Federal rule change threatens mental health care for Minnesota kids

Some quick math illustrates how a policy change in Washington, D.C., is poised to pull the rug out from under Minnesota's already fragile children's mental health care system.

Through Medicaid — the joint federal-state program that provides care for the poor, disabled and elderly — the federal government helps shoulder the cost of care for kids who need residential mental health care treatment. But because of an outdated rule that is now being enforced, the U.S. Department of Health and Human Services has determined it will no longer cover treatment for kids in facilities that are newly classified as "Institutions for Mental Diseases," or IMDs.

Here's what that means by the numbers: The review to determine if facilities are IMDs encompassed 16 Minnesota facilities with 1,101 residential treatment beds. Of those, 11 facilities with 580 beds met the criteria.

That means the treatment provided in more than half of the Minnesota residential beds surveyed will no longer be covered by the federal government's 50 percent payment match. That leaves a shortfall conservatively estimated at $4.5 million a year. Because the need for this care certainly won't go away when these dollars do, the Legislature needs to take action to protect not only vulnerable children but also local taxpayers.

Without both smart short- and long-term solutions, the bill for this care could now fall directly onto counties already struggling to meet their social services mandate. Counties needing extra dollars have limited options. They could cut services, with newly amped-up child protection resources among the tempting targets. Or, they could ask taxpayers for more. "At the end of the day, counties are still responsible for serving these kids," said Eric Ratzmann, executive director of the Minnesota Association of County Social Service Administrators. "County boards are going to be very upset about losing critical financial resources that support services for children."

The state has known about the coming policy change for several years. It is important to note that the federal IMD payment policy change began during former President Barack Obama's administration, and there was a period of time given to the state to plan and gather information about which facilities met IMD criteria. In 2017, the Legislature provided a reasonable solution — having the state instead of counties fill the federal funding shortfall until permanent solutions could be put in place.

Regrettably, the process for developing those longer-term solutions has gone slowly. It's taken the state Department of Human Services longer than it should have to develop an in-depth analysis and recommendations. While that process is now moving along, they won't be ready until this fall at the earliest.

The 2018 Legislature can and should act now to provide some breathing room in 2019 for legislators who will consider possible solutions. Right now, the temporary state funding expires before the end of next year's session. That's a problem, because most things get done at the State Capitol in the waning weeks. Lawmakers should act now to extend state bridge funding past the 2019 session's end in order to provide time to enact and implement solutions.

Thankfully, the Minnesota House health and human services omnibus bill would provide a two-month extension — not ideal, but manageable. The Senate should follow its lead. Rep. Jeff Backer, R-Browns Valley, who has provided compassionate leadership on this issue, astutely worries about the kids who desperately need care and about the burden that could be placed on already stressed county budgets. Said Backer: "This is the right thing to do."