IMPORTANT MESSAGES FOR STATE LEADERS | Behavioral Healthcare Executive Skip to content Skip to navigation


August 1, 2006
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Recent changes to Medicaid could have dramatic effects on children

As Medicaid reform advances on states' agendas, it is more critical than ever that the needs of children and adolescents with emotional and substance use disorders move to and remain in the forefront of policy. Advocates for children's behavioral health services have an opportunity in the coming months to help state leaders understand the impact—and potential unintended consequences—of any actions they consider as they change their programs or attempt to contain costs. In any system changing as rapidly as Medicaid, key priorities need to stay in focus. One of the most important is caring for children—particularly those with or at risk of emotional disturbances who can benefit from early, timely, and appropriate interventions.

The Deficit Reduction Act

The Deficit Reduction Act (signed into law in February) has significant implications for Medicaid, many of which are not yet clear or understood. States have been granted new power through the DRA to experiment with reforms to their Medicaid programs. While flexibility and innovation are being touted as the law's foundation, there is concern that cost alone may be the driving factor in much decision making. For each of the DRA's provisions, it will be important to help state leaders understand how their decisions affect children and adolescents with emotional and substance use disorders.

Benchmark plans

The DRA grants states the flexibility to amend their state plans to provide alternative benefit packages to beneficiaries without regard to certain traditional Medicaid requirements (such as plan comparability, statewide application, or freedom of choice). These benchmark plans are the same types of plans in the State Children's Health Insurance Program (SCHIP).

Many changes to state plans—some of them dramatically different from current plans—have been approved in record time. Kentucky, Florida, Missouri, Tennessee, Vermont, and West Virginia are among states that have changed plans or are considering changes (at press time). A Center on Budget and Policy Priorities analysis estimates that in West Virginia about three-quarters of the beneficiaries affected by the state's plan (which took effect July 1) are children.1 (Editor's note: For more on changes to Medicaid in West Virginia, see page 32.) Advocates need to help state officials understand that appropriate Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) mandates must be wrapped around all benchmark plans to ensure that children get the care they need.

Copays and deductibles

The DRA provides state Medicaid agencies with a new option to impose premiums and cost sharing upon certain Medicaid recipients, including cost sharing for nonpreferred prescription drugs and for nonemergency use of a hospital emergency department. This provision has caused concern that Medicaid recipients—particularly children—could lose access to essential services if they cannot afford new copays and premiums.

A June 16 letter to state Medicaid directors from the Centers for Medicare and Medicaid Services (CMS) clarifies that no cost sharing may be imposed on services for individuals less than age 18 who are required to receive Medicaid services under section 1902(a) (the state plan for medical assistance). The letter adds that states may not impose premiums on mandatory beneficiaries with a family income above 100% but at or below 150% of the federal poverty level (FPL), and cost sharing for these beneficiaries may not exceed 10% of the cost of the item or service. Total cost sharing for these individuals, including that for prescription drugs and nonemergency use of emergency departments, may not exceed 5% of the family income. Yet these still are financial barriers that likely will force beneficiaries out of the program or serve as deterrents to seeking care.

Proof of citizenship

The DRA requires proof of citizenship for both Medicaid eligibility and recertification (effective July 1). In the past, self-attestation of citizenship was sufficient. While CMS provided guidance as the implementation date approached, a number of key issues were left to states' discretion. Some states (such as California, North Carolina, and Ohio) delayed enforcement as they worked to advise people about who may be at risk of losing coverage. At least two lawsuits (in Washington, D.C., and Chicago) were filed, alleging that the citizenship verification requirements are unconstitutional.

In the July 12 Federal Register, CMS issued an interim final rule with a comment period scheduled to end August 11. The most important change from prior guidance was that individuals who become eligible for Medicaid through SSI and individuals who are dually eligible for Medicaid and Medicare are now exempt from citizenship documentation requirements. While this shows the impact of concerned voices, intense advocacy is needed to ensure that implementation of this provision is not a hurdle to children and adolescents with mental illnesses—particularly those within foster care—who are legitimately Medicaid eligible.

Two Important Messages

The pace and scope of the DRA changes mean that we need to urgently spread the message about the role of Medicaid in the lives of young people with emotional and substance use disorders. We can’t assume that state leaders fully understand the important role that Medicaid plays in a complex behavioral healthcare system. Medicaid now covers more than one in four children, including children who live at or below the FPL, children whose family resources have been exhausted, and children not covered by private insurance. Your help is needed to communicate the following messages to state leaders.