National Alliance on Mental Illness
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The Medicare Partial Hospitalization Benefit
Why Medicare Partial Hospitalization Is Important?
Five million Medicare beneficiaries have mental disorders other than mental retardation and 1.3 million of them are under the age of 65 and receiving Social Security Disability Insurance (SSDI). In 1990, Medicare spent $1 billion for 240,000 psychiatric hospital admissions. In 1992 Medicare spent $661.3 million for 831,240 persons under the Medicare Part B outpatient mental health services. Between 1993 and 1997 Medicare spending for partial hospitalization services for mental health jumped from $60 million to $369 million.
Medicare contains one of the most discriminatory benefits for mental illness in the nation. There is no coverage for medication. Outpatient mental health services carry a 50-percent copay, while all other outpatient benefits carry a 20-percent copay. There is a 190-day lifetime limit on inpatient psychiatric hospital treatment. A number of important services for persons with severe mental illnesses are not covered under Medicare, such as psychiatric rehabilitation, case management, and programs for assertive community treatment. Partial hospitalization is frequently used because of the inadequacy of the Medicare mental health benefit, which creates pressure to approve services outside allowable parameters.
The Medicare Partial Hospitalization Benefit, Its Regulations and Its Flaws
In the late 1980s Congress authorized a hospital-based partial hospitalization benefit as an alternative to hospitalization. In 1990 Congress expanded the partial hospitalization benefit to allow community mental health centers (CMHCs) to deliver this benefit. The law required such CMHCs to "meet applicable licensing or certification requirements for CMHCs." Unfortunately, over half of our states do not have such licensing or certification requirements. Many storefront operations calling themselves CMHCs were given Medicare-provider status and began billing for partial hospitalization services. These are not the traditional CMHCs recognized by the state mental health authorities and the federal Community Mental Health Services Block Grant.
Medicare rules require that partial hospitalization services are services "reasonably expected to improve or maintain the individualís condition and functional level and to prevent relapse or hospitalization." Partial hospitalization services are intended to be an alternative to inpatient psychiatric care; a physician must certify that in the absence of partial hospitalization services the patient would require inpatient care.
Medicare rules require "active treatment," generally meaning that patients have an acute psychiatric disorder or are experiencing an exacerbation of a severe and persistent mental illness and that services must be targeted to meet the goals of alleviating impairments and maintaining or improving functioning to prevent relapse or hospitalization.
In late 1997 Medicareís Carrier Medical Director Working Group on Partial Hospitalization issued a model reimbursement policy that fiscal intermediaries have the option of following. The model emphasized active treatment of an acute psychiatric condition in place of inpatient hospitalization. The model required a physical examination by a physician within 24 hours of admission and also required the intensity of services to equal at least three hours a day, four days a week. When the need for inpatient admission ceases, use of the partial program should cease.
In early October a subcommittee of the House Commerce Committee conducted a hearing on "fraud and abuse" in the partial hospital program. HCFA auditors had the week before terminated 80 so-called CMHCs in nine states from the program because they failed to provide active treatmentówhat the HCFA administrator and the press termed "warehousing, playing bingo, watching TV."
The Provider Players
In general there are four kinds of providers participating in the Medicare partial hospitalization program:
NAMI works with both NAPHS and NCCBH and occasionally attends meetings with AABH. Each of these provider groups has its own recommended solution to the problems of the partial programs.
In many ways, none of the three groups want to alter its current operations. Each wants to maximize its Medicare revenue while serving persons with mental illness in the program model currently offers. Defense of their current program models is a predominant goal of these groups. All want to immediately terminate the storefront operations calling themselves CMHCs. Some states and providers have supported expansion of these programs, preferring 100-percent Medicare reimbursement at higher rates than either a Medicaid or state general revenue rate.
What Does NAMI Want?
For more information about NAMIís activities on this issue, please call Clarke Ross at 703/312-7894. All media representatives, please call NAMIís communications staff at 703/ 516-7963.