Buried in the U.S. Senate’s now-stalled effort to repeal and replace Obamacare is legislative language that mental health care professionals have been seeking for years — an exemption to a rule that prohibits federal dollars from being spent on “Institutions For Mental Disease.”
It’s a rule as old as the landmark 1965 program establishing Medicaid — the government-provided medical insurance for the poor and disabled — and it bars federal dollars from being used for adult patients treated at certain kinds of psychiatric facilities.
Known as the IMD Exclusion, the rule was drafted at a time when mental health professionals, advocates for patients and some federal lawmakers were trying to end the notorious era of psychiatric asylums.
That era is over, but the rule still exists. And in Sonoma County, it makes it difficult financially to send mental health patients to Aurora Santa Rosa Hospital, a privately run IMD that is the only psychiatric hospital left in the county.
Mental health patients under the county’s care are often sent to psychiatric hospitals in other counties because the county would have to pay the full cost of care at Aurora with no federal financial match.
“We don’t want to change the IMD exclusion. We don’t want warehouses anymore,” said Michael Kennedy, the county’s director of mental health services. “But for short-term inpatient hospitalizations, they should just go back and say ‘freestanding psych hospitals are not IMDs.’ ”
The Senate’s repeal and replace bill, known as the Better Care Reconciliation Act of 2017, would have would greatly reduced Medicaid spending, the single largest payer of mental health services in the country, with more than 4.5 million beneficiaries, according to the Treatment Advocacy Center, a Virginia-based national nonprofit that works to eliminate barriers to treatment for people with severe mental illness.
It would also have allowed states to more easily waive Obamacare’s 10 essential benefits, which include mental health coverage. But the fact that it addressed the IMD exclusion is a hopeful sign for those who have been struggling to get lawmakers to take note of the outdated rule.
“Leaving aside the other issues in the bill, this is a really important aspect for the mentally ill and should be pursued in order to allow for effective care,” said John Snook, executive director of the Treatment Advocacy Center.
The Senate bill would have allowed adults from the ages of 21 to 65 to stay up to 90 days a year in an IMD, defined as a facility that has 17 or more beds and is primarily engaged in the treatment of people with mental illness.
The federal funding exclusion did not apply to psychiatric units tied to acute general hospitals. Before it became Aurora in 2013, that facility was operated by Santa Rosa Memorial Hospital and was eligible for matching funds through Medi-Cal, the state’s version of Medicaid.
Prickly issue of funding
Ever since the closure of the two local psychiatric hospitals, the funding exclusion has been a thorny issue for Kennedy, who says it forces him to send patients to other counties for treatment in psychiatric hospitals that accept Medi-Cal.
Last year, the county mental health department referred about 1,000 individuals to psychiatric hospitals, with about 71 percent covered by Medi-Cal. Most of the adults 21 to 65 were sent outside the county because it costs too much to treat them at Aurora, which does not qualify for Medi-Cal funding.