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THE OUTDATED INSTITUTION FOR MENTAL DISEASES EXCLUSION:
A CALL TO RE-EXAMINE AND REPEAL THE MEDICAID IMD EXCLUSION
Prepared By
John Fergus Edwards, J.D., LL.M.
May 1997
John Edwards is
a health care attorney who practices law with the Federal Government. John has previous work experience as an attorney
with the National Alliance for the Mentally Ill (NAMI), and he continues to have an
on-going interest in the area of psychiatric/mental health and disabilities law. This paper was written in his private capacity as
a mental health advocate.
TABLE OF CONTENTS
I. INTRODUCTION
AND OVERVIEW OF THE MEDICAID IMD EXCLUSION
a. Importance Of Medicaid For Persons With Serious
Mental Illness And The IMD Exclusion
b. Rationale For The IMD Exclusion And An Overview Of
Why It Should Now Be Repealed
II. LEGAL
ANALYSIS OF THE MEDICAID IMD EXCLUSION
a. Statutory Issues Governing Medicaid And The IMD Exclusion
b. Legislative History Behind The Medicaid IMD
Exclusion
c. Covered and Exempt Facilities Under The IMD
Exclusion
d. Judicial Challenges To The IMD Exclusion
a. Historical Perspective On The IMD Exclusion
THE OUTDATED INSTITUTION FOR MENTAL
DISEASES EXCLUSION:
A
CALL TO RE-EXAMINE AND REPEAL THE MEDICAID IMD EXCLUSION
Approximately five million persons in the United States, or about 2.8 percent of
the adult population and 3.2 percent of children, suffer from severe and persistent mental
illnesses, or "serious mental illnesses",[1] consisting of schizophrenia,[2]
bipolar disorder (formerly called "manic-depressive illness"),[3]
major depression, obsessive compulsive disorder, and panic disorder. These illnesses can have a significant and a
devastating impact on the individuals' lives and their families. Fortunately, treatment is now available which
allows the majority of persons affected by these disorders to be treated on an outpatient
basis, allowing these individuals to participate more fully in society and become more
productive at work, at home, and in the community.[4]
Due to financial barriers limiting access to private health insurance coverage, the
federal program entitled "Grants to States for Medical Assistance Programs"
(commonly called "Medicaid")[5] has evolved into an important
source of funding for treatment of mental illness.[6] Medicaid does not impose any special or additional
requirements that persons with mental illnesses must meet in order to be eligible for
covered services.[7] Thus, Medicaid has increased accessibility to
mental health and psychiatric care services for mentally ill persons in general hospitals
and nursing facility settings, as well as individuals who receive outpatient mental health
services in their communities.[8] Since the early 1980s, Medicaid has been
recognized as "the largest single mental health program in the country",[9]
and it is estimated that fifteen percent of total Medicaid dollars are spent on care and
treatment of persons with mental illnesses.[10]
The majority of persons with serious mental illnesses can now be treated on an
outpatient basis with psychotropic medications which have been developed over the past
four decades. Medications such as clozapine,
risperidone and lithium, used by themselves or in combination with other medications and
nonpharmacologic therapies, are being used successfully to treat the majority of persons
(approximately 80 percent) with serious mental illnesses, such as schizophrenia and
bipolar disorder, allowing these individuals to reside and remain in their communities.[11] State Medicaid agencies are required to cover
psychotropic medications if the state Medicaid plan incorporates a prescription drug
benefit.[12] Maintaining successful long-term outpatient
psychiatric treatment, however, depends upon several other factors such as the patient's
compliance with medications and the availability of good community mental health and
rehabilitative care programs.
Unfortunately, not all individuals who suffer from these disorders are able to
receive satisfactory benefits from psychotropic medications. Persons whose symptoms and disease processes are
exceedingly severe and who do not respond to medications and nonpharmacologic therapies
may require extended hospitalization(s) or long-term institutional / residential
psychiatric care.[13] Because of the nature of these illnesses, it is
difficult to ascertain at any given time a firm estimate of the number of such persons,
often referred to as "the forgotten population",[14] who are unable to receive
satisfactory benefits from medications and need long-term institutional or residential
psychiatric care. Conservative estimates
indicate that ten percent of individuals with schizophrenia are treatment-resistant and
require long-term (often life-long) institutional care, even in communities with the best
outpatient psychiatric care and mental health service programs.[15] Additionally, a greater number of persons with
bipolar disorder and schizophrenia (approximately 20 percent)[16]
respond only minimally to standard psychotropic medications and would be better served
through inpatient hospitalization or residential treatment programs than through
outpatient community mental health services available in many communities in the United
States today.[17] A significant number of persons suffering from
these disorders tend to be treatment-resistant to standard psychotropic medications at the
onset of their illness and initial intervention and need extended psychiatric
hospitalization(s), before they are stabilized on the appropriate treatment regimen and
can be discharged. Repeated psychiatric
hospitalizations are often necessary for persons whose conditions relapse after they are
discharged.[18]
State psychiatric institutions and freestanding psychiatric hospitals are generally
better suited to provide this type of care than psychiatric units in a general hospital. Psychiatrists on the medical staff at psychiatric
hospitals generally maintain their offices on site rather than in the community, which
allows for more interaction with the patients and a closer working relationship with the
nursing staff. These on-site physicians are
better situated to evaluate and/or modify treatment programs if the patient fails to
respond to the prescribed treatment plan. Psychiatric
hospitals offer more specialized services, such as individual and group therapy sessions,
art therapy programs, and other beneficial psychosocial activities tailored to the
individual patient's condition and level of functioning.
Furthermore, psychiatric hospitals are able to provide a continuum of psychiatric
care services with transitions, supervised by the same medical and mental health
professionals, from inpatient psychiatric care to partial hospitalization services and/or
outpatient-based services and, if need be, residential psychiatric care. These inherent advantages of psychiatric hospitals
promote a greater continuity of care for patients than can be received through inpatient
psychiatric care in general hospitals and separate aftercare services furnished by other
organizations or agencies in the community.[19]
Nevertheless, the federal Medicaid statute specifically excludes federal payment
for services provided to otherwise-qualified individuals, twenty-two to sixty-four years
of age, in institutions for mental diseases (IMDs).[20] The term "institution for mental
diseases" was statutorily defined in 1988 as "a hospital, nursing facility or
other institution of more than sixteen beds, that is primarily engaged in providing
diagnosis, treatment or care of persons with mental diseases, including medical attention,
nursing care, and related services."[21] This statutory definition, therefore, denies
federal payment for services furnished to otherwise Medicaid-eligible recipients in
traditional state mental hospitals and in more modern freestanding psychiatric hospitals
and other facilities with more than sixteen beds which specialize in or are primarily
engaged in the care and treatment of persons with psychiatric disorders (other than mental
retardation and related conditions).[22]
The IMD exclusion was originally premised upon the notion in the Social Security
Act and other federal social welfare programs dating back to 1950[23]
and before[24]
that the care of persons in state mental institutions [and tuberculosis (TB) hospitals][25]
was considered to be a traditional responsibility of the States.[26] By the 1960s, however, the Federal Government has
wanted to promote the use of outpatient community mental health services in the belief
that with the development of new treatment techniques, namely more effective psychotropic
drugs and an increased number of psychiatric beds in general hospitals, community mental
health services would ultimately replace the often maligned state mental institutions.[27]
With this in mind, President Kennedy and Congress worked together to enact the
Community Mental Health Centers Act (CMHCA)[28] as part of the Mental
Retardation Facilities and Community Mental Health Centers Construction Act of 1963.[29] The enactment of the Community Mental Health
Centers Act started a dynamic shift in public funding for mental health services from the
States to the Federal Government and promoted the utilization of outpatient-based
community mental health services and discouraged the use of institutional psychiatric
care.[30]
The same rationale underlying the CMHCA was used to allow States to provide
generous coverage of outpatient community mental health services under state Medicaid
plans, while at the same time excluding federal financial participation[31]
or federal medical assistance for services furnished to individuals under sixty-five years
of age in IMDs.[32] The legislative history of the Social Security
Amendments of 1965, pertaining to the federal public assistance provisions[33]
as well as the Medicaid amendments, states that it is anticipated that this legislation
would give States further encouragement to continue the trend of discharging patients from
mental hospitals in an effort to serve them through alternative settings, such as in
nursing homes, foster homes, community mental health centers, and short-term treatment in
general hospitals.[34]
Consequently, federal Medicaid coverage of alternatives to institutional
psychiatric care, used in conjunction with CMHC programs[35] and other federal
entitlement programs available to eligible individuals residing in the community,[36]
provided considerable financial inducements for States to discharge patients from state
mental institutions. Collectively, these
federal funding incentives have been the principal catalysts behind the
"deinstitutionalization" movement in the United States from the 1960s and
beyond.[37]
To illustrate the magnitude of deinstitutionalization in America, at the height of
institutionalization (1955), an estimated 559,000 persons were in public psychiatric
hospitals (IMDs).[38] Today, there are fewer than 90,000 individuals in
the United States remaining in public psychiatric hospitals.[39]
With the advent of psychotropic medications, deinstitutional-ization has provided
greater opportunities for many mentally ill persons who would have otherwise been unable
to participate in or experience these freedoms by virtue of being confined to a
psychiatric hospital. At the same time,
however, deinstitutional-ization has contributed to or exacerbated problems for a
significant portion of individuals with chronic and severe forms of schizophrenia and
other mental illnesses who continue to be treatment-resistant and need extended inpatient
hospitalization or long-term residential or institutional psychiatric care.[40] Instead of being able to make a successful
adjustment or transition to life in the community, a significant number of severely
mentally ill individuals find themselves caught up in a perpetual cycle of homelessness,
living in shelters, revolving door hospitalizations, and confinement in jails and prisons.[41] At best, severely mentally ill,
treatment-resistant individuals often end up or reside in nursing facilities or smaller
board and care facilities or group homes with sixteen or fewer beds, thus preserving their
eligibility to receive Medicaid services.[42] These individuals require ongoing treatment and
need a highly structured living environment and would be better served through
institutions and residential facilities which specialize in the care and treatment of
persons with psychiatric disorders.[43]
The Federal Government, through its administration of public mental health funding
policies, is partly responsible for the problems resulting from deinstitutionalization and
the deficiencies in the public mental health systems in the United States today. Early federal mental health policies were
developed based upon a fundamental misunderstanding of the nature and causes of serious
mental illnesses.[44] Federal policymakers during the 1950s and 1960s
were slow to recognize the fact that schizophrenia and other serious mental illnesses are
neurobiological disorders of the brain.[45] There continues to be a lack of appreciation on
the part of federal policymakers that, even with today's advanced medications and the best
available outpatient treatment services, a small but significant number of persons with
these psychiatric illnesses are treatment-resistant and require residential or
institutional psychiatric care. Consequently,
federal funding incentives emphasizing the use of community-based mental health services,
while at the same time denying federal Medicaid payment for services provided in
institutions and freestanding psychiatric hospitals, have led to uncoordinated psychiatric
care services for the most severe patients and a disjointed public mental health system in
many localities in the United States today.
Therefore, this analysis adopts the position that the Medicaid program should no
longer deny federal medical assistance for medical necessary care and services furnished
to individuals between the ages of twenty-two and sixty-four in institutions or facilities
which specialize in the care and treatment of psychiatric disorders (IMDs). No other institutional exclusions involving other
types of specialized hospital services or long-term care are imposed under Title XIX of
the Social Security Act (the Medicaid statute) altering the provision of care and
treatment services for patients with other medical conditions.[46]
As will be discussed in greater detail in part II of this analysis,[47]
Section 1902(a)(19) of Title XIX states that a State
plan for medical assistance must "provide such safeguards as may be necessary
to assure that ... care and services ... will be provided in ... the best interests of the
recipients".[48] The Medicaid Regulations build upon this principle
by providing that State Medicaid agencies may not arbitrarily deny or reduce the amount,
duration, or scope of a required service to an otherwise eligible recipient solely because
of the diagnosis, type of illness, or condition.[49] These customary coverage requirements should be
applied equally across the board for all medical or biological disorders. Therefore, if a physician determines that an
otherwise-eligible Medicaid patient (between the ages of twenty-two and sixty-four) with a
severe case of schizophrenia or other biologically-based mental illness is in need of
specialized psychiatric care provided through a psychiatric hospital or a state
psychiatric institution, this professional judgment should be respected and accorded
federal Medicaid reimbursement.
As will be discussed in part II of this analysis,[50] judicial challenges to
strike down the IMD exclusion brought under the Equal Protection Clause of the Fourteenth
Amendment to the Constitution[51] have so far been
unsuccessful. If reviewed today, it is
unlikely that the Supreme Court would abolish this Medicaid exclusion.
To rectify the consequences of this policy, Congress should take it upon itself to
reexamine and repeal the Medicaid IMD exclusion and cover all "medically
necessary" care and services furnished to all otherwise Medicaid-eligible individuals
who require inpatient hospitalization in psychiatric hospitals and/or residential
treatment in specialized psychiatric institutions, due to a serious mental illness or
other neurobiological disorder of the brain.
In spite of the modern medical understanding of serious mental illnesses as
neurobiological disorders of the brain and the unintended consequences and problems
resulting from the Medicaid IMD exclusion, the primary rationale today for maintaining
this exclusion appears to be economic considerations regarding fears of a cost explosion
if this exclusion is lifted, especially in a time of tight budgetary constraints on the
federal Medicaid program.[52] To address these budgetary concerns, reasonable
nondiscriminatory proposals to contain federal Medicaid expenditures for inpatient
psychiatric hospital services and residential psychiatric care are set forth in part III.C
of this analysis, if the IMD exclusion were to be abolished.[53] These cost containment proposals are comparable to
federal Medicaid coverage and payment restrictions for inpatient hospital services,
nursing facility services, inpatient psychiatric hospitalization services for persons
under twenty-one years of age, and services provided in intermediate care facilities for
persons with mental retardation.
Congress substantially amended the Social Security Act in 1965.[54] The most significant statutory changes to the Act
were the Medicare[55] and the Medicaid[56]
Amendments. Congress enacted these historic
public health care amendments in an effort to provide a coordinated approach for health
insurance and medical care for aged (sixty-five and older), blind or disabled persons and
needy families with dependent children.[57]
The federal Medicaid program, officially entitled "Grants to States for
Medical Assistance Programs", enacted as Title XIX of the Social Security Act,[58]
is a federal-state cooperative funding program for medical assistance, in which the
Federal Government approves State plans for funding of medical services for
"categorically needy"[59] and "medically
needy"[60]
individuals, and then agrees to subsidize a significant portion of the financial
obligations the State has agreed to assume.[61] The purpose of the Medicaid program is to enable
States to provide medical assistance for or on behalf of families with dependent children,
the blind, disabled persons, and the aged whose income and resources are insufficient to
meet the costs of necessary medical services and to help such families and individuals
attain or retain a capacity for independence or self-care.[62] The intended goal of Medicaid is to furnish
services to program recipients to the same extent, or as nearly to that extent as
possible, as those services are available to the general public.[63]
State participation in the federal Medicaid program is voluntary.[64] However, once a State chooses to participate in
the program, it must comply with the statuary and regulatory requirements of Title XIX,
starting with approval from the Department of Health and Human Services (HHS) of its
"state plan for medical assistance" (a.k.a., a "state Medicaid plan").[65]
For its part, the Federal Government then agrees to pay a specified percentage of
the costs of the mandatory and optional services covered under the state plan. Federal financial participation (FFP) or federal
medical assistance is available for state expenditures for Medicaid services provided to
eligible recipients, whose coverage is required or allowed under Title XIX of the Social
Security Act.[66] The statutory requirements governing Medicaid have
significance beyond the amount of federal financial participation because the United
States Supreme Court has ruled that Title XIX of the Social Security Act does not require
States participating in the program to unilaterally pay for medical services for which
federal Medicaid reimbursement is unavailable.[67]
A state Medicaid plan must offer medical coverage of nine "mandatory
services" for categorically needy persons.[68] These mandatory services include inpatient and
outpatient hospital services for all eligible persons and nursing facility services
(originally called "skilled nursing home services") for qualified individuals
twenty-one years old or older.[69] There are no categorical coverage exclusions based
upon specific diagnoses or conditions under these hospital and nursing facility
provisions.[70] However, the provisions of the Act specifically
exclude coverage of inpatient hospital and nursing services provided in institutions for
mental diseases (IMDs).[71]
Beyond covering mandatory services and complying with other requisite statutory
provisions under the Social Security Act,[72] States have broad discretion
to choose the proper mix of covered services and facially-neutral amount, scope, and
duration limits to keep their Medicaid programs within manageable bounds, as long as the
care and services are provided in "the best interests of the recipients".[73] Therefore, States have the discretion to impose
appropriate limits on the use of services based on such criteria as medical necessity or
utilization control procedures.[74] It is thus permissible for States to impose a
limit on the number of inpatient hospital days or physician visits covered under the state
plan.[75]
One significant limitation upon the States' discretion to select the proper mix of
services covered under their state plans is that State Medicaid agencies may not
arbitrarily deny or reduce the amount, duration, or scope of required services to an
eligible recipient solely because of the diagnosis, type of illness, or condition.[76] For example, this antidiscrimination regulatory
requirement would prohibit coverage limitations on acute general hospital stays for
Medicaid patients with psychiatric diagnoses unless the same limitations were imposed
across the board for all diagnoses. However,
States may define services furnished by a distinct classifications of providers, such as
services provided by clinical psychologists and social workers, and subject these types of
mental health services to special coverage limitations; or a State may decline to cover
these types of services altogether.
