In what is being hailed as the most significant increase in Medicaid behavioral health reimbursement rates in the United States, the Pennsylvania Community Providers Association (PCPA) and the Commonwealth of Pennsylvania have reached a settlement over the rates for outpatient mental health clinic services, outpatient drug & alcohol clinic services, and partial hospitalization services in the Commonwealth. New rates will go into effect on July 1, funded by an additional $28.2 million in state funds. These state funds, in turn, will draw down an additional $32.8 million in federal funds.
"To put this in perspective: the Clinton administration made national news for increasing mental health funding by $70 million for the entire country," noted Alan J. Hartl, President of PCPA. "Our settlement secures an additional $61 million for Medicaid behavioral health services solely for Pennsylvanians - funds that are sorely needed after decades without an increase. This settlement will help to address the traditional underfunding of mental health and substance abuse services - services that are a lifeline for hundreds of thousands of Pennsylvanians."
In concrete terms, the settlement, which was signed on July 1, means that reimbursement for a number of behavioral health services will more than double. Hartl emphasized that this settlement is an excellent first step on the path toward responsibly funding behavioral services for the most needy and vulnerable of our citizens. A number of the services named in the suit had not received rate increases in over 20 years, and the settlement will help to achieve a more realistic relationship between the cost of providing service and the reimbursement for that service.
The increase in Medicaid rates is significant for a number of reasons beyond increased reimbursement for community agencies. As the Commonwealth shifts to greater reliance on managed care contracts for Medicaid recipients, an increase in the reimbursement rates for fee-for-service behavioral health services may increase the actuarial base on which new managed care contracts are negotiated. And, despite the state's commitment to expanding managed Medicaid behavioral healthcare, there will always be thousands of persons who, for a variety of reasons, are still covered under the Medicaid rates of the fee-for-service system.
Despite many years of discussion, requests, and negotiation, PCPA was unable to convince previous administrations to increase Medicaid rates for behavioral health services, some of which had not increased in over 20 years. On June 15, 1998 PCPA, through its counsel, Kirkpatrick & Lockhart, filed suit in U.S. District Court for the Middle District of Pennsylvania to obtain a court-mandated increase for these rates. The suit charged that "defendant [Secretary of Public Welfare Feather O. Houstoun] has...disregarded the requirements of federal law with the respect to the payment rates...by not evaluating and adjusting the payment rates..." for many years.
The suit was based on Section 1902(a)(30)(A) of the Social Security Act, which requires the state to "assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the [state plan] at least to the extent that such care and services are available to the general population in the geographic area."
After months of negotiation, the Ridge administration unveiled the $28.2 million increase for Medicaid behavioral health services in its proposed budget for 1999/00. These additional funds paved the way for the settlement of the PCPA lawsuit.
Raymond R. Webb, Jr., LSW, Executive Director of the Pennsylvania Community Providers Association, emphasized that the entire litigation and negotiation process was marked by a spirit of cooperation and collaboration between the Ridge administration and PCPA. "We were reluctant to bring this issue to the courts, but are pleased at the outcome. Both PCPA and the Department of Public Welfare recognize that adequate funding for behavioral health services is essential."
CONTACT: Lu Conser, Director of Government Relations