Mental Health Patients Gain Treatment Access Under New Medicaid Rule

Published May 18, 2017

Patients on Medicaid managed care plans will soon become eligible for up to 15 days of inpatient hospital mental health care per month when a new rule by the Centers for Medicare and Medicaid Services (CMS) takes effect on July 1.

Medicaid patients aged 21 to 64 have been ineligible to receive inpatient care at institutions for mental diseases, residential treatment facilities with 16 or more psychiatric beds, since before state Medicaid programs began using managed care organizations (MCOs) in the 1970s.

Thirty-nine states pay MCOs fixed amounts per Medicaid enrollee for comprehensive Medicaid health care services. In 28 states, at least 75 percent of Medicaid enrollees receive services from MCOs, according to a Kaiser Family Foundation report published on April 24.

‘A Good Start’

Dr. Kathy Platoni, a clinical psychologist and retired U.S. Army colonel in Centerville, Ohio, specializes in treating post-traumatic stress disorder. Platoni says the Medicaid rule change will help truly needy patients obtain necessary care.

“My disabled patients on Medicaid are too often the last to have access to medically and psychologically necessary treatment,” Platoni said. “This appears to be one of the most viable solutions available and one that I’m thrilled to know is on its way.”

Despite the rule change, enrollees will continue to struggle to find health care providers willing to accept Medicaid patients, Platoni says.

“No doubt this will be fraught with problems in terms of access to care and payment of providers, as has always been the case with government-sponsored mental health initiatives,” Platoni said. “But it’s a good start that needs to be managed by those who really care about the welfare of the segment of the population in receipt of Medicaid services.”

Acute Need

Dr. Robert Emmons, a private-practice psychiatrist in Vermont, says untreated mental illness can cause patients financial hardship.

“There is a vulnerable population with limited financial means,” Emmons said. “On top of that, severe chronic mental illness … tends to take away the ability to work, pushing the ill individuals into lower socioeconomic circumstances.”

Platoni says whether the CMS rule improves patient outcomes will hinge on the quality of the treatment they can get.

“I hope this is at least a start toward providing mental health treatment that is not only much more comprehensive but that doesn’t try to medicate psychological and psychiatric treatment away.”

Supply and Demand

Low reimbursement rates deter hospitals from expanding treatment of mental health patients on Medicaid, Emmons says.

“Medicaid does not pay fair market value,” Emmons said. “Underpayment for psychiatric inpatient treatment means the hospital will allocate fewer beds for psychiatry, which means people not on Medicaid may not get psychiatric admission when they need it.”

Unless reformed, Medicaid’s structure and fee schedule could cause a shortage of mental health care providers, Emmons says.

“Underpayment for psychiatric inpatient treatment means hospitals will pay psychiatrists less than their real market value, which means fewer medical students want to go into psychiatry, which means a shortage in the supply of psychiatrists,” Emmons said.  

Sound Minds

Helping patients exit the Medicaid system will help prevent provider shortages, Emmons says.

“The fewer people we have on Medicaid, the closer payment for medical care will be to fair market value, which means a better match between supply of doctors and demand for care,” Emmons said.

Government can help mental health care patients by stepping aside, Emmons says.

“The best thing to do in public policy is to take the focus off the third-party payment and empower individuals,” Emmons said. “Individuals need better-paying jobs, they need lower taxes, and they need the ability to purchase affordable private health insurance.”

Mental health patients can evaluate whether a treatment or provider is worth their money, Emmons says.

“My patients are very fine medical consumers,” Emmons said. “They know what’s going on with their health … and they’re very good at deciding what kind of treatment they need and how much it’s worth.”

Emma Vinton ([email protected]) writes from Troy, Michigan.

Internet Info:

“Mental Health Awareness Month,” The Heartland Institute:

Matthew Glans, “Government Regulations and the Mental Health Shortage,” Research & Commentary, The Heartland Institute, August 24, 2016:–commentary-government-regulations-and-the-mental-health-shortage

Justin Haskins, “Government Regulations Reduce Access to Mental Health Services,” Consumer Power Report, The Heartland Institute, March 9, 2016:

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