States have the option of covering twelve additional categories of services under
their Medicaid plans.[77] The original Medicaid statute enacted in 1965 gave
States the option of covering inpatient hospital and skilled nursing services provided to
persons sixty-five years of age and older in institutions for tuberculosis or mental
diseases, but denied federal medical assistance for the same services provided to persons
under sixty-five in these same institutions.[78] Also, as noted in part I,[79]
in 1984, the federal Medicaid statute was amended to abolish the exclusion of individuals
in institutions for tuberculosis as being no longer necessary, inasmuch as "TB
sanitoriums" were no longer used for treatment of tuberculosis.[80]
In 1972, the Social Security Act was amended to give States the option of covering
inpatient psychiatric hospital services furnished to individuals under age twenty-one in
psychiatric institutions under their state Medicaid plans.[81] Recognizing that extended inpatient psychiatric
care is sometimes necessary, Congress adopted the position that the nation could not make
"a more compassionate and a better investment" under the Medical Assistance
Program than restoring mentally ill children to a status in which they might be able to
rejoin and contribute to society as productive and active citizens.[82]
During this same period in the early 1970s, the Medicaid statute was amended to
allow States the option of covering of "intermediate care facility services"
under their state plans for medical assistance.[83] Subsequently, in 1988 the statutory definitions of
nursing and institutional care services were amended to their present definitions, which
read "nursing facility services"[84] and "services in an
intermediate care facility for the mentally retarded" (ICF/MR).[85] This inclusion is significant because after the
abolishment of the tuberculosis institution exclusion in 1984, the only category of
hospital services and nursing care (furnished in "medical institutions"[86]
and/or long-term care facilities) to remain ineligible to receive federal medical
assistance is the class of services provided to individuals between the ages of twenty-two
and sixty-four in "institutions for mental diseases" (IMDs).[87]
The exclusion of federal funds for services provided in institutions for mental
diseases predates the enactment of the 1965 Amendments to the Social Security Act. Congress first excluded federal funds under the
Social Security Act for individuals in institutions for mental diseases [and tuberculosis]
in 1950 through the enactment of Title XIV to the Act, entitled "Grants To States For
Aid To The Permanently And Totally Disabled".[88] In addition to denying federal funds for services
provided in IMDs and TB hospitals, Section 1405 of Title XIV covered eligible disabled
persons in medical institutions (i.e., general hospitals and convalescent facilities) but
specifically excluded patients being treated for either tuberculosis or psychosis.[89] These mental illness and TB exclusions were based
upon the notion that States have generally provided medical care for such individuals.[90] The Kerr-Mills Medical Assistance Program,[91]
enacted in 1960, continued the tradition of denying federal funds for inpatient treatment
of mental illness and tuberculosis in general hospitals, as well as in institutional
settings.[92]
Thus, the IMD provisions adopted in the 1965 Amendments expanded federal public
assistance and medical assistance[93] for recipients with chronic
and severe mental illness in two respects, compared to earlier amendments to the Social
Security Act. As noted previously, federal
public and medical assistance could no longer be denied solely on the basis of diagnosis,
(in general hospitals and nursing facility settings).[94] Secondly, as discussed in the statutory section,
the 1965 Amendments to the Social Security Act also gave the States the option of covering
persons aged sixty-five and older in institutions for tuberculosis and mental diseases.[95]
Nonetheless, Congress, in the legislative history of the 1965 Amendments,
articulated that the denial of federal public assistance and Medicaid funds for
individuals under age sixty-five in mental and tubercular institutions was based upon the
rationale that the care and maintenance of persons in such institutions was a traditional
responsibility of the States.[96] Furthermore, it is apparent from the legislative
history that Congress incorporated the IMD exclusion into the Medicaid statute [and the
public assistance amendments] because "the Federal Government has long distrusted the
economic and therapeutic efficiency of large mental institutions".[97]
The original Medicaid statute, enacted in 1965, did not define the term an
"institution for mental diseases". This
led to much confusion during the 1980s regarding whether a particular institution was
entitled to receive federal medical assistance for services provided to otherwise-eligible
patients between the ages of twenty-two and sixty-four as being an "intermediate care
facility" (ICF)[98] or be denied Medicaid
payment for such services under the IMD exclusion.[99]
This issue came before the United States Supreme Court in 1985 in the case of Connecticut
Department of Income Maintenance v. Heckler[100]. In the mid to late 1970s, the State of Connecticut
appeared to be transferring patients between the ages of twenty-two and sixty-four from
state psychiatric hospitals to an intermediate care facility.[101] The State sought and initially received federal
Medicaid reimbursements in excess of 1.6 million dollars for services provided to these
patients.[102] After a review, the Federal Government demanded an
overpayment refund for these medical assistance payments on the grounds that the ICF fell
within the Department of Health and Human Services's interpretation that the facility was
"primarily engaged" in providing diagnostic treatment and care for persons with
mental diseases and thus was ineligible to receive federal Medicaid funds for services
provided to these patients under age sixty-five.[103] The State sought judicial review of the
Department's determination, contending that the terms "intermediate care
facilities" and "institutions for mental diseases" were mutually exclusive
and that the IMD provisions in the Medicaid statute should be narrowly construed to only
cover traditional custodial (state) mental hospitals or institutions. The State also defended its actions as following
an enlightened policy of placing psychiatric patients in the least restrictive
environment.[104]
Rejecting the State's arguments and the interpretation adopted two years earlier by
the Eighth Circuit,[105] the Supreme Court ruled in
favor of the Federal Government, holding that the terms "intermediate care
facilities" and "institutions for mental diseases" were not necessarily
mutually exclusive.[106] To support its holding in the case, the Supreme
Court noted that the phrase "other than services in an institution for mental
diseases" was repeated three times in the Medicaid statute,[107]
which demonstrated that Congress did not intend the ICF and IMD categories to be mutually
exclusive.[108] In so doing, the Supreme Court upheld the
Department's regulations and interpretative guidelines pertaining to the IMD exclusion.[109]
To better clarify these definitional issues, Congress in 1988 adopted a statutory
definition of an IMD based upon the Supreme Court's decision in Connecticut Department
of Income Maintenance v. Heckler and the Department of Health and Human Services's IMD
interpretations. As mentioned previously, the
term "institution for mental diseases" has now been defined as "a hospital,
nursing facility or other institution of more than sixteen beds that is primarily engaged
in providing diagnosis, treatment or care of persons with mental diseases, including
medical attention, nursing care, and related services".[110]
As mentioned, this IMD statutory definition covers not only old traditional state
mental institutions but also freestanding psychiatric hospitals and care facilities
(specializing in psychiatric care) with more than sixteen beds. However, the 1988 definition of an IMD exempts
facilities with sixteen or fewer beds, which includes group homes, small residential
"board and care facilities", and other small psychiatric care facilities called
"semi-hospitals".[111] This small facility exemption is a benefit to many
persons with serious mental illnesses because categorically and medically needy
individuals residing in these facilities are eligible to qualify for Medicaid services.
However, individuals with the most severe and chronic forms of schizophrenia and
other serious mental illnesses often require ongoing and intensive treatment and require a
highly structured living environment and social services, which these small residential
board and care facilities and semi-hospitals are incapable of providing. State psychiatric hospitals and privately-owned
and operated IMDs have the appropriate medical and other professional personnel on staff
and can provide and coordinate necessary services required by persons with very disabling
mental illnesses because all of the services are provided through one entity in the
institutional setting.[112] This results in a greater "continuity of
care"[113] furnished to psychiatric
patients than can be obtained if the same individuals were to reside in smaller facilities
in the community.[114] Group homes, board and care facilities, and
semi-hospitals are not always able to provide adequate services required by persons with
the most severe and disabling forms of serious mental illnesses, thus making it necessary
for these individuals to have access to specialized psychiatric care services available
through an institutional setting.
In the early 1970s, two federal district court cases were brought against the
Secretary of Health, Education, and Welfare (HEW)[115] challenging the IMD
exclusion denying Medicaid coverage to persons between the ages of twenty-one and
sixty-five.[116] The "rational review" equal protection[117]
standard[118]
is applied by courts in judicial actions challenging social and economic classifications
set forth in the Social Security Act in deciding whether such distinctions are rationally
based and free from invidious discrimination.[119]
Plaintiffs in Legion v. Richardson[120], consisting of a class of
one million persons with mental illness confined in public mental institutions, brought an
action in U.S. district court in New York challenging the constitutionality of the
Medicaid IMD exclusion and Medicare restrictions on treatment in psychiatric hospitals[121]
on equal protection grounds. The plaintiffs
argued that such limitations in the Medicare and Medicaid statutes were a result of
arbitrary and invidious discrimination against patients in public mental institutions.[122] The plaintiffs claimed that due to this
discrimination they received inadequate care in state mental institutions, because no
federal funds were available to supplement the inadequate state appropriations.[123]
Declaring that all that is constitutionally required when a statutory
classification is not conceived on peculiarly suspect grounds is that the challenged
classification or restriction bear a reasonable relationship to the objectives sought to
be achieved by legislation, the district court upheld the IMD exclusion and the Medicare
psychiatric care restrictions.[124] The district court concluded that in enacting the
Medicare-Medicaid legislation, Congress believed that the care for patients in state
mental hospitals was the responsibility of the State.
Also, the court noted that Congress believed that the advances made in treating
psychiatric disorders were sufficient to indicate that soon patients with mental illnesses
would be treated in outpatient facilities, where remedial benefits would be available.[125]
The plaintiffs appealed the court's determination to the Supreme Court to no avail. The Supreme Court affirmed the lower court's
decision on the record, without oral arguments or a written opinion.[126]
The IMD exclusion was again challenged in federal district court in the District of
Columbia in 1976. Citing and basing its
decision on the same rationale expressed in Legion v. Richardson, the court, in Kantrowitz
v. Weinberger,[127] held that the IMD exclusion
did not violate the equal protection component of the Fifth Amendment.[128] This district court's decision was also affirmed
on appeal.[129]
In neither case did the United Supreme Court listen to oral arguments nor draft a
written judicial opinion regarding the constitutionality of the Medicaid statutory
exclusion of persons between the ages of twenty-one and sixty-five in institutions for
mental diseases.
The Supreme Court first specifically addressed the constitutionality of the IMD
exclusion in Schweiker v. Wilson[130] in the context of denial of
Supplemental Security Income (SSI) benefits
to otherwise-qualified individuals in public mental institutions. Pursuant to Section 1611(e) of the Social Security
Act, "inmates" of "public institutions" are ineligible to receive
standard SSI benefits under Title XVI of the Act.[131] Congress, however, made a partial exception to
this exclusion by granting a small comfort allowance of $300.00 annually[132]
($25.00 per month) to Medicaid-eligible patients in hospitals, nursing facilities, and
other extended care facilities covered under an approved state plan for medical
assistance.[133] However, this statutory provision specifically
denied these small comfort allowance benefits to persons between the ages of twenty-two
and sixty-four in public mental institutions because they were ineligible to receive
federal medical assistance.[134]
The Court, in a five to four decision, upheld the constitutionality of the federal
statutory exclusion of SSI comfort benefits to individuals in public mental institutions,
even though these limited SSI benefits were granted to patients in other medical
institutions and extended care facilities.[135] The Majority of the Supreme Court reasoned that
mentally ill individuals were not improperly excluded or disproportionately disadvantaged
as a class on the grounds that the challenged statutory provision did not create a
distinction between mentally ill and non-mentally ill individuals, but rather a
distinction between residents in public institutions which receive federal Medicaid
funding for their care and residents in other institutions where no Medicaid reimbursement
is available to cover the cost of their care.[136] The Court's majority opinion stated that the
constitutional requirement of equal protection is not an obligation to provide the best
governance possible.[137] This being the case, the Majority agreed with the
contention of the Secretary of HHS, who had articulated that the Congressional intention
behind the exclusion was to economize the disbursements of federal funds. The Government argued that the decision to limit
distribution of the monthly comfort allowances to individuals in public institutions
receiving Medicaid funding for their care was rationally related to a legitimate
legislative desire to avoid spending federal resources on behalf of individuals whose care
and maintenance were already being provided for by the States and local government
agencies.[138]
In a dissent by Justice Powell, joined by Justices Stevens, Brennan and Marshall,
the characterization that this classification was not based on mental illness was
vigorously attacked. Justice Powell stated
that, although "it is true that not all mentally ill people are denied the benefit,
and that some people denied the benefit are not mentally ill, it is inescapable that the
appellees are denied the benefit because they are patients in mental institutions."[139] Citing the legislative history of the 1965
Amendments to the Social Security Act, Justice Powell asserted that the residential
exclusion of large state institutions for the mentally ill in federal financial assistance
programs rested on two related principles: that "States traditionally have assumed
the burdens of administering this form of care, and the Federal Government has long
distrusted the economic and therapeutic efficiency of large mental institutions."[140]
If one were to challenge the constitutionality of the IMD exclusion today, he or
she might wish to argue that it is no longer rational to continue to make a distinction
between "institutions for mental diseases" and other medical institutions and
long-term care facilities.[141] The medical community now recognizes that
schizophrenia, bipolar disorder, and other serious mental illnesses to be neurobiological
disorders of the brain.[142] In light of this biological revolution in
understanding the brain (and these illnesses), the federal medical assistance program
should be required to cover the care and treatment of persons with serious mental
illnesses on par with other disabilities and illnesses by applying the same
nondiscriminatory "medical necessity" coverage criteria and requirements across
the board for all medical conditions.[143] Federal financial participation (FFP) allocated
for medical treatment and long-term (nursing) care of Medicaid patients should be
predominantly based upon what is "in the best interests of the recipients".[144] Although legitimate arguments can be made that it
is no longer rational to distinguish between IMDs and other medical institutions and
long-term care facilities and that the IMD exclusion discriminates against persons with
mental illnesses, it is unlikely that the Supreme Court would strike down this Medicaid
exclusion, if reviewed today, because Supreme Court precedent indicates that, in the area
of social and economic policy, costs and reimbursement exclusions are generally judged to
be rational classifications furthering legitimate governmental objectives.[145]
Although the IMD exclusion may not technically
violate the Equal Protection Clause of the Constitution,[146] the continued application
of this Medicaid exclusion discriminates against persons with severe mental illnesses. Therefore, as a matter of public policy, Congress
should take it upon itself to remedy this inherent inequality by repealing the Medicaid
IMD exclusion.
The evolution in psychiatric medicine, particularly in regards to understanding the
nature and causes of serious mental illnesses, provides a good reason for revisiting the
issue regarding the continued existence of the IMD exclusion.
The "institution for mental diseases" exclusion was first incorporated
into the Social Security Act in 1950 based upon the rationale that States generally
provided for the care and maintenance of persons in such institutions.[147] This, however, was during the height of
Freudian-based psychoanalysis[148] and other
non-biologically-based theories[149] to explain mental illnesses
which dominated American psychiatry and public perceptions of mental disorders in the
United States for the better part of the twentieth century.[150]
The practice of psychoanalysis gained widespread acceptance within the mainstream
of American psychiatry following its apparent success in the treatment of combat-related
neuroses during World War II.[151] During the postwar period, psychoanalysts exerted
significant influence in the development of federal mental health policy, as evidenced by
the critical role they played in the establishment of the National Institute of Mental
Health (NIMH)[152] in 1946 and by the generous
research and training grants awarded to psychoanalytical institutes during the first two
decades of its existence.[153] Based upon the psychiatric understanding of mental
illness during this postwar period, it seemed reasonable to deny Social Security benefits
to persons in IMDs while making such benefits available to (non-mentally ill and non-TB)
patients in other medical institutions.
