Medicaid pulls back on mental health for kids, teens

Virginia's Medicaid program is further tightening controls on some child and adolescent mental health services this week because of soaring payments to private providers.

Between 2006 and 2010, spending for emotionally disturbed youngsters grew by nearly 400 percent on day treatment and by more than 200 percent for short-term in-home treatment. That added up to $321.1 million for the two programs in the fiscal year ending last summer, up from $85.5 million in 2006.

The increase was due in part to a recent push to treat children at their homes and schools when possible, rather than in institutions and group homes. However, loose regulations and lax monitoring also created loopholes that some private providers exploited.

For example, the programs' low qualification requirements meant providers could hire less-expensive, less-educated staff. That made the contracts so lucrative for some that they offered cash incentives for clients to sign up. In other cases, well-meaning providers made incorrect diagnoses and ordered inappropriate treatment.

As a result, some young people received treatment for mental health problems they didn't have, while others were deprived of services they needed.

"Despite all this money that's been spent on this category of services, it's still not reaching all the kids who need it," said Margaret Nimmo Crowe, senior policy analyst for the advocacy group Voices for Virginia's Children.

The state attorney general's office has recovered more than $4.6 million in recent Medicaid fraud cases involving three companies that provided mental health services for young people.

The federal Centers for Medicare and Medicaid Services is auditing these state mental health services, and the Virginia Department of Medical Assistance Services, with direction from the General Assembly, has been working to control expenditures.

The Department of Medical Assistance Services administers the state's Medicaid program.

Community services boards, the state's local mental health agencies, were the only entities treating eligible children until the program was opened to private providers in the 2000s.

Since then, spending on Medicaid's community mental health services has doubled each year, according to budget numbers from the Virginia House of Delegates Appropriations Committee. More than two-thirds of that money was spent on two programs for children and teens - in-home services and day treatment. Most of it went to private providers.

Intensive in-home services help emotionally disturbed youngsters continue living at home or transition home from another placement. Children and their families may receive crisis treatment, help with life and communication skills and other assistance for up to six months.

Therapeutic day treatment provides education and mental health treatment for two or more hours a day to groups of students, usually in a school setting. The students receive counseling and are taught daily living skills.

The number of children in those two programs increased from about 12,500 in fiscal year 2006 to more than 41,000 in 2010, according to the Department of Medical Assistance Services. Much of that growth was in Richmond and South Hampton Roads.

Karen Lawson, former director of the department's office of behavioral health, said that level of growth was worrisome.

"Are there really that many children in the commonwealth that have that level of significant need?" said Lawson, who is now the department's director of policy and research. "If they do and they need the service, then we want to provide it to them to make sure they get it. But we also want to make sure children aren't being misdiagnosed and placed into this service just because somebody needs somewhere for them to go in the afternoon before their parents come home from work."

Qualifications for the providers were low enough that the market has been flooded with start-ups. The number of providers for the in-home program grew from 134 to 324 between 2006 and 2010. For the day treatment program, the number rose from 81 to 377.

In both programs, people with no degree beyond a high school diploma were allowed to treat the children.

That made it a windfall for less-educated providers. For example, Medicaid's intensive in-home program paid $60 an hour, compared with $46 for physician visits, Lawson said.

Some providers exploited a rule allowing them to both assess a young person's needs and then provide the treatment. Companies competed for new clients with advertisements offering $100 cash or flat-screen televisions, Lawson said. One flyer described the program as summer enrichment, not mentioning that it was for emotionally disturbed children on Medicaid.

"If you are a low-income family and you're not sure what you're going to do with your child during the summer, and you see a flyer that says that - not only do you have a nice safe place for your child to go, you get money back - what are you going to do?" Lawson said.

In some cases, well-meaning providers would provide such services to kids who needed less-intense treatment, said Les Saltzberg, director of licensing with the Virginia Department of Behavioral Health and Developmental Services. "If all you have is a hammer, everything is a nail," he said.

The number of clinicians offering outpatient mental health services for young people on Medicaid has been declining, due to low reimbursement rates and the clients' higher tendency to miss appointments, Saltzberg said. Such outpatient treatment could help some of the children with less serious problems who were being served by the more intensive in-home or day treatment programs.

In recent years, the Virginia Department of Medical Assistance Services has made several changes to rein in spending on these programs.

The department now performs more monthly audits of expenditures, staff qualifications and training. It also created stricter rules about marketing.

Prior authorization from Medicaid is required before a young person can receive services, and some reimbursement rates have been reduced.

That change hurt legitimate providers more than the others, said Crowe of the statewide advocacy group.

"It's an expensive service to provide if you're providing a high-quality service," she said. "If you're not providing a high-quality service, then you're making money off of it. A lot of money."

Last year, Medicaid started requiring at least bachelor's degrees and clinical experience for people treating children in the intensive in-home and therapeutic day treatment programs.

That's helped, Saltzberg said. But it hasn't stemmed the industry's growth: Few companies have dropped out, and more than 150 have applications pending to become providers, he said.

Starting Monday, the state's 40 local community services boards - not private providers - must perform the initial assessments to determine whether a youngster needs intensive in-home services, therapeutic day treatment or other services. In the future, the same rule will apply to other child mental health programs under Medicaid.

The General Assembly mandated the newest change last winter, hoping to save $18 million.

"The goal is not to prevent them from getting care," Saltzberg said. "The goal is to get them to the right care."

Amy Jeter, (757) 446-2730, amy.jeter@pilotonline.com