B-226561 Human Services may grant "freedom of choice" waivers and "home and community-based services" waivers, both intended to help contain Medicaid costs. According to some state officials, the process of applying for and carrying out these waivers is cumbersome. Officials of several states proposed that (1) waiver requirements be eliminated and (2) each state have the option of providing services now only permitted under a waiver. Other officials proposed altering the requirement that home and community-based services programs be cost effective and not increase per capita expenditures (see p. 15). Overall administration of the Medicaid program was addressed by Medicaid officials from 6 states and mental health officials from 14 states. The concerns included (1) lack of consistency in interpreting Medicaid laws and applying regulations, (2) problems with the process for issuing regulations and providing guidance, and (3) the lack of guidance concerning the definition of certain mental health services (see p. 19). Medicaid officials from 5 states and mental health officials from 12 states called for less stringent eligibility requirements to make it easier for the mentally ill to be designated as disabled and meet income and asset limitations. States must provide Medicaid coverage to the "categorically needy," those receiving federally administered Supplemental Security Income (with certain exceptions) or stateadministered (and federally supported) Aid to Families With Dependent Children. In addition, each state can have the option of extending Medicaid coverage to the "medically needy"--those who (1) meet all criteria for categorically needy assistance with the exception of income and (2) have incurred relatively large medical bills. Mentally ill recipients who become employed face potential loss of Medicaid benefits if their income exceeds the limitations established by the state, according to officials from five states. Other officials said that it is too difficult for the mentally ill to be certified as disabled under the Supplemental Security Income program if they are able to work, thus making them ineligible for Medicaid (see p. 22). We obtained comments on the technical accuracy of matters discussed in this report from responsible program-level officials of the Health Care Financing Administration. Their comments have been incorporated where appropriate. 3 B-226561 Copies of this report are being sent to the Subcommittee on Labor, Health and Human Services, Education, and Related Agencies, Senate Committee on Appropriations; the Secretary of Health and Human Services; the state Medicaid and mental health directors; congressional committees with oversight responsibility for the Medicaid program; and other interested parties. Sincerely yours, Mahael Immanen Michael Zimmerman Senior Associate Director 4 Contents TABLE 1 Summary of State Directors' Comments Page 9 VIEWS ON CHANGES NEEDED IN MENTAL INTRODUCTION Medicaid, authorized under title XIX of the Social Security Act, is a federally aided, state-administered medical assistance program for low-income people. Generally, those receiving cash assistance under the Aid to Families With Dependent Children (AFDC) or Supplemental Security Income (SSI) programs are eligible for Medicaid assistance. In addition, each state has the option of providing Medicaid benefits to those who cannot afford needed health care, but have income above the maximum allowable for public assistance. Medicaid coverage of mental health services is available through a variety of mandatory and optional services financed under title XIX. Generally, services for the mentally ill must be available to recipients on the same basis as for recipients of all other title XIX services. Title XIX, however, specifically excludes federal reimbursement for the care of the mentally ill aged 22 to 64 in institutions for mental diseases (IMDs), which are defined in Medicaid regulations as institutions primarily engaged in providing diagnosis, treatment, or care (which includes medical attention, nursing care, and related services) for people with mental diseases. A state has the option of providing institutional care for the mentally ill who are 21 years of age and under or over 64 years of age. Each state is allowed to set use and dollar limitations on the amount, duration, and scope of Medicaid coverage. Each state also has the option of covering or not covering certain mental health services. As a result, each state has considerable flexibility in establishing the nature and extent of mental health services available to Medicaid recipients. The Department of Health and Human Services (HHS) has overall responsibility at the federal level for administering Medicaid. Within HHS, the Health Care Financing Administration (HCFA) is responsible for developing program policies, setting standards, and ensuring compliance with federal Medicaid legislation and regulations. Depending on a state's per capita income, the federal share of a state's Medicaid costs for health services in fiscal year 1987 ranged from 50.0 to 78.5 percent. Although all states participate in Medicaid, Arizona is operating an alternative program and has received waivers of some federal requirements. OBJECTIVES, SCOPE, AND METHODOLOGY The Senate Report on the Departments of Labor, Health and Human Services, and Education, and Related Agencies Appropriation |