Psychoanalysis and other nonbiological approaches for the treatment of serious
mental illnesses began to crumble with the discovery of organic drug therapies in the late
1950s and 1960s.[154] The proven effectiveness of early psychotropic
medications ignited the biological revolution in psychiatry.[155] The biological revolution in brain research slowly
led to the decline and repudiation of psychoanalysis and other non-biologically-based
theories for the treatment of serious mental disorders.[156] By the 1980s, most psychiatrists and mental health
professionals accepted the notion that schizophrenia and other severe mental illnesses are
biologically-based disorders of the brain.[157] As evidence of the repudiation of psychoanalysis
within the mainstream of American psychiatry, the American Psychiatric Association (APA)
released the third edition of the Diagnostic and Statistical Manual of Mental Disorders
(the DSM-III) in 1980, in which it deleted all references to psychoanalytical and
psychodynamic theories and explanations for serious mental disorders.[158] Today, virtually all psychiatrists and mental
health professionals recognize the biological nature of serious mental illnesses and the
importance of organic therapies in the treatment of these conditions.[159]
Within the past two decades, significant advances have been made in understanding
the workings of the brain, which has provided further scientific evidence supporting the
organic nature of these psychiatric disorders.[160] Even though the specific causal relationships for
the onset or manifestation of severe mental illnesses have yet to be determined,[161]
recent medical research has established neurobiological components or bases for a number
of psychiatric illnesses including schizophrenia, bipolar disorder, and major depression.[162] Magnetic resonance imaging (MRIs) and pathologic
studies have revealed structural brain abnormalities in persons with schizophrenia.[163] Abnormalities in cerebral blood flow,
neurochemical transmitters (e.g., increased dopamine levels), and neuronal impulses have
been found in individuals with schizophrenia.[164] With regard to mood disorders, abnormal
fluctuations in the level of neurotransmitters called monoamines (such as norepinephrine,
serotonin, and acetylcholine), have been identified in persons with bipolar disorder and
major depression.[165] Beyond this, most medical researchers in the field
of psychiatric medicine now believe that genetics plays a role in the development of
schizophrenia and other severe mental illnesses.[166]
Congress has now recognized that serious mental illnesses are biological disorders
of the brain and has recently mandated that by 1998 treatments for mental illness can no
longer be subjected to annual and lifetime caps in private health insurance policies when
no such coverage limitations are imposed for treatment for other physical illnesses.[167] Congress should take this realization one step
further and accept the fact that, in spite of the tremendous progress which has taken
place in the field of psychiatric medicine within the past three decades, there continues
to be a small but significant number of persons with chronic and disabling forms of
schizophrenia and other serious mental illnesses who are treatment-resistant to, or fail
to receive adequate benefits from, available medications and community-based treatment
services and will continue to need residential treatment or institutional psychiatric
care.[168] In addition to this population of chronic and
severely disabled psychiatrically ill individuals, a number of persons with these
disorders are initially treatment-resistant to standard psychotropic medications and/or
experience a relapse in their condition. These
individuals could greatly benefit from specialized inpatient psychiatric care and other
therapeutic services provided on an outpatient, and partial hospitalization, basis through
(public and private) psychiatric hospitals.[169]
The federal medical assistance program purports to operate under a "best
interest of the recipient" standard based upon a non-discriminatory policy without
regard to specific diagnosis, type of illness, or condition.[170] Pursuant to this policy rationale underlying the
federal Medicaid statute, it would seem reasonable that if a physician (i.e., a
psychiatrist) determines that the most appropriate and "medically necessary"
care and placement for an otherwise eligible Medicaid patient is in a state psychiatric
hospital or another facility which specializes in the care and treatment of persons with
psychiatric disorders that this professional medical judgment should be respected and
carry the controlling weight in determining the proper care and placement for that
patient. Old statutory classifications and
distinctions allowing for federal medical assistance payments for some acute and long-term
care of persons with some organic disorders[171] while denying payment for
other medically necessary care for (otherwise eligible) recipients with other types of
neurobiological disorders is arbitrary, irrational, and discriminatory.
Congress should mandate that Medicaid apply the "medically necessary"
standard across the board for all medical neuro-biological disorders.[172] Using the "medical necessity" standard,
the Eighth Circuit Court of Appeals, in Pinneke v. Preisser,[173]
held that the Iowa Medicaid agency had to cover a sex reassignment surgical procedure for
a transsexual Medicaid recipient. Based upon
expert medical testimony, the trial court had determined that this sex conversion
procedure was the only medically necessary and available treatment for this individual's
transsexual condition. The district court and
circuit court held that Iowa's decision to deny Medicaid payment for this procedure
violated the Medicaid regulation prohibiting state agencies from arbitrarily denying or
reducing the amount, duration, or scope of required services to eligible recipients based
solely upon a patient's diagnosis or condition.[174] The appellate court cited the legislative history
of the 1965 Amendments to the Social Security Act to support its assertion that Congress
intended professional medical judgments to play the primary role in the determination of
medically necessity.[175] The report from the Senate Finance Committee
provided that "the physician is to be the key figure in determining the utilization
of health services", and that "it is a physician who is to decide upon admission
to a hospital, order tests, drugs and treatments, and determine the length of stay."[176] This same "medically necessary" coverage
standard should apply with regard to Medicaid payment of psychiatric health services and
long-term (psychiatric) care.[177]
Beyond the evolution in the medical understanding of psychiatric disorders,
significant societal consequences have resulted from the Medicaid IMD exclusion and other
federal mental health incentives promoting the utilization of community-based mental
health services. As discussed earlier,[178]
one of the primary public policy goals of the federal mental health initiatives adopted
during the 1960s was to encourage States to deinstitutionalize patients from public
psychiatric hospitals and provide care for these individuals through community mental
health centers.[179] The incorporation of the IMD exclusion into the
1965 Amendments to the Social Security Act, in particular the Medicaid statute, was a
coordinated and logical extension of this federal mental health policy.
Deinstitutionalization, with its emphasis on community mental health services, has
benefitted numerous persons with serious mental illnesses who otherwise would have been
institutionalized.[180] The humanitarian purpose underlying the
deinstitutionalization movement is premised upon the notion that these individuals will be
able to make a successful adjustment to life in the community and assumes that their
conditions can be properly maintained on an outpatient basis with the appropriate
medications.[181] Unfortunately, however, this is not always the
case.
Consequently, the Medicaid IMD exclusion, in conjunction with the overall shift in
public mental health financing based on the Federal Government's mental health policy of
promoting community-based treatment services, has contributed to and/or exacerbated
problems for a number of individuals with severe forms of schizophrenia and other serious
mental illnesses who have not been as fortunate in making a successful transition to life
in the community. It is estimated that
between 150,000 to 200,000 persons with a primary diagnosis of schizophrenia, bipolar
disorder, or another serious mental illness are homeless in the United States on any given
day.[182] Besides homelessness, deinstitutionalization has
brought with it or led to an increase in the number of persons incarcerated in prisons and
jails across America who suffer from severe mental illnesses.[183] A study of prisons in the United States in the mid
to late 1980s concluded that ten to fifteen percent of inmates had a major thought
disorder or mood disorder and needed treatment services associated with a chronic and
severe mental illness.[184] Also, a 1992 survey of the nation's jails found
that 7.2 percent of inmates, or approximately 30,700 persons, suffered from a serious
mental illness.[185] All told, it is estimated that approximately
150,000 mentally ill individuals (or more) are incarcerated in jails and prisons across
the country.[186] Many mentally ill persons confined in jails across
the country are held without charge or are incarcerated for nonviolent misdemeanor
offenses, such as disorderly conduct.[187] Thus, the era of deinstitutionalization has
created a "revolving door" phenomenon for approximately 150,000 to 300,000
persons suffering from severe mental illnesses, between living on the streets, being
confined in jails and prisons, and being civilly committed to hospitals for short periods
of time.[188]
Beyond the societal problems resulting from deinstitutional-ization, States have
found ways to circumvent the IMD exclusion by playing the financial incentive game created
by Medicaid's statutory funding mechanisms. As
discussed previously,[189] Medicaid covers services
furnished to eligible recipients residing in general hospitals and nursing facilities with
no special payment rules regarding diagnosis or the provision of psychiatric care
services.[190] This has led States to engage in the practice of
cost-shifting by discharging chronically mentally ill patients from state psychiatric
hospitals and, after a relapse, admitting these former institutionalized patients to
general hospitals and nursing facilities.[191] This cost-shifting has resulted in inappropriate
placements and treatment decisions for a significant number of chronically mentally ill
patients, based not upon "what is in the patient's best interests", but upon
whether federal funds are available to cover the provided treatment services.[192]
Illustrating this cost-shifting phenomenon, a 1989 report of the Agency for Health
Care Policy and Research estimated that of the 1.5 million nursing facility residents in
the United States greater than 29 percent had a mental disorder other than or in addition
to a dementia-related disorder, and 15.5 percent of the residents had a mental
disorder(s), but no dementia.[193] Based upon these nursing facility population
percentages, it is estimated that between 232,500 and 435,000 residents suffer from a
serious mental illness other than or in addition to a dementia-related disorder.[194] More recent research studies now estimate the
total nursing facility population in the United States to be over two million[195]
and reveal that 150,000 residents have schizophrenia, including a large percentage of
individuals under sixty-five years of age.[196] As these numbers indicate, serious questions arise
as to whether such persons in these nursing facilities are actually receiving the most
appropriate and medically necessary care for their conditions.[197]
There is no indication in the legislative history of either the Community Mental
Health Centers Act or the 1965 Amendments to the Social Security Act that Congress
intended the States to engage in mental health cost-shifting to such an extent that
severely mentally ill persons, who are not prepared to make the adjustment to life in the
community, are discharged from state psychiatric hospitals, or that the state governments
fail to uphold their traditional responsibility of furnishing necessary institutional care
for (new) patients who require such services.[198] Nevertheless, States have either abandoned or
significantly relaxed the standards of care owed to these patients in order to obtain
federal Medicaid funding and other federal subsidies for these individuals.[199]
States, in reliance upon federal funds to help pay for mental health services, have
been inclined to abrogate their responsibility to provide care and maintenance services
for chronic and severely mentally ill individuals who continue to require long-term
psychiatric care. This abrogation of
responsibility can be seen in the closures of state psychiatric hospitals nationwide (with
no guarantees of adequate and/or continuous aftercare services for former patients), and
in the significant reductions in state appropriations for institutional care and
rehabilitative services.[200] As a result, the most vulnerable mentally ill
individuals in the United States are left unprotected under both federal and state law.
Therefore, rather than furthering the positive and well-meaning purposes of
deinstitutionalization, the Medicaid IMD exclusion, employed in conjunction with other
federal incentives encouraging the use of community mental health services, has helped to
create a system of premature release and "transinstitutional-ization"[201]
for many mentally ill individuals who need extended psychiatric hospitalizations or
residential treatment services. The Federal
Government should recognize and accept the fact that these funding mechanisms are
partially, or indirectly, responsible for the unintended consequences which have resulted
from the States' reliance upon federal mental health policy incentives. One means by which Congress could partially
rectify this situation and lessen the social problems and inappropriate placements created
by States trying to take advantage of these federal funding incentives is by abolishing
the exclusion of federal medical assistance for services provided to otherwise-eligible
individuals (between the ages of 22 and 64) in psychiatric hospitals (i.e., IMDs).[202] Nonetheless, budgetary concerns have seemed to
take precedence over the need to eliminate these social problems and other inequities
caused by the Medicaid IMD exclusion.[203]
Beyond the social policy arguments for lifting the IMD exclusion, the principal
rationale behind allowing this discriminatory exclusion to stand is based upon budgetary
concerns resulting from an extension of federal financial responsibilities if this
Medicaid exclusion is repealed, especially in this era of tight budgetary constraints.
The Health Care Financing Administration (HCFA) completed a review and a report to
Congress in December 1992 concerning the cost implications of abolishing the Medicaid IMD
exclusion.[204] HCFA projected in this 1992 report that
eliminating the IMD exclusion would increase federal Medicaid expenditures for alcohol,
drug abuse, and mental health (ADM) treatment services[205] by approximately 1.73
billion dollars annually.[206] HCFA attempted to justify the continuation of the
Medicaid IMD exclusion by stating that traditional inpatient or institutional psychiatric
care is not as cost-effective as treatment alternatives provided through community-based
programs.[207] Therefore, the Health Care Financing
Administration recommended that no major changes be made with regard to the IMD exclusion.[208]
This determination, however, ignores the fact that a small but significant number
of persons with chronic and severe forms of schizophrenia and other serious mental
illnesses continue to be treatment-resistant and need a structured living environment and
coordinated treatment services and other activities, which are best provided through a
state psychiatric hospital or another institution specializing in psychiatric care.[209] Thus, it is fair and legitimate criticism to cite
this HCFA report for failing to address issues concerning the inequitable treatment and
discrimination against persons with the most severe and disabling forms of schizophrenia
and other serious mental illnesses.[210]
In addition to the criticisms relating to the discrimination against the most
chronic and severely mentally ill individuals' need for extended and/or long-term care in
a psychiatric facility, the continuation of the Medicaid IMD exclusion fails to recognize
the changing nature of inpatient psychiatric care which has developed since the inception
of the IMD exclusion.
Even with the many breakthroughs that have occurred in psychopharmacology since the
1960s, inpatient hospitalization is often necessary to treat and stabilize a psychiatric
patient who suffers an acute episode or has an exacerbation of psychotic symptoms, before
the individual can be appropriately monitored and maintained
on an outpatient basis with the proper medications and rehabilitation services furnished
through community mental health programs. Freestanding
(or specialty) psychiatric hospitals with larger, coordinated staffs consisting of
psychiatrists, psychiatric nurses, and other clinical professionals are designed to offer
greater continuity of care for patients, from inpatient care and/or specialized
residential treatment programs through a continuum of aftercare services (e.g., partial
hospitalization programs and other outpatient psychiatric and mental health services),
than are available through psychiatric units in general hospitals and separate
outpatient-based community mental health service programs.[211] Moreover, psychiatric hospitals are more willing
to accept and care for difficult patients with very severe conditions, who are denied
admission or treatment at general hospitals.[212] Nevertheless, the continuation of the IMD
exclusion precludes state Medicaid programs from taking advantage of the intensive
treatment programs, greater continuity of care, and the other innovations in psychiatric
care offered by psychiatric hospitals which are available to the general public and
covered by private health insurance plans.[213]
Beyond the treatment benefits offered by psychiatric hospitals, the repeal of the
IMD exclusion would provide economic advantages in controlling costs of inpatient
psychiatric care and related services covered under state Medicaid programs. The Medicaid IMD exclusion is anticompetitive in
nature because it restricts patients' choice of provider (for otherwise eligible
recipients between twenty-two and sixty-four years of age) to inpatient psychiatric care
services provided at general hospitals (and crisis centers or semi-hospitals with sixteen
or fewer beds).
To illustrate the anticompetitive nature of the IMD exclusion, the National
Association of Psychiatric Health Systems (NAPHS) completed a nationwide study, in May
1995, of the per diem costs and average length of stays at psychiatric hospitals versus
that of inpatient psychiatric care provided at general hospitals.[214] This study found that the average of cost per day
in a freestanding psychiatric hospital was slightly less than the per diem costs of
inpatient care in a psychiatric unit of general hospitals ($485.67 to $499.05).[215] The average length of stay (ALOS) at the
freestanding psychiatric hospitals was 17.3 days, as compared to 13.36 days in general
hospitals.[216]
Therefore, with regard to acute inpatient psychiatric care, hospitalizations in
specialty psychiatric hospitals function as viable and comparable substitutes for
inpatient psychiatric treatment in general hospitals.
This substitution lends creditability to the notion that lifting of the IMD
exclusion, for acute inpatient psychiatric services, would not create a new benefit for
States, under Title XIX of the Social Security Act, but rather would allow inpatient
services in freestanding psychiatric hospitals to serve as comparable substitutes for
inpatient psychiatric services in general hospitals.
