher Co-Payments for Certain Medicaid Beneficiaries

The House Energy & Commerce Committee proposal is expected to include a controversial proposal developed by the National Governors Association (NGA) to allow states the ability to require most Medicaid recipients to pay higher co-payments for health care services including doctors visits and prescriptions.  This would be a state option and would include certain required exemptions for beneficiaries below 100% of the federal poverty level.

Other proposals under active consideration include:

  • Short-term fiscal relief and supplemental assistance for state Medicaid programs in the Gulf region that have been devastated by Hurricanes Katrina and Rita (through 100% federal matching funds for Louisiana, Mississippi and parts of Alabama through June 2006),
  • Language allowing states to more effectively invest in evidence-based disease management programs for the prescribing of psychiatric medications for Medicaid recipients.  NAMI supports this language that would allow states use disease management as an alternative to restrictive policies such as prior authorization and step therapy,
  • Inclusion of the Family Opportunity Act (FOA), legislation allowing states set up Medicaid buy-in programs for families of children with severe disabilities including mental illness,
  • Changes in the pricing medications for state Medicaid programs and the imposition of higher supplemental rebates on drug makers (these supplemental rebates are directly related to restrictive policies imposed by states against specific products including atypical anti-psychotic medications)
  • Limits on the ability of states to use of “Intergovernmental Transfers” of funding between cities and counties and the state in order to draw down additional federal Medicaid matching funds, and
  • Reform of current rules limiting the ability of Medicaid beneficiaries to transfer assets when entering a nursing home or long-term care facility.

NAMI will be providing additional details as progress on the Medicaid budget reconciliation measure moves forward.