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 health reform:

Updates on Medicaid spending, Medicare cuts, and parity regs

The health care reform package approved in March provides for a hefty 25% expansion of the Medicaid rolls by 2014, so you would expect opportunities to open up on the mental health side. But looking beyond the headlines, itís apparent that any new business for private practitioners will entail the same old low fees and much red tape.

The Patient Protection and Affordable Care Act calls for 16 million Americans to be added to the 60 million already on Medicaid. And although that wonít be fully implemented for four years, at least some growth will take place prior to the kick-off date.

While the White House and Congress have been making noises about austerity in the lead-up to the November elections, an additional $16.1 billion in Medicaid spending was approved by the House and Senate and signed by President Obama on August 16. That money will go to the states to beef up existing Medicaid programs.

(A similar bill was killed in June amidst battles over its impact on the deficit. This time around, Democrats attracted sufficient GOP support for new Medicaid money by cutting spending elsewhere.) But additional "available money" doesnít always mean "money spent." Hereís why:

l Just because 16 million more Americans become Medicaid eligible doesnít mean all of them will sign up. The current participation rate varies widely by state, but the average is about 57%, according to a report by the Kaiser Commission on Medicaid and the Uninsured. Itís estimated that the "maximum" participation rate would only be about 75%.

l Medicaid funds arenít generally aimed at the outpatient services, although mental health groups are lobbying to change that. "There are a disproportionate number of Medicaid patients who need mental health care," notes Julie Clements, director of legislative affairs for the American Mental Health Counselors Association (AMCHA). "But most of it goes to inpatient care."

AMCHA has been trying to get state legislatures to warm up to preventive care, which would entail more outpatient services. "They need to know that it will save a lot of money," Clements says.

l A majority of practitioners shy away from Medicaid anyway--because reimbursement is low, and thereís usually more paperwork involved. For instance, only about 30% to 50% of AMHCA members have Medicaid contracts, according to Clements. The numberís a lot lower for psychologists.

Clements says clinicians are reporting rates of $50 per session now, "and our main concern is that reimbursement rates are going to go lower under Medicaid."

Actually, says Laura Groshong, director of government relations for the Clinical Social Work Association (CSWA), fees have already slipped under $50--at least for some. According to data she gathered for the CSWA, Medicaid reimbursement for LCSWs in 2008 ranged from a low of $43 in Missouri to a high of $73 in Delaware. "If rates stay this low, Iím not sure if theyíll find people to do the work," she tells us.

According to the American Psychological Association, 55% of psychologists have opted out of Medicaid due to low rates. Psychologists do make more than their masterís-level colleagues, however: $70 and up in some states.

MFTs are not eligible to provide Medicare services but are Medicaid-eligible in some states. Reimbursement rates vary but are generally low, says Tracy Todd, director of public affairs for the American Association for Marriage and Family Therapy (AAMFT).

New regulations for mental health parity were issued by the Obama administration on July 1. One result is that Medicaid programs will have to cover mental health on par with medical benefits.

"Parity doesnít have to lead to higher rates," says Groshong. "Itís about access...And I think overall rates could actually go lower." Managed care companies with Medicaid business will try hard to hold onto the profits they make on these already lean government contracts.

"You can bet theyíll be putting up more roadblocks to care," Clements says. "Thatís something weíre going to have to work on." (See more in the box, opposite.)

(Weíre continuing to assess the potential impact of the health reform law as details gradually emerge--see PsyFin January, February, March, and April, 2010. The true picture for psychotherapists in private practice continues to develop--so look for more coverage in the months ahead.)

Contacts: 1) Julie Clements, AMHCA, Alexandria, VA, (800)326-2642, ext. 105, email:; 2) Laura Groshong, CSWA, Seattle, WA, (206) 524-3690, email:


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