Additionally, if the IMD exclusion were to be repealed, State Medicaid agencies
would have greater leverage to negotiate better prices for inpatient psychiatric hospital
services because more health care providers would be eligible to bid for state Medicaid
contracts to provide such care.[217] More significantly, opening up the bidding process
to specialty (and/or public) psychiatric hospitals to furnish acute inpatient psychiatric
hospitalization services for Medicaid recipients (of all ages) could enhance the quality
and continuity of care received by psychiatrically ill Medicaid patients, which could help
reduce the rate or risk of decompensation of patients who would require further inpatient
hospitalization.
Also, since a significantly greater number of chronically mentally ill persons have
already been transinstitutionalized into nursing facilities[218]
than remain in traditional IMDs (i.e., public psychiatric hospitals),[219]
a similar compromise could be devised (after an appropriate investigation and
deliberation) which would provide federal medical assistance for institutional psychiatric
care or residential treatment services for (all) otherwise-eligible Medicaid recipients
found to require such services, on a comparable basis to federal Medicaid reimbursements
for nursing facility services.[220] In so doing, this could help reduce the number of
inappropriate placements of psychiatric patients in nursing facilities because States
would have less incentive to play the mental health funding game, at the expense of
chronically and severely mentally ill Medicaid recipients.[221]
After acknowledging the inappropriate treatment and placement decisions and the
other unintended consequences caused by the Medicaid IMD exclusion, applied in conjunction
with other federal mental health incentives discouraging the use of specialized inpatient
psychiatric care, policymakers would realize that there are other nondiscriminatory means
by which to contain federal expenditures for inpatient and residential psychiatric care,
without continuing to deny federal medical assistance for services provided to
otherwise-eligible individuals between twenty-two and sixty-four years of age in
psychiatric hospitals.
First, as mentioned earlier, opening up the competitive bidding process, to allow
more health care entities to compete for Medicaid contracts to provide inpatient
psychiatric hospital services (and specialized psychiatric nursing services or residential
psychiatric care for eligible individuals), could give state Medicaid agencies greater
leverage in negotiating better prices for such care and services.
Beyond this, the Federal Government should require a certification of medical
necessity (CMN) before reimbursing the State for such care and services. Within this CMN requirement, the Federal
Government should mandate, as a prerequisite for federal payment of services provided in
psychiatric hospitals and residential treatment facilities, that all feasible less
intensive treatment alternatives (i.e., community mental health service programs and
standard psychotropic medications) be tried and be proven unsuccessful in treating the
patient.[222] Likewise, the Federal Government should require
that States adopt concurrent and retrospective utilization control procedures to guard
against extended and unnecessary use of inpatient psychiatric hospital services, weeding
out patients who can be rightfully discharged and appropriately treated and monitored on
an outpatient basis.[223]
Congress could also limit federal medical assistance payments to services which are
considered to be primarily medical or therapeutic in nature, thereby excluding federal
payment for activities deemed to be social, educational, or vocational in nature.[224] As for Medicaid-eligible patients requiring
extended or long-term psychiatric care in traditional state hospital settings, it should
be permissible for the Federal Government to restrict federal payment to strictly cover
"active treatment" services, as opposed to covering services which are
determined to be "maintenance" level treatment services or "custodial
care".[225]
Although traditionally it was the responsibility of the States to care for severely
mentally ill persons through institutionalization in state asylums, since the mid 1960s
the Federal Government has been setting the agenda for the provision of psychiatric and
mental health services in our nation. Not
only through the creation of significant financial incentives promoting the use of
community-based mental health services, but also indirectly through the denial of Medicaid
payment for institutional psychiatric care via the IMD exclusion, the Federal Government
has been quite successful over the past thirty years in encouraging States to
deinstitutionalize patients from state hospitals.
The Federal Government should now acknowledge and accept partial responsibility for
the foreseeable harm and unintended consequences which have occurred as a result of such
policies promoting deinstitutionalization.[226] Congress could help rectify the problems caused by
deinstitutionalization by abolishing the IMD exclusion under Title XIX of the Social
Security Act, thereby enabling Medicaid-eligible recipients with serious mental illnesses
to gain access to medically necessary and appropriate psychiatric care for their
conditions.
In calling for the repeal of the IMD exclusion, this analysis is not suggesting the
necessity of returning to the days of warehousing psychiatrically ill persons in state
mental institutions; rather the point of this analysis is that federal medical assistance
should be allocated on the basis of what is medically necessary and appropriate for a
given patient. At the present time, however,
the appropriations of federal funds under the Medicaid program to cover services furnished
to eligible individuals in need of inpatient and/or residential psychiatric care are not
based upon medical considerations and the best interests of the recipients, but upon
whether a particular institution or facility is eligible to receive such payments.
Thus, although the IMD exclusion may not technically violate the Equal Protection
Clause of the Fourteenth Amendment to the United States Constitution, the continued
application of this Medicaid exclusion discriminates against a class of (otherwise)
eligible recipients (twenty-two to sixty-four years of age) with chronic and severe
neurobiological brain disorders through the denial of coverage of, and access to,
medically necessary and appropriate inpatient psychiatric care (and/or residential
treatment services) in facilities which specialize in the care and treatment of persons
with psychiatric illnesses, especially when no similar statutory exclusions are imposed
for Medicaid coverage of other types of inpatient hospital and long-term care services for
recipients with other medical disorders.
In its place, this analysis advocates that the general nondiscriminatory policies
underlying Title XIX of the Social Security Act and the Medicaid Regulations be applied
across the board regardless of whether the prescribed treatment and care services are
furnished in general hospitals, nursing facilities, or other properly licensed medical
institutions or extended care facilities, including psychiatric hospital facilities. This reasonable modification would not only be
consistent with an underlying principle of the Medicaid program to provide services in the
"best interest of the recipient", but also this revision would help eliminate
the financial incentives for States to engage in mental health cost-shifting through the
inappropriate placement of chronically and severely mentally ill individuals in nursing
facilities in order to obtain federal Medicaid reimbursement for such care, rather than
ensuring that these recipients receive the most appropriate care for their conditions. Utilization review and control procedures could
also be implemented across the board to guard against extended or unnecessary use of
psychiatric hospital services and residential psychiatric care for patients who can be
medically discharged and appropriately treated on an outpatient basis.
Beyond the medical and social policy arguments for abolishing the IMD exclusion,
repealing this outdated federal Medicaid exclusion could yield economic benefits for the
States and the Federal Government in the long term with regard to the payment of Medicaid
benefits for psychiatric and mental health services.
First, abolishing the IMD exclusion today would not in actuality create a new
benefit for States in terms of covering inpatient and/or long-term psychiatric hospital
services, inasmuch as the vast majority of state psychiatric patients have now been
deinstitutionalized or transinstitutionalized into other medical and/or long-term care
facilities which are eligible to receive Medicaid payment.
In addition, opening up the bidding process to allow more institutional providers
to compete for Medicaid contracts would give state Medicaid agencies greater leverage in
negotiating the best rates for inpatient psychiatric hospital services and appropriate
long-term (nursing) care for chronically and severely psychiatrically ill Medicaid
recipients. Moreover, permitting specialty
and/or public psychiatric hospitals to furnish necessary psychiatric care and mental
health services to Medicaid recipients could enhance the quality and continuity of care
received by psychiatrically ill Medicaid patients. This,
in turn, could conserve Medicaid resources in the long run by reducing the rate or risk of
decompensation of patients requiring further inpatient hospitalization.
In conclusion, persons suffering from schizophrenia, bipolar disorder, and other
serious mental illnesses have endured much societal stigma and discrimination based upon
ignorance and misunderstandings of these disorders, especially in regards to the delivery
and coverage of health care services. In
addition to coping with the various challenges and difficulties which life presents, these
individuals should not also have to continue to endure the chaos and inadequacies in our
present public mental health system. The
present inequities in the delivery and coverage of psychiatric and mental health services
evolved from outdated notions and distinctions pertaining to psychiatric illnesses that
have now been rejected by modern medical science.
This is not right; America can do and deserves better. Congress, building upon the
new consensus that it took to enact the Mental Health Parity Act of 1996,[227]
should ensure that categorically and medically needy individuals have access to the most
appropriate and medically necessary psychiatric and mental health services by repealing
the Medicaid IMD exclusion.
[1] National Advisory Mental Health Council, Health Care Reform for Americans With Severe Mental
Illnesses 7 (1993) (hereinafter NAMHC Rep.). The NAMHC
Rep. was requested by Senate Appropriations Committee, in S. Rep. No. 102-397, and
the executive summary of the report has been republished in 150 Am. J. Psychiatry 1447-1465 (Oct. 1993). It is estimated that approximately 5.6 million
Americans suffer from a serious mental illness today, based upon a 1995 total population
estimate of 262 million persons in the United States.
See E. Fuller Torrey, Out Of The Shadows: Confronting America's mental illness
crisis 6 (1996) (hereinafter Out Of The
Shadows).
[2] It has been estimated that each
year in the United States, approximately one in a hundred persons, or 2.0 to 2.62 million
persons are diagnosed as having schizophrenia based upon the above mentioned 1995 United
States population estimate of 262 million persons. Center for Mental Health Services, Substance Abuse &
Mental Health Services Administration, Public Health Service, U.S. Dep't of Health &
Human Services, DHHS Pub. No. (SMA) 94-3011,
A New Federal Focus for the Prevention and
Treatment of Mental Illness 7 (1994) (hereinafter CMHS 1994 pamphlet). In addition, it is estimated that approximately
3.7 million Americans have or will develop schizophrenia during their lifetime. See E.
Fuller Torrey, Surviving Schizophrenia
6 (3rd ed. 1995).
It is noteworthy that schizophrenia, (originally called dementia praecox),
is the most prevalent serious mental illness which requires long-term hospitalization or
institutional psychiatric care. Interviews
with E. Fuller Torrey, M.D., a research psychiatrist at the National Institute of Mental
Health, Neuro-Science Center at Saint Elizabeth's Hospital, in Washington, D.C. (Oct. 27,
1995; Mar. 15, 1996) (hereinafter Interviews with Dr. Torrey) and with Roger Peele, M.D.,
the past superintendent and chairperson of the psychiatric department at Saint Elizabeth's
Hospital and current President of Washington Psychiatric Society, in Washington, D.C.
(April 9, 1996) (hereinafter Interview with Dr. Peele).
See infra notes 13-17 and accompanying text for a discussion of the
estimated number of persons with schizophrenia requiring long-term hospitalization or
institutional psychiatric care.
[3] Estimates indicate that at least
1.1 million people are affected by bipolar (affective) disorder or manic-depression. See Torrey,
Surviving Schizophrenia, supra note 2, at 6.
Also, it is not uncommon for patients with the most severe forms of bipolar
disorder to be treatment-resistent and require long-term residential or institutional
psychiatric care. Interviews with Dr. Torrey
and Dr. Peele, supra note 2.
[5] Title XIX of the Social Security
Act, enacted as part of the Social Security Amendments of 1965, established the federal
Medicaid program. 42 U.S.C. � 1396 et seq.
(1994). A complete overview and discussion of
the relevant statutory and regulatory Medicaid provisions is set forth in part II.A of
this article, infra notes 54-87.
[6] See Congressional Research Service (CRS), Medicaid Source Book: Background Data and Analysis
913 (January 1993) (App. E: Medicaid Services For The Mentally Ill) (hereinafter CRS, Medicaid Source Book, Medicaid Services
For The Mentally Ill).
[7] States participating in the
federal medical assistance program must cover
persons who are deemed under the Act to be "categorically needy". 42 U.S.C. � 1396a(a)(10) (1994). Persons with severe mental illness typically
qualify for Medicaid services based upon eligibility for Supplemental Security Income
(SSI), by virtue of being determined to be "disabled" within the meaning of the
Social Security Act. The other main
classification of "categorically needy" individuals who are eligible for
Medicaid services are recipients of "Aid to Families with Dependent Children"
(AFDC). 42 U.S.C. � 1396a(a)(10) and �
1396d(a) (1994) and 42 CFR 435.100 et seq., 435.500 et seq., 435.600 et seq., and 435.700
et seq. (1995). The relevant statutory and
regulatory provisions of the federal medical assistance program are set forth in part II
of this article, infra notes 54-87.
Additionally, Medicaid does not distinguish between expenditures made for
treatments for mental versus physical conditions. CRS,
Medicaid Source Book, Medicaid Services For The Mentally Ill, supra
note 6, at 913. As a result, estimates of the
total number of eligible persons with mental illness covered under Medicaid have been
difficult to pinpoint. However, using Social
Security Administration research data regarding SSI benefits, reveal that 26.4 percent of
SSI recipients had a primary diagnosis of a mental disorder, (other than mental
retardation). Id. at 915.
[8] CRS, Medicaid Source Book, Medicaid Services
For The Mentally Ill, supra note 6, at 913.
In comparison to Medicaid coverage of on-going mental health services, Medicare's
hospital insurance, (Medicare Part A), covers 90 days of inpatient hospital care and 100
days of extended care services in a skilled nursing facility (for rehabilitation), per
"spell of illness". Beyond these
"spell of illness" coverage limitations, Medicare allows for an additional 60
days of inpatient hospitalization under a lifetime reserve policy, which may only be used
once. Also, Medicare places a lifetime
limitation of 190 days on inpatient treatment in psychiatric hospitals; no similar
lifetime coverage limitations are imposed for services provided in other types of hospital
settings. See Section 1812(a) and
(b)(1)-(3) of the Social Security Act, 42 U.S.C. � 1395d(a) and (b)(1)-(3) (1994). Nevertheless, this article will strictly focus on
Medicaid because it is the primary source of federal funding for ongoing psychiatric care
and mental health services.
[9] Torrey, Out Of The Shadows, supra note 1,
at 93 citing Kiesler, Mental Health Policy as a Field of Inquiry for Psychology,
35 American Psychologist 1066-1080 (1980).
Bruce C. Vladeck, the Administrator
of the Health Care Financing Administration (HCFA), stated during questioning before a
House subcommittee that Medicaid is now the number one source of funding for expenditures
for treatment of mental illness. See
testimony of HCFA Administrator Bruce Vladeck, before the U.S. House of Representatives,
Committee On Governmental Reform and Oversight, Subcommittee on Human Resources and
Intergovernmental Relations, on January 18, 1996, regarding Unfunded Mandates in
Medicaid, 1996 Federal Document Clearing
House, Inc., Federal Document Clearing House
Congressional Testimony, (January 18, 1996), (hereinafter Testimony of HCFA
Administrator Vladeck). This House
subcommittee hearing was televised on C-SPAN.
[10] See C.A. Taube et al., Medicaid
Coverage for Mental Illness, Health Affairs,
Spring 1990, at 5-18.
[11] Patient success rates with
antipsychotic medications can vary greatly. However,
the Center for Mental Health Services (CMHS) estimates that medication can help up to 80
percent of persons diagnosed with bipolar disorder and can relieve acute symptoms in 80
percent of persons diagnosed with schizophrenia. See
CMHS 1994 pamphlet, supra note 2, at 5. During
interviews with Dr. Torrey, supra note 2, he stated that on average 80 to 85
percent of all patients with schizophrenia and bipolar disorder (after stabilization) can
now be treated and cared for on an outpatient basis with the proper medications and
monitoring.
Clozapine and risperidone are examples of two recently approved drugs by the
Federal Food and Drug Administration (FDA) which have been successful in treating patients
with schizophrenia and related disorders. Lithium,
discovered in Australia in 1948 but not introduced in the United States until the 1970's,
has become the standard form of treatment of persons with bipolar disorders. Lithium has proven to be an effective treatment
for bipolar disorders in approximately 75 to 80 percent of all cases. See Torrey,
Surviving Schizophrenia, supra note 2, at 190-216. See also A. Gelenberg, Report on the
Efficacy of Treatments for Bipolar Disorder, published in the NAMHC Rep., supra note 1, at 75-85.
Another useful treatment employed to treat some medication-resistant patients with
schizophrenia and bipolar disorder(s), (short of long-term hospitalization), is
electroconvulsive therapy (ECT or "shock therapy"). See NAMHC
Rep., supra note 1, at 10 and Torrey,
Surviving Schizophrenia, supra note 2, at 108, 218.
Furthermore, research studies based upon clinical trials have verified the efficacy
of modern treatments for serious mental disorders and have provided a scientific basis for
clinical decision-making. The efficacy of
many treatments for severe mental disorders is now recognized as being comparable to or
exceeding that of other medical procedures, such as angioplasty and atherectomy. See NAMHC
Rep., supra note 1, at 8-12. See
also Office of Technology Assessment
(OTA), U.S. Congress, Pub. No. OTA-BA-538, The Biology of Mental Disorders (Sept. 1992),
(hereinafter OTA Rep., Biology of Mental Disorders).
