Two members of Congress have asked Department of Health and Human Services officials to stop an activity by the department’s Office of Inspector General (OIG) that they said is cutting off federal funding for treatment of children hospitalized with severe mental illness.
Rep. Henry Waxman (D-CA) and Sen. Susan Collins (R-ME) said the OIG is auditing state Medicaid programs based on the premise that the federal government is not permitted to fund medical care of children in mental institutions.
They said the action has no basis in law, reverses decades of Medicaid program precedent, and threatens to worsen what they said is already a national crisis in access to quality mental health care for children.
According to a letter Mr. Waxman and Ms. Collins wrote to the Centers for Medicare & Medicaid Services (CMS) Administrator Mark McClellan, Virginia, New York, Texas, New Jersey, and California have been asked to repay more than $10 million spent on medical services for institutionalized children. And if the states don’t repay the money voluntarily, CMS could compel them to do so.
"Because the loss of these funds could threaten the viability of institutions that provide critical mental health services, these audits are a direct threat to the health of needy children," Mr. Waxman and Ms. Collins said. "The audits also misconstrue the letter, purpose, and history of Medicaid law."
Preserving state responsibility
The two members of Congress said the issue relates to what is known as the IMD exclusion — the exclusion of federal funding for services provided in "institutions for mental diseases."
Historically, the federal government has refused to pay for such services so as to not displace traditional state responsibility. Mr. Waxman and Ms. Collins said they don’t question that exclusion as it applies to adult patients ages 21 to 64.
Misreading of the law
They said that in 1972, Congress carved out an exception to the IMD exclusion that permits federal support for children to receive inpatient psychiatric hospital services.
"Unfortunately, the Inspector General has misread the law and regulations as permitting support only for inpatient psychiatric services,’ dropping the word hospital,’ Mr. Waxman and Ms. Collins wrote.
"What has resulted is a bizarre policy under which Medicaid would pay for psychiatric services for children in Medicaid in inpatient facilities, but not for their medical care. This policy conflicts with the structure and purpose of Medicaid, a program created to provide access to medical care for indigent children," they noted.
"While the premise of the IMD exclusion is that federal funding for psychiatric services is disfavored, Congress has never discouraged federal support for children’s medical services. It makes no sense for the federal government to deny funds for essential medical treatment for children in the Medicaid program," Mr. Waxman and Ms. Collins added.
They explained that they had reviewed relevant Medicaid program documents, department Appeals Board decisions relating to the IMD exclusion, and applicable court cases and have not found one document or opinion that supports cutting off Medicaid payments for medical treatment for children in mental institutions. "To the contrary," they said, "several of these sources do provide direct support for interpreting the statute and regulations as providing for Medicaid coverage for the medical expenses of these needy children."
The letter said the OIG’s audits rest on a flawed interpretation of the law. Mr. Waxman and Ms. Collins said the case appears to depend on one sentence in the State Medicaid Manual that says that federal matching funds only are available for "inpatient psychiatric services under age 21."
But they said such a sentence couldn’t be relied on to justify such a radical change in Medicaid. The language of the manual omits the word "hospital," they wrote, and thus is in conflict with the plain language of the statute and accompanying regulation, which have the power of law.
Audits yield absurd result’
According to the letter, the audits lead to an "absurd result: Federal funding is made available for the traditionally state-covered area of psychiatric services, but federal funding is prohibited for the traditionally Medicaid-covered area of medical services.
"As the legislative history makes clear, Congress wanted to see children with severe mental illness improve and rejoin society, not languish without support for potentially lifesaving medical treatment, with only their psychiatric problems addressed," the letter noted.
Mr. Waxman and Ms. Collins said the timing of the audits could not be worse because "the mental health care system for youth is broken, with thousands of children being warehoused in detention centers across the country.
"Withdrawing millions of dollars in federal funding for children’s mental health will increase the pressure on overburdened providers of critical mental health services. As beds close, the number of youth needlessly incarcerated to wait for community services will inexorably rise," they added.
Two members of Congress have asked Department of Health and Human Services officials to stop an activity by the departments Office of Inspector General that they said is cutting off federal funding for treatment of children hospitalized with severe mental illness.
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