Slaughtering cash cows: Why are Medicaid profits not honored? | Behavioral Healthcare Executive Skip to content Skip to navigation

Slaughtering cash cows: Why are Medicaid profits not honored?

August 31, 2009
by Terry L. Stawar, Ed.D.
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Like most CMHCs, Medicaid is currently our primary funding source. Under the current reimbursement rate system (for our center) some Medicaid services are profitable (partial hospitalization and case management), others are break even (outpatient therapy), and some constitute a significant fiscal loss (psychiatric services). 

We recycle all of our profits from serving Medicaid clients back in to the system to help pay for the Medicaid services that are financial losers and to help serve the uninsured.

This fund-shifting is for some reason seen as something suspicious and to be eliminated. Under the banner of “Medicaid funds only for Medicaid patients” our state and federal authorities seem determined to minimize these profits, so that there is nothing or little to recycle and support charity care in the future.

In our state charity care ratios for CMCHs average about 18 percent or revenue and our center has had rates averaging over 30 percent for the past decade.

All of our state funds are tied up in paying Medicaid match or supplementing inadequate Medicaid rates or paying for services to Medicaid clients that are not covered (residential, vocational, etc.).

My only two points are:
  1. If Medicaid wants to reduce fund shifting, they need to pay rates that are remotely realistic in regard to the current market, for ALL services.
  2. Why should the state or feds care what we do with the profits we fairly earn? Do they ask private doctors what they do with their profits? And if they happened to use them to subsided uninsured patients, why would that be so inappropriate? Twenty-five percent of the uninsured have a behavioral health issue, why shouldn’t we use the money we earned to support their care?


Medicaid cares because the for-profit nursing home owners are billing out the wazzo. They don't get monitored like BH because the for-profit pay millions to their PAC's. So, they pick on the BH services...

Terry Stawar

President/CEO (LifeSpring, Inc.)

Terry Stawar


Terry L. Stawar, EdD, is President and CEO of LifeSpring Health Systems, a community behavioral...

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