[12] Prescription drug coverage is an
optional benefit under the federal Medicaid program, set forth in Section 1905(a)(12) of
the Social Security Act, 42 U.S.C. � 1396d(a)(12) (1994).
However, once a State decides to cover prescription drugs in its state Medicaid
plan, it cannot discriminate on the basis of type of prescription medication or condition. See Visser v. Taylor, 756 F. Supp. 501 (D.
Kan. 1990), citing 42 CFR 440.230(c); see also Alexander L. v. Cuomo, 588
N.Y.S. 2d 85 (N.Y. App. 1992). Prescription
drugs covered by Medicaid must, however, be approved by the federal Food and Drug
Administration (FDA) as being safe and effective.
[13] See Torrey, Out Of The Shadows, supra note 1,
at 91; Torrey, Surviving Schizophrenia, supra
note 2, at 248-250; Roger Peele, The Indispensable St. Elizabeths, The Washington Post, February 11, 1996, at C8,
(hereinafter Peele, The Indispensable St. Elizabeths); and Roger Peele, In Pursuit
of the Promise: The Needs of Washington's Psychiatrically Ill and Saint Elizabeths, 4,
18-23 (March 22, 1996), (unpublished manuscript, on file with the Washington Psychiatric
Society), (hereinafter Peele, In Pursuit of the Promise).
In interviews with both Dr. Torrey and Dr. Peele, supra note 2, these
psychiatrists expressed their professional opinions that for the most severely disabled
mentally ill individuals repeated short-term hospitalizations in psychiatric units of
general hospitals fail to yield satisfactory long-term solutions for their chronic
conditions and problems. Additionally,
nursing facilities and small board and care facilities generally do not have
professionally trained staff, such as a full-time psychiatrist on site, nor the capacity
to provide specialized psychiatric and other mental health services to these severely
disabled individuals, which would allow them to function at their optimum functioning
level on a continual basis. Therefore, even
with the advanced medicines of today, long-term care in asylums offers chronic and
severely mentally ill individuals who are unable to protect or fend for themselves the
best hope and possibility of achieving their maximum functioning potential, in terms of
overall quality of life. Id. See also infra note 15.
Further note, Dr. Peele prefers to use the terms "psychiatrically ill"
and "psychiatric illness", in place of "mentally ill" and "mental
illness". However, in an effort to
maintain consistency, this analysis will use the traditional term "serious mental
illness" in reference to this category of psychiatric disorders.
[14] Rose Marie Friedrich and Curtis
B. Flory, The Need for a Policy on Long Term Care, (January 1996), (unpublished
manuscript, on file with The National Alliance for the Mentally Ill) (NAMI).
[15] This ten percent figure is based
upon the treatment-resistant population in areas with the best outpatient psychiatric
services and mental health programs, like the "Program Assertive Community
Treatment" (PACT) in Dane County (Madison), Wisconsin.
See Torrey, Surviving Schizophrenia,
supra note 2, at 249. Beyond this, in
interviews, Dr. Torrey stated that, on average, between 15 to 20 percent of persons with
schizophrenia and bipolar disorder do not receive satisfactory benefits from medication
for treatment on an outpatient basis and will continue to require long-term
hospitalization or residential psychiatric care. Interviews
with Dr. Torrey, supra note 2. This 15
to 20 percent figure is the inverse of the 80 to 85 percent estimate that patients with
these disorders (after stabilization) can be maintained on an outpatient basis with the
proper medications and monitoring, cited in supra note 11.
These professional views and contentions are supported by Dr. Peele, who stated
that there is a small proportion, but a significant number, of chronic psychiatrically ill
persons who, even with the most modern treatment approaches, are unable to live in the
community and will require indefinite care at Saint Elizabeths (Saint Elizabeth's
Hospital) (or other psychiatric hospitals or institutions).
Interview with Dr. Peele, supra note 2.
See also Peele, The Indispensable St. Elizabeths and Peele, In
Pursuit of the Promise, supra note 13, at 4 and 18-24.
[16] This 20 percent estimate is
based on the inverse of CMHS's estimate that medication can help up to 80 percent of
persons diagnosed with bipolar disorder and can relieve acute symptoms in 80 percent of
persons diagnosed with schizophrenia. See supra note 11, citing the
CMHS 1994 pamphlet, at 5.
Additionally, the National Advisory Mental Health Council (NAMHC) stated, in its
1993 report, supra note 1, at 9, that clinical trials over the last 30 years reveal
that antipsychotic medications initially reduce psychotic symptoms in 60 percent of
patients with schizophrenia and in 70 to 85 percent of patients experiencing symptoms for
the first time. Nevertheless, even when
medication is sustained, 60 percent of patients will relapse to the point of requiring
inpatient care. Id. Adding in psychosocial treatment programs to
medication regimens can reduce the rehospitalization rate to 25 to 30 percent within a 2
year period. Id. Also, the NAMHC mentioned that new medications,
such as clozapine and risperidone, are effective in nearly one-third of patients who were
previously unresponsive to all treatments. Id. However, this still leaves approximately 26.6
percent, (40 percent minus one-third), of persons with schizophrenia who are
treatment-resistant to standard antipsychotic medications.
[17] Dr. Torrey stated in his book, Surviving Schizophrenia, supra note 2, at
249, that in areas with few outpatient services less than half of all seriously mentally
ill persons would fare better living in the community than in an institutional setting. He further stated that, based upon his
professional experience, at least one-quarter of the patients discharged from Saint
Elizabeth's (Hospital) are worse off living in the community in terms of quality of life
than if they had remained in the hospital. Id.
[18] See supra note 16, citing
the NAMHC Rep., supra note 1, stating
that, even when medication is sustained, 60 percent of patients will relapse and will
require inpatient care.
[19] See part III.C, supra
notes 211-213 and accompanying text, for a further discussion of the treatment advantages
in freestanding (specialty) psychiatric hospitals versus inpatient treatment in
psychiatric units in general hospitals.
[20] Pursuant to Section 1905(a) of
the Social Security Act [42 U.S.C. � 1396d(a) (1994)], the term "medical
assistance" specifically excludes federal payment for services provided in an
"institution for mental diseases" (IMD). However,
sections 1902(a)(20) and 1905(a)(14) [42 U.S.C. �� 1396a(a)(20) and 1396d(a)(14) (1995)]
provide an exception to the IMD exclusion for individuals sixty-five years of age and
older if covered under the State's Medicaid plan. Subsections
1905d(a)(16) and (h) [42 U.S.C. � 1396d(a)(16), (h) (1994)], added in 1972, provide for
federal Medicaid payments to cover services provided to individuals 21 years of age or
younger in psychiatric hospitals.
[22] An in-depth discussion and
analysis pertaining to the medical institutions and facilities which constitute an
"IMD", under the statutory definition of an "IMD", and other relevant legal issues are set forth in part II.C of this
article, infra notes 98-114 and accompanying text.
Also, the contentions raised in this analysis, for abolishing the Medicaid IMD
exclusion, will strictly focus on inpatient and/or residential psychiatric care for
otherwise-eligible recipients who require such institutional care due to neurobiological
psychiatric disorders. See further
discussion in this part at notes 44-49 and accompanying text. Discussion concerning prospective Medicaid
coverage of institutional treatment for persons with alcohol and substance abuse disorders
is beyond the scope of this analysis. See
the discussion in infra note 205, in part III.C of this analysis, for an
examination of the legal distinctions between persons receiving treatment for serious
mental illnesses and those receiving treatment for alcohol and substance abuse disorders.
[23] See H.R. Rep. No. 1300,
81st Cong., 1st Sess., 42 (1949) pertaining to Congressional deliberations concerning the
federal program entitled "Grants To States For Aid To The Permanently And Totally
Disabled", enacted as Title XIV of the Social Security Act, Pub. L. No. 81-64, 64
Stat. 555 (1950), 42 U.S.C. ' 1351 et seq. (1994), (repealed by Pub. L. 92-603,
�303, effective January 1, 1974, except with respect to Puerto Rico, Guam, and the Virgin
Islands). See the discussion in the
legislative history subsection in part II.B of this analysis, infra notes 88-97 and
accompanying text.
[24] Prior to 1950, federal funds
administered under the Social Security Act were denied to individuals who were deemed to
be "inmates of public institutions", which covered patients in public medical
facilities, including public general hospitals and state mental and TB hospitals, as well
as inmates in penal institutions. See
further discussion in part II.B, infra note 88.
[25] Originally, this institutional
exclusion also covered services provided in tuberculosis institutions or sanitoriums. However, in 1984, the federal Medicaid statute was
amended to abolish the exclusion of individuals in institutions for tuberculosis as being
no longer necessary, inasmuch as "TB sanitoriums" were no longer used for
treatment of tuberculosis. The TB amendments to Section 1905(a) of the Social Security
Act, [42 U.S.C. � 1396d(a)], were incorporated into Section 2335 of the Deficit Reduction
Act of 1984, Pub. L. No. 98-369, 98 Stat. 494, 1090-1091 (1984). Since issues relating to the denial of federal
Medicaid for services provided in tubercular institutions are now moot, this analysis
strictly pertains to the exclusion of federal medical assistance for services provided to
individuals between the ages of twenty-two and sixty-four in institutions for mental
diseases (IMDs).
[26] See Schweiker v. Wilson,
450 U.S. 221, 237, n. 19 (1981) citing H.R. Rep. No. 1300, 81st Cong., 1st Sess.,
42 (1949); S. Rep. No. 404, 89th Cong., 1st Sess., pt. 1, at 144-147 (1965). See also the discussion of the federal
program entitled "Grants To States For Aid To The Permanently And Totally
Disabled", Pub. L. No. 81-64, 64 Stat. 555 (1950), [42 U.S.C. � 1351 et seq.
(1994)], in the legislative history subsection of the statutory section, in part II.B, infra
notes 88-89 and accompanying text, for an in-depth analysis of the "traditionally a
state responsibility" rationale for the Medicaid IMD exclusion.
[27] See the legislative
history to the Community Mental Health Centers Act of 1963, Pub. L. No. 88-164, 77 Stat.
282, 290-294 (1963), published in H.R. Rep. No. 694, 88th Cong., 1st Sess. (1963), reprinted
in 1963 U.S.C.C.A.N. 1054, at 1064-66.
The Committee on Interstate and Foreign Commerce for the House of Representatives,
in the above cited Congressional report, discounted the need for long-term institutional
psychiatric care by citing a research study which indicated that seven out of ten
schizophrenic patients were able to be discharged within a year. Id. at 1065.
The committee report noted that half of the nation's hospital beds were occupied by
psychiatric patients and cited two programs existing at that time where the average
psychiatric hospital stays in general hospitals were between sixteen to twenty-one days. Id. at 1064-65. This Congressional report also referred to
outpatient mental health programs in which half of the psychotic patients, who would
otherwise have been institutionalized, were being treated in the community, and a large
number of such patients were also able to return to work within six weeks. Id.
These studies and the potential for success of the community mental health centers
in treating the majority of individuals with schizophrenia and other serious mental
illnesses, on an outpatient basis, in the community are not disputed. However, Congress failed to recognize the fact
that a significant number of persons with severe forms of schizophrenia and other serious
mental illnesses were (and remain) treatment-resistant to medications and need
institutional or residential psychiatric care.
[28] Pub. L. No. 88-164, 77 Stat.
282, 290-294 (1963), 42 U.S.C. � 2689 (repealed 1981).
The legislative history to the Community Mental Health Centers (CMHCs) Act referred
to mental illness as being the nation's most serious public health problem (during the
1950s and 1960s). H.R. Rep. No. 694, 88th
Cong., 1st Sess. (1963), reprinted in 1963 U.S.C.C.A.N. 1054, 1064.
In 1981, the CMHCs program was replaced by federal block grants to the States to
provide public mental health services covering alcohol, drug abuse, and mental health
(ADM) services. Pub. L. No. 97-35, tit. 9,
�902(e)(2)(B), 95 Stat. 560 (1981). See
discussion of the ADM block grant programs in infra note 35 and contentions raised
in infra note 205.
[29] Pub. L. No. 88-164, 77 Stat. 282
(1963). Title I covered "Construction of
Research Centers and Facilities for the Mentally Retarded", and Title II pertained to
the "Construction of Community Mental Health Centers".
[30] Prior to the enactment of the
CMHCA in 1963, public funding for the treatment and care of persons with mental illnesses
was almost exclusively done at the state and local level.
In 1963 and before, 98 percent of public funding for care and services for mentally
ill persons was at the state and local levels, with only 2 percent being funded by the
Federal Government. By 1985, 38 percent of
the costs for public services furnished to persons with mental illness was paid for at the
federal level, and by 1994, 62 percent of this fiscal responsibility was paid for by the
Federal Government. In 1994, the Federal
Government spent a total of $38 billion for care and services for mentally ill
individuals, including $8.6 billion Medicaid dollars.
The other federal dollars came from the Veterans Administration budget, the
Supplemental Security Income (SSI) and the Social Security disability insurance (SSDI)
programs, the "alcohol, drug abuse and mental health" block grant (ADM)
programs, and housing and other subsidies. See
Torrey, Out Of The Shadows, supra
note 1, at 98-99.
[31] Federal financial participation
(FFP) or federal medical assistance (Medicaid) is available for state expenditures for
Medicaid services provided to eligible recipients, whose coverage is required or allowed
under Title XIX of the Social Security Act. See
42 U.S.C. �� 1396a(a), 1396b and 1396d(b) (1994) and 42 CFR 430.10 et seq. and 42 CFR
435.1002 (1995). See also discussion
in part II.A of this analysis, infra notes 66-67 and accompanying text, pertaining
to federal financial participation (FFP).
[32] Sections 1902(a)(10) and 1905(a)
of the Social Security Act, 42 U.S.C. � 1396a(a)(10) and � 1396d(a) (1994). The statutory provisions underlying the Medicaid
IMD exclusion are examined in greater detail in part II.A of this analysis, infra
notes 58-87.
[33] The 1965 Amendments to the
Social Security Act of 1935 not only established the federal Medicare and Medicaid
programs, but also amended the federal public assistance program, which later evolved into
the Supplemental Security Income program, Title XVI of the Social Security Act. See discussion in part II.A, infra
notes 54-61 and accompanying text.
[34] S. Rep. No. 404, 89th Cong. 1st
Sess., pt. 1, at 145 (1965), reprinted in 1965 U.S.C.C.A.N. 1943, 2085.
In enacting Medicaid, Congress believed that it was important for States to move
forward in developing comprehensive mental health plans as contemplated by the Community
Mental Health Centers Act. Id. at 146
and 2085-86, respectively. Thus, in order to
accomplish these policy goals, Congress made approval of federal public assistance and
medical assistance for eligible individuals age sixty-five and older in IMDs [and TB
hospitals] contingent upon the State's demonstrating satisfactory progress toward
developing and implementing a comprehensive mental health program, which included the
utilization of community mental health centers, nursing homes, and other alternatives to
institutional care. Id. and 42 U.S.C.
� 1396a(a)(21) (1994). Note, coverage of
services provided to individuals sixty-five years of age and older in IMDs is an optional
benefit which individual States may elect, but are not required, to cover under their
state Medicaid plans. 42 U.S.C. �
1396d(a)(14) (1994). This statutory coverage
issue and the optional benefit covering inpatient psychiatric hospital services for
individuals under 21 are discussed in part II.A of this analysis, infra notes 81-82
and accompanying text.
[35] The original CMHC program was
replaced, in 1981, by federal block grants to the States for alcohol, drug abuse, and
mental health (ADM) treatment services. The
Omnibus Budget Reconciliation Act of 1981 (OBRA of 81), Pub. L. No. 97-35, tit. 9, �
902(e)(2)(B), 95 Stat. 560 (1981). The ADM
block grants represented a 25 percent cut in federal funding for mental health and
substance abuse services, in exchange for greater control at the state and local levels.
[36] Other social welfare entitlement
programs which are available to eligible persons living in the community include Social
Security disability, Supplemental Security Income (SSI), Housing and Urban Development
(HUD) housing vouchers, and food stamps. However,
States cannot receive federal reimbursement under these programs for similar services
provided to persons in state mental institutions. Nonetheless,
the primary financial incentive for States to deinstitutionalize patients has been the
exclusion of federal Medicaid payments for services provided to individuals between the
ages of 22 and 64 in IMDs. See supra
note 30, citing Torrey, Out Of The Shadows,
supra note 1, at 98-99.
