CMS awards $75 million to test new mental-health benefits in Medicaid

The federal Medicaid agency awarded $75 million in funding Tuesday for a program that looks for cheaper, more effective ways to treat mental illness.

Eleven states and Washington, D.C., were selected to take part in the demonstration program, the Centers for Medicare and Medicaid Services (CMS) said. States will use the money to provide Medicaid coverage for inpatient psychiatric hospitals.

Medicaid does not pay for mentally ill patients to be admitted to psychiatric hospitals, largely because of historical concerns that states would warehouse those patients in large facilities. Medicaid patients who are experiencing a mental-health emergency — such as suicidal or homicidal thoughts — are instead admitted to hospital emergency rooms.

The demonstration project will allow Medicaid patients to use psychiatric hospitals, which CMS hopes will improve the quality of care they receive while also cutting down on emergency-room costs. The demonstration was authorized by the healthcare reform law.

Sending suicidal or homicidal patients to general hospitals “may not be an efficient use of health care dollars, and may be detrimental to vulnerable patients — especially when they could immediately be treated in the setting with more appropriate care,” acting CMS Administrator Marilyn Tavenner said in a statement.

The 11 states selected to take part in the pilot program are Alabama, California, Connecticut, Illinois, Maine, Maryland, Missouri, North Carolina, Rhode Island, Washington and West Virginia.

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