National Alliance on Mental Illness
page printed from
(800) 950-NAMI;
December 19, 2005

House-Passed Budget Legislation Would Harm Medicaid Beneficiaries With Serious Mental Illness -- Bill Includes Higher Medicaid Cost Sharing -- Senate Vote Could Occur Late Tonight or Early Tomorrow

Early this morning, the House passed a $41.7 billion deficit reduction bill that includes reductions to a broad range of entitlement programs, including both Medicare and Medicaid. The vote was 212-206. The legislation, known as the "budget reconciliation" package now moves to the Senate which is expected to move on the legislation as early as tonight. The vote is expected to be very close. Because of rules governing the budget reconciliation process, the package is not subject to a filibuster (i.e., be killed through unlimited debate) and can pass with only 50 votes.

Among the Senators whose votes could turn the outcome are: Norm Coleman (Minnesota), Susan Collins (Maine), Mike DeWine (Ohio), Mary Landrieu (Louisiana), Ben Nelson (Nebraska) and Arlen Specter (Pennsylvania). NAMI advocates in these states are strongly encouraged to call these Senators and urge them to oppose S 1932. All Senate offices can be reached by calling 1-866-727-4894.

$13 Billion in Reductions for Medicare and Medicaid

The bill (S 1932) is projected to reduce spending within Medicare and Medicaid by $13 billion over the next five years. Of most concern to NAMI are changes that would allow states to impose higher cost sharing requirements on Medicaid beneficiaries -- even mandatory beneficiaries eligible for SSI (Supplemental Security Income). These changes follow provisions in the House-passed bill that were recommended by the National Governors Association (NGA). These changes are projected to reduce Medicaid spending by $1.9 billion over 5 years ($10.1 billion over 10 years).

It is important to note that these savings result largely from reduced demand for services, rather than the actual increased co-payments paid by beneficiaries. In other words, most of the budget savings that occur from higher cost sharing come as a result of beneficiaries not seeking services (or being deterred from seeking treatment) -- a major concern for NAMI in the case of "non-preferred" prescription drugs.

Read more about the increased cost sharing requirements in S 1932.

Legislation Allows States to Offer Alternative Benefit Package

The final legislation maintains portions of a provision in the House passed version of S 1932 that allows states to offer a reduced alternative Medicaid benefit package that can exclude certain mandatory and optional services that states have previously been required to provide to all eligible populations (both mandatory and optional eligibility categories).

Read more about the alternative benefit package provision.

Changes to Targeted Case Management Included in Final Bill

The final House-Senate agreement includes a provision clarifying the scope of case management services and codifying existing guidance to state Medicaid programs. This guidance relates to the distinction between direct clinical services and case management (assessment, care plan development, referral, monitoring and follow-up) and clarifies rules for third-party recovery (how states can seek payments from managed care organizations). NAMI is carefully monitoring this TCM provision to ensure that adequate guidance is provided to CMS (the federal agency that administers Medicaid) and state Medicaid programs so that additional administrative limits are not imposed on intensive case management and ACT programs.

Buyer Amendment Protecting Access to Medications Dropped from Final Legislation

The House bill contained a provision authored by Representative Steve Buyer (R-IN) that would have directed states to invest in disease management programs and evidence-based practice for prescribing of psychiatric medications. More importantly, the Buyer Amendment would have limited the ability of state Medicaid programs to impose restrictive policies such as prior authorization on anti-psychotics and anti-depressants.

NAMI strongly supported the Buyer Amendment as critical to protecting access to medications for the most vulnerable Medicaid beneficiaries with severe mental illness. States are increasingly using prior authorization requirements (mandating that specific medications cannot be prescribed or paid for without special permission) in Medicaid against psychiatric medications. These restrictive policies result in limited short-term savings, but higher long-term costs as Medicaid recipients with severe mental illness decompensate when they are unable to access the specific medication that works for them.

Despite repeated efforts by Rep. Buyer to offer compromise language, the amendment was rejected by House leaders.

Snowe Amendment on Inpatient Care Excluded

The final version of S 1932 excludes a proposal offered by Senator Olympia Snowe (R-ME) that would have created a new demonstration program allowing states greater flexibility to avoid current restrictions on Medicaid funding for acute inpatient psychiatric care. This amendment would have allowed for a waiver of the so-called Institutions for Mental Disease (IMD) exclusion for acute psychiatric care. NAMI strongly supported the Snowe Amendment. This important waiver program would have permitted 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.

Family Opportunity Act Included

The final agreement includes a provision authorizing a new program allowing states to establish Medicaid buy-in programs for families of children with severe disabilities. The program would be available to allowing these families to purchase Medicaid coverage for a child with a severe disability (including mental illness) in order to avoid having to impoverish the entire family (e.g., by quitting a job) to qualify for Medicaid. This new demonstration program would be available for families at 300% of the poverty level or below. The provision also authorizes a 10-state demonstration program for home-based care for Medicaid eligible children with psychiatric disabilities (as an alternative to institutional care). This version of the FOA is estimated to cost $872 million over the next five years.

Katrina Medicaid Relief

Both the House and Senate versions of S 1932 provided relief to states in the Gulf region still under stress from Hurricanes Katrina and Rita. The final legislation authorizes $2 billion in additional funds for impacted state Medicaid programs. These funds would be allocated both the direct impact states (Alabama, Louisiana & Mississippi), as well as states that have accepted evacuees who are Medicaid eligible. By contrast, the previous versions of S 1932 allowed for 100% Medicaid matching funds through June of 2006. This provision in the final legislation will allow states that have accepted evacuees to access these funds.