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Windfall planning with stimulus package funds

May 26, 2009
by Terry L. Stawar, Ed.D.
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It looks as if some behavior healthcare organizations, that bill Medicaid under the Medicaid Rehabilitation Option (MRO) , will receive a windfall from the American Recovery and Reinvestment Act (ARRA). Stimulus package monies have been directed to the Federal Medicaid Assistance Program, that in some cases will reduce the match portion on MRO funds. States may pass this match reduction on to centers, especially those centers that pay their own match portion.

Planning to use these windfall funds will be tricky. Our center has been told that these stimulus funds must be used exclusively to expand consumer access to services or lower consumers’ cost. 

Supplies and equipment purchases maybe allowable expenses, where it can be shown that the items directly increase consumer access to treatment. It appears that buildings and electronic medical records may also be allowable, if they can be linked directly to consumer services . 

Fearing another AIG fiasco, centers in our state have also been told that funds may not be used to increase profits or give staff raises or bonuses. Centers are also required to keep a detailed, written, auditable record.

So how can these stimulus funds be best spent, knowing that they are temporary and that the financial environment will certainly be worse, than it is currently, after the windfall expires.

The main challenge seems to be to develop an infrastructure that will allow for a sustainable expansion of services. That is to invest these monies in resources that will not only expand services now, but will also generate revenue streams or cost savings that will extend in to the foreseeable future. 

These funds might be exploited by some centers in a competitive manner to expand their services into other center’s traditional markets and territories. Thus protection of market share unfortunately needs to be considered.

ARRA offers a tremendous opportunity for behavioral healthcare organizations to expand service access, increase quality, and strengthen the system’s infrastructure. Let’s not squander this chance.



Sounds like the same challenges we face with grant monies—once they're up, then what?

"Centers are also required to keep a detailed, written, auditable record." Well at least CMHCs have experience with that!

There may be more flex with this than most grants, but you still only one shot at trying for a long lasting effect

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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