Proposed Medicaid Rules Would Limit Help for Those With Special Needs

New interim rules issued by the Bush administration's Centers for Medicare and Medicaid Services (CMS) would reduce case management services provided to Medicaid beneficiaries, including individuals with physical or mental disabilities and children in foster care, according to the Center on Budget and Policy Priorities.

The new rules, issued December 4, 2007, implement changes to Medicaid made by Congress in the Deficit Reduction Act of 2005 (DRA). 72 Fed. Reg. 68077-68093 (Dec. 4, 2007). But the Center charges that the rules go far beyond Congress's intent, limiting case management services in ways not called for by the DRA. The rules would have a detrimental impact on beneficiaries, particularly poor children in foster care and poor individuals with physical or mental disabilities or other chronic health conditions, says the Center, a Washington "think tank" that analyzes the effect of public programs on low- and moderate-income families and individuals

Case Management Eases the Transition From Institution to Community

Medicaid provides case management services to assist beneficiaries in moving from an institution to a community setting. Before the individual leaves the institution, the case manager assists in making housing and other arrangements to smooth the transition. Case managers help beneficiaries and their families gain access to medical, social, educational, and other community services.

Under current policy, Medicaid reimbursement is available for case management provided for up to the last 180 days of a stay in an institution. But the new rules reduce the duration of federal matching funds for pre-transition case management services from 180 days to 60 days (or 14 days, if the individual's institutionalization was less than 180 days). The shorter periods may not allow a case manager sufficient time to arrange for the transition from institution to community, the Center says.

"Moreover, the rules would prohibit payment until an individual is actually living in the community," the Center notes. "As a result, some providers would not be able to deliver transition services -- because they lack the financial capacity to wait for payment and cannot take the risk that the individual will not be able to complete the transition to the community, in which case they would not be paid at all."

Schoolchildren Will be Affected

The new rules also limit the funding of case management services for children with special needs who need both Medicaid and special education. Federal law requires states to prepare an annual educational plan specifying all the services required for special needs children to receive an appropriate public education. Under the new rules, Medicaid will not cover case management services to such children unless case management is designated in the child's plan as a required service.

Moreover, the new rules prohibit federal funding for case management services performed solely to satisfy Section 504 of the Rehabilitation Act, which requires the provision of free and appropriate education for special needs children. This is the case even if a child'™s disability requires the coordination of multiple medical, social, and educational services in order for the child to participate in school programs. These restrictions on covered case management services in the school context make it more difficult to coordinate all of the services to which a child with special needs is entitled, says the Center.

The new rules also restrict the use of case management services for children in foster care.

Tying States' Hands

While the Social Security Act has in general given states broad latitude to set the terms and conditions for payment of benefits like Medicaid, the new CMS rules take away some of the states' flexibility to manage the delivery of benefits. For example, the new rules expressly prohibit more than one case manager even when a beneficiary has multiple conditions requiring the expertise of more than one individual.

The Center is urging CMS to withdraw the published rules and provide more lenient guidance that does not restrict case management services or curtail the flexibility of the states to establish Medicaid requirements. CMS will accept public comments on the new rules through Feb. 4, 2008. The rules are scheduled to become effective on March 3, 2008.

To read the Center's article, 'New Medicaid Rules Would Limit Care for Children in Foster Care and People with Disabilities in Ways Congress Did Not Intend' by Judith Solomon, go to: www.cbpp.org/12-21-07health.htm

To read CMS's interim final rule, click here.