[37] These federal funding incentives
have created enormous financial inducements to deinstitutionalize patients from state
psychiatric hospitals. As a result, States
have tried quite consciously to discharge the majority of psychiatric patients from state
hospitals over the past several years (rightfully or wrongfully) in an attempt to treat
these individuals on an outpatient basis, or transfer them to other medical facilities
which are eligible to receive federal Medicaid funds.
See E. Fuller Torrey, Economic Barriers to Widespread Implementation of
Model Programs for Seriously Mentally Ill, 41 Hospital
and Community Psychiatry 530-531 (1990), citing W. Gronfein, Incentives
and Intentions in Mental Health Policy: a comparison of the Medicaid and community mental
health programs, 26 J. of Health & Social
Behavior 192-206 (1985); and C. Kieler, Mental Hospitals and alternative Care,
37 American Psychologist 349-360 (1982). See Torrey,
Surviving Schizophrenia, supra note 2, at 24-26, and the testimony of E.
Fuller Torrey before the United States Senate, Committee on Finance, on Deinstitutionalization,
Federal News Service, (May 10, 1994),
(hereinafter Dr. Torrey's Congressional Testimony).
Other significant contributing factors behind the deinstitutionalization movement
include misunderstanding of the causes of serious mental illnesses portrayed in books and
movies, such as T. Szasz, Myth of Mental Illness
(1961) and Ken Kesey, One Flew Over the Cuckoo's
Nest (1962) and legal causes of action based upon the "least restrictive
environment" and individual liberty interests of psychiatric patients. See Torrey,
Surviving Schizophrenia, supra note 2, at 24-25.
[39] Id. Also a recent figure from the National Institute
of Mental Health (NIMH), released on December 21, 1994, indicated that the number of
persons in state psychiatric hospitals was 71,619. See
Torrey, Out Of The Shadows, supra
note 1, at 8.
Today, individuals suffering from mental illness who have private health insurance
coverage or can otherwise afford it, can receive on-going treatment in private
freestanding psychiatric hospitals. However,
due to the Medicaid IMD exclusion, the vast majority of persons with chronic and severe
forms of schizophrenia and other serious mental illnesses reside in or receive on-going or
periodic care and treatment in other types of settings, such as "board and care
facilities" and "semi-hospitals" (with 16 or fewer hospital beds, and thus
exempt from the IMD exclusion under the Medicaid statute), inpatient units at mental
health centers, nursing home facilities, and psychiatric wards of general and Veterans
Administration hospitals. Parts II.C and
III.B of this analysis, at infra notes 100-112 and 189-201 and accompanying text,
respectively, discuss in greater detail the types of facilities and patient populations
which are exempted from the IMD exclusion.
[40] See the discussion
regarding the treatment-resistant populations and need for extended inpatient psychiatric
care or long-term residential or institutional psychiatric care, in supra notes 13-18 and
accompanying text.
[41] Part III.B of this analysis, infra
notes 179-188 and accompanying text, discusses the recurrent social problems resulting
from deinstitutionalization.
[42] The general scheme by which
severely mentally ill persons are transferred to or placed in nursing facilities and
smaller residential care facilities eligible to receive Medicaid payment who otherwise
would require institutional psychiatric care other
is referred to as "transinstitionalization".
See a discussion of transinstitionalization and inappropriate placements in
parts II.C and III.B of this analysis, infra notes 100-114 and 190-201 and
accompanying text.
[43] See parts II and III of
this analysis, infra notes 112-114 and 211-212 and accompanying text, for a
discussion of the advantages of psychiatric institutions and specialized residential care
facilities for persons with mental illnesses in terms of "continuity of care"
and specialized psychiatric and mental health services furnished to patients which are not
readily available to residents of other nonspecialized nursing facilities or smaller
residential care facilities. Also, as will be
discussed in part II, infra notes 100-110 and accompanying text, if a nursing
facility becomes too specialized in caring for persons with psychiatric disorders, it runs
the risk of being classified as an "IMD", and thus losing its eligibility to
receive federal Medicaid payments for services provided to these patients between the ages
of 22 and 64.
[44] As will be discussed in part
III.A, infra notes 148-158 and accompanying text, Freudian psychoanalysis and other
nonbiologically-based theories dominated American psychiatry and public perceptions of
serious mental illnesses for the better part of the twentieth century. These misconceptions regarding serious mental
illness greatly influenced and impacted upon the development and evolution of federal
public mental health policy during the post World War II period.
[45] Issues pertaining to the modern
neurobiological understanding of serious mental illnesses, and the Federal Government's
recent recognition of this, are addressed in part III.A, infra notes 154-166 and
accompanying text.
[46] Pursuant to Section 1905(a)(1),
(4) and (15) of the Social Security Act, federal medical assistance is available to cover
inpatient hospital services (other than services in an IMD), nursing facility services
(other than services in an IMD), and services
provided in "intermediate care facilities for the mentally retarded" (ICF/MR)
for persons who suffer from other types of conditions, including other brain diseases such
as Alzheimer's disease, Parkinson's disease, multiple sclerosis, mental retardation, and
autism, (if they are determined to be in need of such care). 42 U.S.C. � 1396d(a)(1), (4) and (15) (1994). See also the discussion in supra
note 25 regarding the old TB institution or sanitarium exclusion which was eliminated in
1984.
[48] Section 1902(a)(19) of the
Social Security Act, 42 U.S.C. � 1396a(a)(19) (1994).
The full text of sub-section 19 of Section 1902(a) reads "A State plan for
medical assistance must-" "provide such safeguards as may be necessary to assure
that eligibility for care and services under the plan will be provided, in a manner
consistent with simplicity of administration and the best interests of the
recipients."
[49] 42 CFR 440.230(c) (1995). This is discussed in greater detail, in part III, infra
notes 172-177 and accompanying text.
[52] See Health Care Financing Administration (HCFA), U.S. Dep't of Health and Human Services (HHS), HCFA Pub. No. 03339, Report to Congress: Medicaid and Institutions for Mental
Diseases, chs. ES & VII (December 1992). The
findings in this HCFA report are summarized in part III.C, infra notes 204-210 and
accompanying text.
[54]
Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat. 286 (1965), 42 U.S.C. �
301 et seq. (1994). Besides the
Medicare-Medicaid Amendments, the 1965 Amendments, taken as a whole, modified the Social
Security Act in three other very important areas. First,
it expanded services for needy children. Secondly,
it revised the benefit and coverage provisions significantly improving the financing
mechanism and structure of the federal old age, survivors, and disability insurance
programs. Thirdly, the 1965 Amendments
provided for greater access to the federal public assistance programs.
[55]
Title XVIII of the Social Security Act, Pub. L. No. 89-97, 79 Stat. 290 (1965), 42 U.S.C.
� 1395a et seq. (1994).
[56]
Title XIX of the Social Security Act, Pub. L. No. 89-97, 79 Stat. 343 (1965), 42 U.S.C. �
1396a et seq. (1994).
[57]
The Medicare-Medicaid Amendments, effective January 1, 1966, established three health care
programs consisting of: 1) a compulsory hospital-based program (Medicare Part A), 2) a
voluntary supplementary plan to cover physicians' services and other supplementary health
services (Medicare Part B) and 3) a federal grant program for States, officially named
"Grants to States for Medical Assistance Programs", to provide medical
assistance for the categorically needy and medically needy aged, blind, disabled persons
and families with dependent children. S. Rep.
No. 404, 89th Cong., 1st Sess., pt. 1, at 2 (1965), reprinted in 1965 U.S.C.C.A.N.
1943.
[59]
Participating States, in the Federal medical assistance program, must provide medical
coverage of "mandatory services", [set forth in Sections 1902(a)(10) and 1905(a)
of the Social Security Act], for individuals deemed under the Act to be
"categorically needy". The two main
categories of "categorically needy" individuals who qualify for Medicaid
benefits are recipients of "Aid to Families with Dependent Children" (AFDC) or
Supplemental Security Income (SSI) beneficiaries. 42
U.S.C. � 1396a(a)(10) and � 1396d(a) (1994) and 42 CFR 435.100 et seq., 435.500 et seq.,
435.600 et seq., and 435.700 et seq. (1995).
[60]
States, at their option, may provide medical coverage of services for individuals
classified under their Medicaid plans to be "medically needy", as provided for
in Sections 1902(a)(10) and 1905(a) of the Act. 42 U.S.C. � 1396a(a)(10) and � 1396d(a)
(1994) and 42 CFR 435.301 et seq. and 435.800 et seq. (1995). The "medically needy" category covers
individuals who do not meet the income eligibility or other requirements to be classified
as "categorically needy", but who, in practical terms, are economically strapped
due to extraordinary medical expenses, such as those for nursing facility care.
[61]
Alexander v. Choate, 469 U.S. 287, 289, n. 1 (1985) citing Harris v. McRae, 448
U.S. 297, 301 (1980).
The
Medicaid program expanded and ultimately replaced the Kerr-Mills Act, enacted in 1960,
which enabled States to receive federal funds to provide medical care for needy elderly
persons who did not have sufficient income and resources to pay for the cost of their
medical care.
Payment
and eligibility provisions under Medicaid are closely aligned with the provisions under
the public assistance amendments of the Social Security Act of 1965, especially in regards
to the "institution for mental diseases" (IMD) exclusion. In fact, the only recorded legislative history
regarding Congressional intent for incorporating the IMD exclusion into the 1965 Social
Security Act Amendments is found within the Congressional committees' comments pertaining
to the public assistance amendments. See
S. Rep. No. 404, 89th Cong., 1st Sess., pt. 1, at 144-147 (1965), reprinted in 1965
U.S.C.C.A.N. at 2083-2087. The Supreme Court,
in Schweiker v. Wilson, 450 U.S. 221 (1981), cited this section of the legislative history
in its interpretation of Congressional intent and rationale for incorporating the Medicaid
IMD exclusion into the 1972 Supplemental Security Income (SSI) Act. 450 U.S. at 237-238. See discussion of Schweiker v. Wilson in infra
notes 130-140 and accompanying text.
[63] 42 CFR 447.204 (1995). However, many States pay considerably less under
their Medicaid programs than the providers' costs or customary charges. As a result, many medical providers refuse to
accept Medicaid patients. Nevertheless,
Medicaid patients appear to have significantly greater access to health care services than
uninsured persons. See the CRS, Medicaid Source Book, supra note 6,
(ch. 1: Overview).
[64]
This voluntary participation in the federal Medical Assistance Program follows the
tradition established by the Kerr-Mills Act, supra note 61, and earlier amendments
to the Social Security Act.
[65] Section 1902 of the Social
Security Act sets forth the statutory provisions that a state plan for medical assistance
must comply with before the State is eligible to receive federal medical assistance under
its Medicaid plan. See 42 U.S.C. �
1396a et seq. (1994) and 42 CFR Parts 430 - 498 (1995).
First, a participating State must submit a (proposed) Medicaid plan to the United
States Department of Health and Human Services (HHS), and receive the Federal Government's
approval before it can begin receiving federal assistance under the plan. The
state plan must include reasonable standards for medical assistance, in accordance with
the standards prescribed by the Secretary of H.H.S. with respect to income levels for
eligibility. 42 U.S.C. � 1396a(a)(17)
(1994). Section 1902(a)(10) of the Act
mandates that the services covered under the state plan must be sufficient in amount,
duration, and scope to reasonably achieve their purpose.
42 U.S.C. � 1396a(a)(10) (1994) and 42 CFR 440.230(b) (1995). Section 1902(a)(10) also imposes a
"comparability" requirement which mandates that services available to any
"categorically needy" recipient may not be less in amount, duration, and scope
than those services available to "medically needy" individuals, and that
services available to any individual in either the categorically needy group or the
medically needy group are equal in amount, duration, and scope for all recipients within
that group. 42 U.S.C. � 1396a(a)(10) (1994)
and 42 CFR 440.240 (1995).
Additionally, the Social Security Act mandates that the state Medicaid plans
establish procedures for professional review of the services furnished to the recipients
to assure appropriateness and quality of care. 42
U.S.C. � 1396a(a)(30) (1994) Furthermore,
the Medicaid statute requires that the state plans provide utilization review procedures
and inpatient hospital and nursing facility services certification of need requirements to
safeguard against unnecessary utilization of services.
42 U.S.C. � 1396a(a)(30) and (44) (1994). These
same nondiscriminatory utilization control and review procedures can be employed to
contain costs of institutional psychiatric care, if the IMD exclusion is lifted. See discussion in part III.C, supra
notes 220-225 and accompanying text, for examples of possible cost control measures to
contain the costs of Medicaid expenditures for institutional psychiatric care.
[66] The Federal Government's share
of a State's Medicaid payments for mandatory and optional services, covered under a state
plan for medical assistance, is called the "federal medical assistance
percentage" (FMAP). FMAPs are calculated
annually based upon the State's per capita income. No
State may receive lower than a 50 percent rating or higher than an 83 percent rating. See 42 U.S.C. �� 1396a(a), 1396b and
1396d(b) (1994) and 42 CFR 430.10 et seq. and 42 CFR 435.1002 (1995).
[67] Harris v. McRae, 448 U.S. 297,
308, 65 L. Ed. 2d 784, 100 S. Ct. 2671, 2684 (1980) citing S. Rep. No. 404, 89th
Cong., 1st Sess., pt. 1, at 83-85 (1965); H.R. Rep. No. 213, 89th Cong., 1st Sess., at
72-74 (1965), reprinted in 1965 U.S.C.C.A.N., 1943.
Harris v. McRae was an abortion case, decided in 1980, which held that States did
not have to unilaterally pay for abortions under their Medicaid plan, when federal
Medicaid funds were unavailable due to the Hyde Amendment.
The Hyde Amendment barred federal Medicaid funding to pay for abortions, except
where the life of the mother would be endangered if the fetus was carried to term. Later versions of the Hyde Amendment added
exceptions for victims of rape and incest.
[68]
42 U.S.C. � 1396a(a)(10) and � 1396d(a) (1994).
Besides
hospital and nursing facility services, discussed in infra note 69 and accompanying
text, other mandatory services include physician services; laboratory and X-ray services;
early and periodic screening; diagnosis and treatment services for individuals under 21
years of age; family services and supplies; rural health services; and nurse-midwife
services. Also, States have the option of
covering and receiving federal Medicaid reimbursement for mandatory services to
"medically needy" individuals. See
42 U.S.C. �� 1396a(a)(10) and 1396d(a) (1994); 42 CFR 440.10 - 440.70, 440.165, and
440.210-220 (1995).
[69]
42 U.S.C. � 1396d(a)(1), (2) and (4) (1994).
The
1965 Medicaid statute used the terminology "skilled nursing home services" under
the definitional section for federal medical assistance in Section 1905(a)(4) of the
statute. Pub. L. No. 89-97, 79 Stat. 351
(1965). This was subsequently amended to
read "skilled nursing facility services". 42
U.S.C. � 1396d(a)(4). Additionally, the 1971
Amendments to the Social Security Act added coverage of "intermediate care facility
(ICF) services", for individuals who are in need of such care. Pub. L. No. 92-223 � 4 (g)(2), 85 Stat. 802, 809
(1971). This 1971 amendment pertaining to
coverage of ICF services was originally enacted under Section 1905(a)(16) of the Social
Security Act. However in 1972, to make room
for Medicaid coverage of treatment in psychiatric hospitals for individuals under age 21,
the ICF provision was redesignated as subsection 1905(a)(15). This redesignation deleted the original catch-all
provision covering other types of medical care and remedial care recognized under State
law and specified by the Secretary (except for care and services for individuals who are
inmates of a public institution, other than in public medical institutions). See Pub. L. No. 92-603 � 299B, 86 Stat.
1329, 1709-1710 (1972). Subsequently in 1988,
sections 1905(a)(4) and 1905(a)(15) were amended to their present statutory definitions of
"nursing facility services" and "services in an intermediate care facility
for the mentally retarded", respectively. 42
U.S.C. � 1396d(a)(4) and (15) (1994). Statutory
definitional issues concerning Medicaid coverage of institutional care services are
discussed in greater detail in infra notes 81-85 and 98-110 and accompanying text.
[70]
42 U.S.C. �� 1396a(a) and 1396d(a) (1994) and 42 CFR 440.230(c) (1995). This is significant because prior amendments to
the Social Security Act specifically denied federal assistance for otherwise qualified
persons in medical institutions who were diagnosed as having either tuberculosis or a
psychosis (i.e., a mental illness). See
discussion of the legislative history behind the IMD exclusion in infra notes 88-97
and accompanying text.
