RD241 - Funding Educational Costs for Students Place in Psychiatric or Residential Treatment Facilities for Non-Educational Reasons - September 21, 2015


Executive Summary:
The 2015 Appropriation Act required the State Executive Council (SEC) for the Children's Services Act (CSA) (formerly the Comprehensive Services Act [*1]) to "examine options and make recommendations for funding the educational costs for students whose placement in or admittance to state or privately operated psychiatric or residential treatment facilities for non-educational reasons has been authorized by Medicaid."

The circumstances leading to this situation have evolved over the past 15 years as the state Medicaid plan allowed for children with significant behavioral health difficulties to be placed in Level "C" psychiatric residential treatment facilities through authorization and reimbursement by Medicaid without involvement of local CSA structures and processes. The provision of educational services for children placed in these facilities is required by licensing regulations. Medicaid does not allow payment for educational services. A "disconnect" therefore exists between the required educational services and the availability of public funds to support that service. In FY2015, 524 children were placed in residential treatment through Medicaid outside of the CSA process and without any state funding for educational services.

Both the General Assembly and the SEC have identified this issue as needing resolution. Several task forces and work groups have attempted to address the issue over the past year and public comment has been solicited. The problem is complex and potential solutions have significant fiscal and administrative impacts on the state, but especially the local government level.

This report summarizes the work and provides recommendations endorsed by the SEC as called for by the Appropriation Act. These recommendations include short term fiscal measures and suggestions for areas needing additional consideration toward a longer term solution to these complex issues.

The recommendations are as follows:

1. State general funds should be allocated to cover the full cost (no local match) of educational services for children placed through Medicaid without CSA involvement in a PRTF. This should be a short-term solution (beginning no later than FY2017) while additional work is completed to fully integrate "Medicaid-only" placements into the CSA system or to determine another funding mechanism.

a. The estimated fiscal impact of this recommendation is $10. 7 million per year based on the average costs for FY2013 and FY2015 (FY2014 data is not available due to the transition in December 2014 to Magellan as the behavioral health services administrator for DMAS and discontinuity in that year's data). A more detailed fiscal impact analysis is provided in Appendix A.

b. The recommended mechanism for administering this funding is through the Department of Medical Assistance Services and its Behavioral Health Services Administrator, Magellan. This would be distinct from a Medicaid funded service.

2. The General Assembly, DMAS, the SEC, local governments and other interested parties should consider elimination or recalculation of the local Medicaid match requirements for children placed through CSA in PRTFs.

3. The Office of Children's Services, DMAS, Community Services Boards, parent representatives and local CSA staff should develop and implement a practical, short-term data collection project that will provide necessary information about the process of accessing residential treatment. Such data would include, but not be limited to, what entity is issuing the Certification of Need required by Medicaid, time frames for accessing an assessment by the local CSB, and time frames for accessing the local FAPT and CPMT for case planning and service implementation.
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[*1] Effective July 1, 2015 the Comprehensive Services Act is renamed as the Children's Services Act and the Office of Comprehensive Services (OCS) as the Office of Children's Services. The new naming will be used throughout this report except where the use of the prior name is more historically accurate.