Lawmakers target 1960s law blocking Medicaid funds for mental health care
Amtrak police are attempting to remove an individual who began disrupting a press conference at Penn Station on June 28, 2021. Photo by Ben Fractenberg/THE CITY
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Senator Brad Hoylman wants New York to seek a waiver to allow federal funding for long-term inpatient treatments that could involve innovative alternatives to incarceration.
As New York struggles to treat people with serious mental illness, one barrier hasn’t moved: Medicaid is barred from assuming long-term stays for most patients receiving mental health or substance abuse treatment at a facility with more than 16 beds .
This federal law, in place for more than half a century, blocks a key source of funding that could fund residential homes that offer long-term treatments — from traditional mental health care to innovative efforts to direct people to therapy rather than jail.
But that could change in New York, under a recent bill introduced in Albany by State Senator Brad Hoylman (D-Manhattan). It would require the state health commissioner to seek an exemption from the federal Centers for Medicare and Medicaid Services to make payments for long-term stays at large mental health facilities.
“By doing this, we create an incentive to create new beds,” Hoylman told THE CITY. “We must act quickly to overcome this crisis. We see human suffering in our midst and it really is time to take decisive action like this legislation. New Yorkers are in dire need of treatment.”
Hoylman’s West Midtown neighborhood was in the spotlight of a mental health crisis playing out on its streets and transit stations. A man with an untreated mental illness is accused of fatally pushing Michelle Go into a subway lane in Times Square.
A spokeswoman for the state Department of Health, Erin Silk, said the agency would not comment on pending legislation.
The number of inpatient psychiatric beds has fallen sharply over the past two decades. A 2020 report by the New York State Nurses Association found that the state had reduced the number of psychiatric beds from a total of 6,055 to 5,419 from 2000 to 2018 — a 12% loss, with most of the reduction coming from the private sector .
New York City has 3,991 inpatient psychiatric beds, according to the State Office of Mental Health, but about 600 are not operational. The state repurposed many of these beds for COVID patients early in the pandemic and is working to get them back, according to OMH spokesman
Erson James Plastiras.
Under Medicaid, the federal government pays half and the state government pays half, with New York budgeting a combined $170 billion for all Medicaid services this year and next.
Maryland, Oklahoma, Utah, Vermont, Washington, Idaho, Indiana and Washington, DC have already successfully applied for such exemptions from the funding ban for “mental health institutions” (IMDs), while several additional states have applications pending.
New York State is already exploring the possibility. “The Department of Health and Human Services is actively considering a waiver application to the Centers for Medicare & Medicaid Services,” Silk told THE CITY.
Hoylman decided to force the issue because the state had not submitted an application or committed to sending one. He didn’t offer a cost estimate for a waiver, but claimed it would save money in the long run by curbing street crime.
Even within the current confinement, Gov. Kathy Hochul is trying to invest more in mental health care.
In February, she announced a $49 million initiative to improve mental health services across upstate New York. That includes $27.5 million to increase Medicaid’s payout for the psychiatric beds it covers by 20%, which will allow the state projects to bring at least 600 psychiatric beds back online in New York City. It is also providing $9 million to hire nurses and other staff and create 500 more supportive living beds for people affected by homelessness.
The federal ban on Medicaid mental health payments to states applies to patients between the ages of 21 and 64 and dates back to the original creation of the health program in 1965.
According to the Treatment Advocacy Center, an organization that encourages investment in inpatient mental health, Congress intended to bar the construction of large mental health facilities in response to exposés documenting the horrors of large residential facilities and the cost of mental health care to states to pass on services.
“The point of the directive was to discourage long-term hospital care for people with the most serious illnesses. It should be accompanied by a massive investment in community-based care, which incidentally never really happened,” said Brian Stettin, the group’s policy director.
Still, the need for long-term hospitalization has never gone away for many people with mental illness, he added. “The idea was that hospital care is a bad thing per se, which is clearly an over-generalization of a well-intentioned policy that has gone too far.”
The Treatment Advocacy Center and others are pushing Congress for a full federal repeal of the ban, but have also backed states seeking an exemption.
Proponents of a waiver say the 16-bed limit hurts people who really need care by preventing the creation of innovative, high-quality treatment centers.
The nonprofit Greenburger Center for Social and Criminal Justice, which advocates alternatives to incarceration, has been trying for years to build Hope House, an inpatient treatment center for women convicted of crimes and suffering from mental illness. They have a location near Crotona Park in the Bronx, but no way to receive Medicaid reimbursement for inpatient psychiatric beds.
“We can’t go beyond 16 beds and get Medicaid because of the IMD ban. If you have more than 16 beds, our folks can’t get Medicaid. So these types of facilities will never be built,” said Cheryl Roberts, executive director of the Greenburger Center.
“Without a lot of gap funding, you really can’t do a facility that does quality care work with 16 beds. You need more beds, not a lot more, but a few more for economies of scale to work.”
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