[71]
42 U.S.C. � 1396d(a)(1), (2) and (4) (1994). See
supra notes 21-22 and accompanying text for the statutory definition of an IMD,
codified under 42 U.S.C. � 1396d(i) (1994). See
also infra notes 98-114 and accompanying text for a discussion regarding
specific types of facilities covered by or exempted from the statutory definition of an
IMD.
[73] See
Alexander v. Choate, 469 U.S. 287, 303, 105 S.Ct. 712, 721 (1985) citing Section
1902(a)(19) of the Social Security Act, 42 U.S.C. � 1396a(a)(19) (1994). The full text of Section 1902(a)(19) states
"A State plan for medical assistance must-" "provide such safeguards as may
be necessary to assure that eligibility for care and services under the plan will be
provided, in a manner consistent with simplicity of administration and the best interests
of the recipients."
[74] See 42 CFR 440.230(d)
(1995).
The Medicaid statute provides an array of cost containment mechanisms which permits
States and the Federal Government to restrict medical assistance payments for services by
means of nondiscriminatory medically necessary certification requirements and standard
utilization review practices, in an effort to control program costs. 42 U.S.C. � 1396a(a) (10), (30), and (44)
(1994). It is therefore permissible for a
state plan to mandate a pre-authorization utilization review requirement before furnishing
or covering a medical or mental health service.
[76]
42 CFR 440.230(c) (1995). See the
discussion of Pinneke v. Preisser, 623 F. 2d 546 (8th Cir. 1980), and other relevant cases
cited in infra notes 173-175 and accompanying text.
[77] See
42 U.S.C. �� 1396a(a)(10) and 1396d(a)(10) (1994) and 42 CFR 440.60-181 (1995) for a
list of all possible "optional services" for which federal medical assistance is
available, if covered under the State's Medicaid plan.
Some notable optional services include medical or remedial care furnished by
licensed practitioners, prescription drugs, diagnostic, screening, preventive and
rehabilitative services, case management, and personal health and respite care services.
[78] See
Section 1905(a)(14) in Pub. L. No. 89-97, 79 Stat. 351-352 (1965).
Recognizing
that discharge plans do not always succeed, the Senate Finance Committee called upon the
States to devise provisions for prompt readmission of aged Medicaid patients into
institutional settings, when needed. Therefore,
Section 1902(a)(20) was incorporated into the statute to mandate that
participating states opting to cover this optional service
develop alternative plans for readmission of Medicaid recipients sixty-five years old or
over, who would otherwise require care in a mental institution. 42 U.S.C. � 1396a(a)(20) (1994) and 42 CFR
441.103 (1995). Also, the legislative
history of the Medicaid statute clearly states that Congress desired to foster
deinstitutionalization by making the approval of this optional service contingent upon the
State developing and implementing a comprehensive mental health plan, which utilizes
community mental health center services and other alternatives to institutional care. See 42 U.S.C. � 1396a(a)(20) (1994) and S.
Rep. No. 404, 89th Cong., 1st Sess., pt. 1, at 146 (1965), reprinted in 1965
U.S.C.C.A.N. 1943, 2086. See also supra
notes 27-34 and accompanying text. Finally,
Congress believed and estimated that the number of persons sixty-five years old and older
with mental illness or tuberculosis was so small that no special safeguards were necessary
for this group. See S. Rep. No. 404,
89th Cong., 1st Sess., pt. 1, at 144-147 (1965), reprinted in 1965 U.S.C.C.A.N.
1943, 2083-2087.
[80]
The tuberculosis institution repeal amendments to Section 1905(a) of the Social Security
Act [42 U.S.C. � 1396d(a)] were adopted as part of the Deficit Reduction Act of 1984,
Pub. L. No. 98-369 � 2335, 98 Stat. 1090-1091 (1984).
Since issues relating to the denial of federal Medicaid for services provided in
institutions for tuberculosis are now moot, this analysis strictly pertains to the
exclusion of federal financial participation for services provided to individuals between
the ages of 22 and 64 in institutions for mental diseases.
[81]
Section 1905(a)(16) and (h) of the Social Security Act, 42 U.S.C. � 1396d(a)(16) and (h)
(1994). The effective date for these
statutory changes was January 1, 1973. Pursuant
to Section 1905(h)(1)(A), [42 U.S.C. � 1396d(h)(1)(A) (1994)], the phrase "inpatient
psychiatric hospital services for individuals under age 21" entails inpatient
services provided in an institution (or distinct part thereof), defined under the Medicare
statute in
Section 1861(f) in 42 U.S.C. � 1395x(f), as a psychiatric
hospital. Also, the term "psychiatric
hospital services" is used place of services provided in "institutions for
mental diseases" with regard to institutional psychiatric care for children, but
generally speaking these terms are used interchangeably.
See the Conference Report, to accompany H.R. Rep. No. 92-1605, 92nd Cong.,
2nd Sess., at 65 (1972). However, in order to
receive federal medical assistance, these inpatient psychiatric services must involve
"active treatment", which meets the standards established by the Secretary of
Health and Human Services. 42 U.S.C. �
1396d(h)(1)(B) (1994). Finally, in cases in
which an individual is receiving treatment in the period immediately preceding the date
which he or she attains the age of twenty-one, federal medical assistance continues until
the individual no longer requires such services or until his or her twenty-second
birthday, whichever comes first. 42 U.S.C. �
1396d(h)(1)(C) (1994).
Another
important component of the 1972 Amendments to the Social Security Act was the enactment of
the Supplemental Security Income (SSI) program for aged, blind, and disabled persons,
enacted under Title XVI of the Social Security Act. 42
U.S.C. � 1382 et seq. (1994). Section
1611(e) of the Act incorporates Medicaid eligibility criteria and excludes persons or
inmates in public institutions from being eligible to receive SSI benefits. 42 U.S.C. � 1382(e) and 42 U.S.C. �
1396d(a)(24)(A) (1994). See also infra
note 88. This public institution exclusion
covers persons in mental institutions (IMDs), as well as inmates in prisons and jails. Congress then granted a partial exception to this
public institution exclusion by granting a "comfort allowance" of $300.00
annually for Medicaid-eligible beneficiaries in hospitals and nursing care facilities. Id. This
medical institution exception to the public institution exclusion under Section 1611(e)
has subsequently been modified to cover institutions whose primary purpose is the
provision of medical or psychiatric care. 42
U.S.C. � 1382(e)(E) (1994). See infra
notes 130-140, pertaining to a discussion of the Supreme Court case Schweiker v. Wilson,
450 U.S. 221, 101 S.Ct. 1074 (1981), which upheld the constitutionality of the exclusion
of reduced SSI comfort allowance benefits for persons between the ages of 22 and 64 in
mental institutions.
[82] See Senate Finance
Report, S. No. 92-1230, to accompany H.R. 1, 92nd Cong., 2nd Sess., at 280-281 (1972).
During the 1972 Medicaid debate, a number of senators believed that the potential
social and economic benefits of totally abolishing the IMD exclusion for all otherwise
qualified-individuals in institutions deserved to be evaluated. Id. The
Senate Finance Committee proposed that a research project be undertaken to study the
possible effects of abolishing the IMD exclusion, but this measure was dropped in the
conference committee with the House on the bill. See
the Conference Report, to accompany H.R. Rep. No. 92-1605, 92nd Cong., 2nd Sess., at 65
(1972).
[83]
Pub. L. No. 92-223 � 4, 85 Stat. 802, 809 (1971). 42
U.S.C. � 1396d(a)(15) (1994). See supra
note 69.
[85]
Pub. L. No. 100-360 � 411, 102 Stat. 683, 798-799 (1988), 42 U.S.C. � 1396d(a)(15)
(1994). See supra note 69. The 1988 amendments also included a statutory
definition of an "institution for mental diseases". 42 U.S.C. � 1396d(i) (1994).
[86] See
discussion in infra note 88, citing 42 U.S.C. � 1396d(a)(24)(A) (1994)
regarding Social Security Act exclusions of persons considered to be inmates of public
institutions, excluding patients in a medical institution.
[87] No serious legislative
initiatives have been undertaken since the
early 1970s to eliminate or substantively modify the IMD exclusion because since that time
the primary emphasis of subsequent amendments to Title XIX has been the need to contain
Medicaid costs. Nevertheless, various
technical amendments and regulatory changes have been adopted to better clarify and
enforce the IMD exclusion with this purpose in mind.
See the discussion in part III.B, infra note 197, regarding the
"pre-admission screening and annual resident review (PASARR) requirements. See also the discussion of Health Care Financing Administration (HCFA), U.S. Dep't of Health and Human Services (HHS), HCFA Pub. No. 03339, Report to Congress: Medicaid and Institutions for Mental
Diseases (December 1992) in part III.C of this analysis, infra notes 204-210
and accompanying text.
[88]
Grants To States For Aid To The Permanently And Totally Disabled, Title XIV of the Social
Security Act, Pub. L. No. 81-64, 64 Stat. 555 (1950), codified at 42 U.S.C. � 1351 et
seq. (1994), (repealed by Pub. L. 92-603, �303, effective January 1, 1974, except
with respect to Puerto Rico, Guam, and the Virgin Islands).
As signified by its program name, Title XIV of the Social Security Act appropriated
federal grant money to States to provide financial aid and assistance for needy persons
who were permanently and totally disabled.
Prior
to 1950, federal funds administered under the Social Security Act were denied to
individuals deemed to be "inmates of public institutions", which covered
patients in public medical facilities, including public general hospitals, state mental
institutions, and TB hospitals, as well as inmates in penal institutions. Title XIV and the Medicaid statute include an
exclusion for an "inmate of a public institution", but exempt patients in
"medical institutions". Id.;
see Section 1905(a)(24)(A) of the Medicaid statute, 42 U.S.C. � 1396d(a)(24)(A)
(1994). The purpose behind adopting the
medical institution exemption to the public institution exclusion under the Act was to
eliminate the inequality in coverage between patients receiving treatment in public
hospitals and those in private hospitals. However,
at the same time, Congress, in 1950, did not want to extend Social Security benefits to
individuals in mental and TB hospitals.
As
indicated by the above citation, except in regards to United States territories, Title XIV
was replaced in 1972 by the enactment of the Supplemental Security Income (SSI) program,
Title XVI of the Social Security Act. 42
U.S.C. � 1381 et seq (1994). Issues
pertaining to the denial of SSI benefits for persons receiving treatment in psychiatric
institutions are addressed in the discussion of Schweiker v. Wilson, 450 U.S. 221 (1981),
in infra notes 130-140 and accompanying text.
[91] The Kerr-Mills Act, the
forerunner to the Medicare and Medicaid programs, enabled States to receive federal funds
to provide medical care for needy elderly persons who did not have sufficient income and
resources to pay for the cost of their medical care.
See S. Rep. No. 404, 89th Cong., 1st Sess., pt. 1, at 73, (1965), reprinted
in 1965 U.S.C.C.A.N. 1943, 2014-2015.
[95] See supra note 78,
citing Section 1905(a)(14) of the Social Security Act, Pub. L. No. 89-97, 79 Stat.
351-352 (1965), 42 U.S.C. � 1396d(a)(14) (1965).
[96] See S. Rep. No. 404, 89th
Cong., 1st Sess., pt. 1, at 144-147 (1965), reprinted in 1965 U.S.C.C.A.N. 1943,
2084; and H.R. Rep. No. 1300, 81st Cong., 1st Sess., 42 (1949). See also H.R. Rep. No. 694, 88th Cong., 1st
Sess. (1963), reprinted in 1963 U.S.C.C.A.N. 1054, 1064-66; and supra notes
23-26 and accompanying text.
[97] See
Schweiker v. Wilson, 450 U.S. 221, 242, 101 S.Ct. 1074, 1086 (1981) (Powell, J.,
dissenting) citing S. Rep. No. 404, 89th Cong. 1st Sess. pt. 1, at 20 (1965). See also infra notes 148-169 and
accompanying text.
[98]
Pre-1988 versions of the Medicaid statute used the terms "skilled nursing facility
services" and "intermediate nursing facility services". See supra note 69. An intermediate care facility was defined under
the Act as an institution licensed under State law to provide health-related care and
services to individuals who do not require the degree of care or treatment which a
hospital or a skilled nursing facility was designed to provide, but who, because of their
mental or physical condition, require care and services beyond room and board, which is
available to them only through institutional facilities.
[99]
In 1966, the Department of Health, Education and Welfare (HEW), [now the Department of
Health and Human Services (HHS)], issued initial guidelines for determining whether a
particular facility is considered to be an "institution for mental diseases"
based upon the institution's "overall character".
This determination was based on whether the "facility has been established and
maintained primarily for the care and treatment of individuals with ... mental
diseases", regardless of whether it is licensed as such. See Connecticut Dept. of Income Maintenance
v. Heckler, 471 U.S. 524, 531, n. 17, citing U.S.
Dep't of Health, Education, and Welfare, Handbook of Public Assistance Administration,
Supplement D: Medical Assistance Programs Under Title XIX of the Social Security Act,
para. D-4620.2 (1966). These guidelines were
followed by regulations stating that an IMD is "an institution which is primarily
engaged in providing diagnosis, treatment, or care of persons with mental diseases,
including medical attention, nursing care, and related services." Id. at n. 18 citing 45 CFR
248.60(a)(3)(ii) and (b)(7) (1972).
In
1982, the Secretary of HHS revised the IMD regulations and guidelines to better clarify
what constitutes "primarily engaged in" and "overall character". 42 CFR 435.1009(e) (1982). The Health Care Financing Administration, within
the Department of Health and Human Services, takes into account various factors in making
IMD determinations. The most significant
considerations under the old regulatory definition include whether the facility in
question is licensed as or holds itself out as a facility specializing in psychiatric
care, and whether the majority of its patients have a serious mental illness or a
disability in mental functioning, as defined by the International Classification of Diseases (ICD), or frequently or predominantly is used by
individuals who either were transferred from mental hospitals or would otherwise be
admitted to them. See HCFA, State Medicaid Manual, � 4390, Institutions
For Mental Diseases (1990). See also
Connecticut Dept. of Income Maintenance v. Heckler, 471 U.S. at 527-528, n. 5; State of
Minnesota v. Heckler, 718 F. 2d 852, 861-862 (8th Cir. 1983) citing letters from
HCFA officials to State Medicaid officials.
[100]
471 U.S. 524, 85 L. Ed. 2d 577, 105 S. Ct. 2210 (1985).
Besides
the State of Connecticut, the Federal Government, through the Health Care Financing
Administration (HCFA), disallowed federal financial participation or medical assistance
for services provided in similar facilities in Minnesota, Illinois, and California. See State of Minnesota v. Heckler, 718 F.
2d 852 (8th Cir. 1983).
[101]
The facility in question was Middletown Haven, a privately owned 180-bed facility licensed
under Connecticut state law as a "Rest Home with Nursing Supervision" with
authority to care for persons with certain psychiatric conditions. During the years from 1977 through 1979, 77
percent of its patients suffered from a major mental illness, and the majority of its
patients had been transferred from state mental hospitals.
471 U.S. at 526.
[104] Id.
at 526-528 and 536-537. See also
discussion in part I.B, supra note 27 and accompanying text.
[105]
State of Minnesota v. Heckler, 718 F. 2d 852 (8th Cir. 1983). This Eighth Circuit Court of Appeals decision held
that the determination of whether a particular facility is considered to be an ICF or an
IMD should be primarily based upon the nature of the services provided, rather than the
diagnoses or types of illnesses manifested by its patients.
Id. at 861-866. The Eighth
Circuit based its decision upon the statutory definition of an intermediate care facility,
which authorizes care of patients in ICFs with either mental or physical conditions, as
long as the illnesses involved require a lesser degree of care and treatment than that of
a hospital or a skilled nursing facility. 42
U.S.C. � 1396d(c) (1976 & Supp. V 1981).
The
U.S. District Court in Connecticut set aside the disallowance, but the Second Circuit
Court of Appeals reversed the trial court. 731
F. 2d 1052 (2nd Cir. 1984).
[107]
471 U.S. 529-530 citing 42 U.S.C. �� 1396d(a)(1),
1396d(a)(4)(A), and 1396d(a)(15) for hospital services, skilled nursing facility
services, and ICF services, respectively.
