Obscure Rule Restricts Health Law’s Expansion of Care for Addicts
By: Abby Goodnough (NY Times) July 2014
EAST HAZEL CREST, Ill. — On its surface, the Affordable Care Act seems like a boon for addiction treatment centers like the South Suburban Council on Alcoholism and Substance Abuse, housed in a no-frills former hotel outside Chicago.
The law allowed states to expand Medicaid to many more low-income people, meaning that drug addicts and alcoholics who were previously ineligible could now receive coverage for substance abuse treatment, which the law has deemed an “essential health benefit.”
But there is a hitch: Under an obscure federal rule enacted almost 50 years ago, Medicaid covers residential addiction treatment in community-based programs only if they have 16 or fewer beds. The South Suburban Council’s main treatment program has 48. So the very people who might have flowed through its doors in search of care will not be coming. And the same problem faces many other centers, which typically are larger than 16 beds, experts say.
The quirk in the law could have a significant impact on substance abuse treatment in Illinois and the 25 other states that have expanded Medicaid under the health care law. While millions of low-income addicts have been promised access to treatment through the expansion, the rule will most likely prevent many from entering residential programs, a more intensive form of care, even as heroin addiction is surging in many states.
In California, for instance, nine out of 10 addiction treatment beds are in programs too large to get Medicaid reimbursement.
“For some addicts, there is an undeniable and essential need for residential treatment,” said Allen Sandusky, the South Suburban Council’s chief executive. “The A.C.A. is going to mess that up badly unless this problem is acknowledged and addressed.”
The rule was intended to prevent Medicaid funds from covering treatment in state psychiatric hospitals, which were far more common when it was written in 1965. The federal government considered such treatment a state responsibility, and it included residential programs for substance abuse under the exclusion.
“The federal government basically said to the states, ‘We’re not going to pay for your institutional care,’ ” said Becky Vaughn, executive director of the State Associations of Addiction Services, which represents treatment providers. “Addiction services never should have been wrapped into that because we are not long term.”
Any change to the rule would have to come from Congress, because it is a provision of Medicaid law. Treatment centers and state Medicaid directors have called for changing or repealing it, but the odds are low, partly because Congress seems unwilling to tackle any health care issues this year, and partly because this one could prove expensive.
Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, said most substance abuse treatment for new Medicaid enrollees was being provided on an outpatient basis. Such treatment usually consists of one or more group counseling sessions a week — enough for some, but inadequate for the severely ill, said Paul Samuels, director of the Legal Action Center, a nonprofit group in New York that advocates for people with addiction.
States and treatment providers are now scrambling to accommodate those who need residential treatment without running afoul of the 16-bed rule.
In Washington State, four existing treatment centers are downsizing to 16 beds and four new ones are opening at that size this summer to ensure at least some access — 128 beds — for new Medicaid enrollees. California and New York plan to seek waivers from the Obama administration that would allow Medicaid reimbursement for residential treatment in larger facilities.
Kentucky is trying to determine whether programs with multiple 16-bed units must be counted as one entity, and thus be subject to the rule.
Until now, many states have financed at least some residential treatment for the poor and uninsured with a mix of federal block grant and state funds. But Mr. Samuels said he feared that states may no longer want to foot the bill for addicts who enroll in Medicaid, which is paying 100 percent of costs for the expansion population.
Illinois, for one, has decided to stop using a mix of state general revenue and federal block grant funds for residential addiction treatment for people who have enrolled in Medicaid under the law, putting providers with more than 16 beds in a quandary.
Haymarket Center, a large treatment provider in Chicago, has eaten the costs of residential treatment for more than 40 newly eligible Medicaid enrollees so far this year, said Jeffrey Collord, a spokesman. “We are not turning people away right now,” he said. “But I don’t know how long we can continue to do that, to provide services and not get paid for them.”
The South Suburban Council has so far been able to treat new Medicaid beneficiaries in its smaller 16-bed unit by making it coed instead of for women only. But its larger 48-bed unit cannot accept clients on Medicaid.
So far the juggling has worked. But as more and more of South Suburban Council’s clients enroll in Medicaid, as is expected, the program will have to start turning away many of the new Medicaid enrollees — leaving it, paradoxically, unable to fill its beds, Mr. Sandusky said.
His program receives $143 per patient per day for what is typically a 28-day stay, or about $4,000. The reimbursement rate must also increase for programs like his to survive, he said.
Mr. Sandusky and other substance abuse experts say that many of their patients — typically referred by jails, courts, probation departments, emergency rooms and mental health agencies — need the stability and intensive care of residential treatment, and would probably fail in outpatient programs. Even intensive outpatient treatment, which may be several hours a day, several days a week, is not sufficient for many in this population, Mr. Sandusky said.
“The majority of our clients are in crisis,” Mr. Sandusky said. “They are the clients who present the most challenging issues for our communities and systems.”
Pete Kurpios, 41, started using heroin two years ago and was referred to the South Suburban Council by a hospital after he intentionally overdosed and spent days in a coma. “I’ve tried outpatient and that didn’t work out,” said Mr. Kurpios, who added that he had signed up for Medicaid but was still waiting for confirmation of enrollment. “I had too much time on my hands.”
Jim McCarthy, 53, who was also in treatment at the South Suburban Council last month, said his addiction to alcohol and heroin recently cost him his painting business. “Here you’ve got people watching over you when you might not be capable of watching over yourself,” he said.
In California, where only about 10 percent of the 18,155 beds at residential addiction treatment programs are in centers with 16 or fewer beds, officials tried unsuccessfully to persuade the Obama administration to soften the rule, saying in a February letter that “California is severely limited in its ability to provide this benefit to Medi-Cal beneficiaries.”
Now the state is pursuing a waiver that would, among other things, allow those newly eligible for Medicaid under the Affordable Care Act to get residential treatment in larger programs. In the meantime, the state will provide a new intensive outpatient treatment benefit for the Medicaid expansion population, said Karen Baylor, deputy director of mental health and substance use disorder services at the California Department of Health Care Services.
In Ohio, Tracy Plouck, director of the state’s Department of Mental Health and Addiction Services, said 72 percent of the state’s 2,538 addiction treatment beds were in programs too large for Medicaid reimbursement under the rule, known as the Institutions for Mental Disease exclusion. “It’s a serious access challenge,” she said. “I firmly believe there are providers that would increase their capacity but for concerns about the I.M.D.”
Larry Brand, 59, who recently completed a month-long stay at the South Suburban Council, said outpatient treatment would have felt much riskier because he would not have had a round-the-clock support system. Mr. Brand, who is eligible for Medicaid under the health care law but has not yet signed up, said he had been in and out of prison after stealing to support his cocaine habit. He is determined not to return there.
“There’s no drugs and no alcohol here,” he said, “so it’s like a safe haven for me. If I would have stayed out there and tried to do it on my own, I can’t say what would have happened. But here I am today, clean and sober, and I’ve got a good start.”