[110]
Section 1905(i) of the Social Security Act, 42 U.S.C. � 1396d(i) (1994), enacted as part
of the Medicare Catastrophic Coverage Act of 1988, � 411(k), Pub. L. No. 100-360, 102
Stat. 683, 798-799 (1988). The Medicare
Catastrophic Coverage Act of 1988 was repealed in 1989, but the IMD statutory definition
was not repealed and remains in effect today.
The
Department of Health and Human Services subsequently modified its regulations by
incorporating the "more than sixteen-bed" requirement in accordance with the
statutory definition. However, the Department
preserved the "overall character" interpretation pertaining to whether a
particular institution has been established and maintained for the care and treatment of
individuals with mental diseases, regardless of whether it is licensed as such. 42 CFR
435.1009 (1995).
Following
the Supreme Court's decision in Connecticut Department of Income Maintenance v. Heckler,
471 U.S. 524 (1985), the most crucial criteria in determining whether a particular
facility is considered to be an IMD pertains to whether the current need for
institutionalization for more than fifty percent of all patients in the facility results
from mental diseases as defined in the International
Classification of Diseases (9th edition, modified for clinical applications) (ICD-9CM), excluding disorders involving mental
retardation, senility, and organic brain syndrome. Under
the Department's interpretation, a diagnosis of a mental disorder (other than mental
retardation, Alzheimer's disease or dementia) need not be a patient's primary diagnosis,
as long as this condition would independently be significant enough to require nursing
facility care or hospitalization. See HCFA, State Medicaid Manual � 4390; Commerce Clearing House, The Medicare-Medicaid Guide,
(hereinafter CCH, Medicare-Medicaid Guide),
Vol. III, Section 14,601, at 6295-4 - 6295-5 (May 1992).
A
particular area in which there has been confusion over whether a specific facility is
considered to be an IMD pertains to alcohol and substance abuse treatment centers. There is a broad spectrum of care with regard to
the treatment of substance abuse disorders. At
one end of the spectrum is professional psychiatric care, performed by medical and other
licensed and trained personnel who use or combine drug therapy and psychotherapy in an
effort to gain control of the patient's addictive disorder.
This type of treatment is commonly considered to constitute the treatment of a
mental disease, and facilities providing such treatment are generally considered to be
IMDs. At the other end of the spectrum are
facilities which offer services based upon the Alcoholics Anonymous model. These organizations primarily focus on peer groups
and laypersons as counselors to promote support and encouragement for the participants. Facilities providing these types of services are
generally not considered to be IMDs. See
CCH, Medicare-Medicaid Guide, Vol. III, �
14,601, at 6295-5 - 6295-6 (May 1992).
[112] Institutions provide
psychiatric and nonpsychiatric medical services and social programs and welfare services,
such as food, shelter and clothing to their patients, all in or through a single setting. This is in stark contrast to the disjointed system
of outpatient mental health services and other social services available in many
communities across the country. Additionally,
persons with these very disabling conditions living in the community frequently have
difficulty dealing with various federal, state, and local agencies to obtain necessary
social and welfare benefits needed for daily living.
Interviews with Dr. Peele and Dr. Torrey, supra note 2.
[113] "Continuity of care"
is a general term and an important element in the psychiatric and mental health field
signifying that a single individual or treatment team is responsible for providing or
ensuring that all necessary psychiatric care and other mental health services and program
benefits are provided to individuals under his, her or its care. See Torrey,
Surviving Schizophrenia, supra note 2, at 222-225 and 240-245.
[115] During President Carter's
Administration, HEW was split into two departments: the Department of Health and Human
Services (H.H.S.) and the Education Department.
[116] Legion v. Richardson, 354 F.
Supp. 456 (S.D. N.Y. 1973) aff'd sub nom., Legion v. Weinberger, 414 U.S. 1058, 94
S.Ct. 564, 38 L. Ed. 2d 465 (1973), rehearing denied, 415 U.S. 939, 94 S. Ct. 1459,
39 L. Ed. 2d 498 (1974); Kantrowitz v. Weinberger 388 F. Supp. 1127 (D. D.C. 1974), aff'd
530 F. 2d 1034 (D.C. Cir. 1976), cert. denied 429 U.S. 819 (1976).
[117] The Equal Protection Clause
of the Fourteenth Amendment to the United States Constitution provides, in pertinent
parts, that no State shall deny any person within its jurisdiction equal protection of the
law. U.S.
Const. amend. XIV ' 1, last clause. Although an equal protection clause is not
expressly incorporated in the Fifth Amendment (pertaining to actions of the Federal
Government), the United States Supreme Court has held that the Fifth Amendment's Due
Process Clause encompasses equal protection principles.
Dandridge v. Williams, 397 U.S. 471, 90 L.Ed. 2d 491 (1970).
The fundamental principle behind the doctrine of equal protection is that "all
persons similarly situated shall be treated alike".
City of Cleburne, Texas v. Cleburne Living Center, 473 U.S. 432, 439, 105 S.Ct.
3249, 3254, 87 L. Ed. 2d 313 (1985), citing Plyer v. Doe, 457 U.S. 202, 216, 102
S.Ct. 2382, 2394, 72 L.Ed. 2d 786 (1982).
[118] The Supreme Court has
interpreted the "rational review" equal protection standard to mean that
challenged legislation or other governmental actions will be presumed to be valid and will
be upheld unless no rational relationship can be established between the classification
and the asserted legitimate governmental objective. City
of Cleburne, Texas v. Cleburne Living Center, 473 U.S. 432, 105 S. Ct. 3249, 87 L. Ed. 313
(1985).
[119] The Supreme Court has asserted
that "The guarantee of equal protection under the Fifth Amendment is not a source of
substantive rights or liberties, but rather a right to be free from invidious
discrimination in statutory classifications and other governmental activity." See Harris v. McRae, 448 U.S. 297, 322, 100
S.Ct. 2671, 2691, 65 L. Ed. 2d 784 (1980). See
also Dandridge v. Williams, 397 U.S. 471, 90 S. Ct. 1153, 25 L. Ed. 491 (1970);
Schweiker v. Wilson, 450 U.S. 221, 101 S. Ct. 1074, 67 L. Ed. 2d 186 (1981). Also, a social and economic classification must
not be based on a fundamental right, race or national origin suspect classification(s), or
gender / illegitimacy or it will lose its presumption of constitutional validity and will
be subjected to a higher level of judicial scrutiny.
[120] 354 F. Supp. 456 (S.D. N.Y.
1973) aff'd sub nom., Legion v. Weinberger, 414 U.S. 1058, 94 S.Ct. 564, 38 L.Ed.
2d 465 (1973), rehearing denied, 415 U.S. 939, 94 S.Ct. 1459, 39 L.Ed. 2d 498
(1974).
[121] Pursuant to Section 1812(b)(3)
of the Social Security Act [42 U.S.C. � 1395d(b)(3) (1994)], Medicare's hospital
insurance (Medicare Part A) places a lifetime limit of 190 days on inpatient treatment in
psychiatric hospitals.
[123] Id., at 458, citing
Wyatt v. Stickney, 325 F. Supp. 781 and 334 F. Supp. 1341 (M.D. Ala. 1971 and 1972).
To follow up, in recent years due to budgetary cutbacks on the state level, there
have been a number of cases brought by advocates and persons with mental retardation and
mental illnesses, challenging the inadequacy of state mental health funding and alleging a
right to treatment for persons in state mental institutions and for recently discharged
patients of state facilities. See
Thomas S. By Brooks v. Flaherty, 902 F. 2d 230 (4th Cir. 1990); Thomas v. Morrow, 781 F.
2d 367 (4th Cir. 1986); Jackson v. Fort Stanton Hospital & Training School, 964 F. 2d
980 (10th Cir. 1192); S.H. & P.F. v. Edwards & Gay, 860 F. 2d 1045 (11th Cir.
1988), cert. denied 491 U.S. 905, 109 S. Ct. 3187, 105 L.Ed. 2d (1989). See also Antony B. Klapper, Finding A
Right in State Constitutions for Community Treatment of the Mentally Ill, 142 U. Pa.
L. Rev. 739 (Dec. 1993); Jonathan P. Bach, Requiring Due Care in the Process of
Patient Deinstitutionalization: Toward a Common Law Approach to Mental Health Reform,
98 Yale L. J. 1153 (Apr. 1989). The plaintiffs in these cases have generally been
unsuccessful in their efforts to increase the level of state mental health appropriations. Nevertheless, these cases and articles illustrate
the problems with patient care resulting from inadequate state funding of psychiatric and
mental health services. Therefore, it is
inherently inequitable for Congress or the courts to use the "traditionally, a state
responsibility" rationale to continue to deny federal Medicaid funding for services
provided to otherwise-qualified individuals in psychiatric institutions.
[126] Legion v. Richardson, 354 F.
Supp. 456 (S.D. N.Y. 1973) aff'd sub nom., Legion v. Weinberger, 414 U.S. 1058, 94
S.Ct. 564, 38 L.Ed. 2d 465 (1973), rehearing denied, 415 U.S. 939, 94 S.Ct. 1459,
39 L.Ed. 2d 498 (1974).
[127] 388 F. Supp. 1127 (D. D.C.
1974), aff'd 530 F. 2d 1034 (D.C. Cir. 1976), cert. denied 429 U.S. 819
(1976).
[128] Id. Besides challenging the IMD exclusion on the
grounds that it arbitrarily discriminated against a class of mentally ill persons in
public mental institutions, the plaintiffs also tried to challenge the exclusion on the
grounds that it irrationally discriminated against persons who were between the ages of
twenty-two and sixty-four. Citing the Supreme
Court case of Jefferson v. Hackney, 406 U.S. 535, 92 S.Ct. 1724, 32 L.Ed. 285 (1972), the
court applied the rational review equal protection standard and struck down this age
argument.
[131] 42 U.S.C. � 1382(e)(1)(A)
(1994). See also 42 U.S.C. �
1396d(a)(24)(A), discussed in supra note 88.
[132] This $300.00 SSI comfort
allowance for persons in medical institutions has since been slightly increased to
$360.00, annually. 42 U.S.C. �
1382(e)(1)(B)(i) (1994).
[134] Id. However, subsequent
to the Supreme Court's decision in Schweiker v. Wilson, Congress amended Section 1611(e)
of the Social Security Act to allow SSI comfort allowance benefits to inmates of public
institutions whose primary purpose is the provision of medical or psychiatric care. 42 U.S.C. � 1382(e)(1)(E) (1994).
[136] 450 U.S. 232-233, 101 S.Ct.
1082. Justice Blackmun wrote the majority
opinion in Schweiker v. Wilson.
[140]
Schweiker v. Wilson, 450 U.S. 221, 242, 101 S.Ct. 1074, 1086 (1981) (Powell, J.,
dissenting) citing S. Rep. No. 404, 89th Cong. 1st Sess. pt. 1, at 20 (1965) reprinted
in 1965 U.S.C.C.A.N. 1943, 2084.
Justice
Powell pointed out that the legislative history of the 1972 Social Security Act Amendments
sheds no light on why Congress decided to exclude the SSI comfort allowance benefits for
persons in public mental institutions based upon the denial of Medicaid eligibility. Id. at 243, 101 S.Ct. at 1087, note 3, citing
H.R. Rep. No. 92-231, at 150 (1971), reprinted in 1972 U.S.C.C.A.N. at 5136. He also noted that the only indication of
Congressional intent in the legislative history is that "No assistance benefits will
be paid to an individual in a penal institution".
Id. Finally, noting that the
purpose behind granting the $25.00 monthly SSI benefit was for personal comfort needs
rather than for maintenance and medical care, Justice Powell stated that it was irrelevant
whether the Federal Government or the State is responsible for paying for the individuals'
maintenance and medical care because the monetary and comfort needs of patients in general
medical and psychiatric institutions are the same. Id.
at 246-248, 101 S.Ct. at 1089. Thus,
Justice Powell concluded that there was no rational reason for Congress' refusing to pay
SSI comfort allowances to otherwise eligible patients in state psychiatric hospitals,
while at the same time granting such monthly benefits to identically situated disabled
individuals in other medical facilities. Id.
[141] Creating different
classifications for "mental diseases" and other medical conditions earlier in
the twentieth century could have been considered to be a rational distinction in federal
public policy. However, as will be discussed
in greater detail in part III.A of this analysis, infra notes 154-166 and
accompanying text, the care and treatment for persons with serious mental illnesses has
evolved tremendously and is now based upon a neurobiological understanding of the brain.
[143] 42 CFR 440.230(c) (1995).
A legal representative challenging the constitutionality of the IMD exclusion
should encourage the Supreme Court to adopt Justice Stevens's "medically
necessary" judicial review approach, which he articulated in his dissent in Harris v.
McRae, discussed in supra note 67, 448 U.S. 297, 349-357, 100 S.Ct. 2701, 2712-2716
(1980), (Stevens, J., dissenting). (Justice
Stevens joined Justice Powell's dissent in Schweiker v. Wilson).
This same "medical necessity" reasoning was used by the Eighth Circuit
Court of Appeals in requiring Iowa's state Medicaid agency to cover a sex reassignment
surgical procedure for a transsexual Medicaid recipient on the grounds that this procedure
was the only available treatment for this individual's transsexual condition. Pinneke v. Preisser, 623 F. 2d 546 (8th Cir.
1980). See the discussion of this case
and other relevant cases and information pertaining to "medical necessity"
coverage issues in part III.A of this analysis, infra notes 170-177 and
accompanying text.
[144] See discussion of
Section 1902(a)(19) of the Social Security Act, 42 U.S.C. � 1396a(a)(19) (1994), in supra
note 73 and accompanying text. Also, a legal
representative for a class of persons with severe mental illnesses should assert that the
Medicaid statute does not exclude federal payment for services provided by other
specialized hospitals (e.g., dialysis centers, cancer treatment centers and orthopedic
hospitals) and covers other types of long-term care for Medicaid recipients. See discussion in part I.B, supra
notes 40-49 and accompanying text.
[145] See Dandridge v.
Williams, 397 U.S. 471, 90 L.Ed. 2d 491 (1970) and the equal protection discussion in supra
notes 117-119 and accompanying text.
[146] U.S. Const. amend. XIV � 1, last clause. See discussion in part II.D, supra
notes 116-138 and accompanying text.
[147] These individuals were
considered to be wards or inmates of the State. See
discussion regarding the legislative history of the IMD exclusion in part II.B, supra
notes 88-96 and accompanying text, citing H.R. Rep. No. 1300, 81st Cong., 1st
Sess., at 42 (1949); H.R. Rep. No. 694, 88th Cong., 1st Sess. (1963), reprinted in
1963 U.S.C.C.A.N., 1954, 2064-66; and S. Rep. No. 404, 89th Cong., 1st Sess., pt. 1, at
144-147 (1965), reprinted in 1965 U.S.C.C.A.N., 1943, 2084.
[148] The predominant view of mental
illness in the United States for the better part of the twentieth century was based
primarily upon Sigmund Freud's psychoanalytical or psychodynamic theories of the mind or
"psyche". Freud believed that the
mind possessed a certain amount of psychic energy which could be understood by examining
the interplay between the psychic forces striving to maintain an equilibrium. See Nancy
C. Andreasen, The Broken Brain: The Biological Revolution in Psychiatry 20-22
(1984) (hereinafter Andreasen, The Broken Brain). The
aim of Freudian psychoanalysis was to strive for a fundamental change in a disturbed
individual's personality through a slow cure releasing the patient from neurotic fears in
his or her subconscious. See Nathan G. Hale, Jr., The Rise and Crisis of
Psychoanalysis in the United States: Freud and the Americans 1917-1985 293 (1995)
(hereinafter Hale, The Rise and Crisis of
Psychoanalysis).
[149] Another competing view of
mental illness in the United States in the twentieth century was conceptualized in terms
of behavioralism, which involved conditioning and reactions to stimuli. Behaviorists approached treating persons with
mental illnesses by trying to teach them to modify their behaviors through the use of
positive and negative conditioning mechanisms. John B. Watson and B. F. Skinner were two
acclaimed proponents of behavioralism for the treatment of mental illness. Andreasen,
The Broken Brain, supra note 148, at 17-19 and 24-26.
[150] Psychiatrists trained in
Freudian psychoanalysis believed that nervous disturbances and serious mental illnesses
could be attributed to various psychological and interpersonal factors or damaging
influences, such as bad parenting or other adverse environmental factors, rather than to
any biological or organic disorders of the brain. Thus,
psychoanalytical practitioners were skeptical of organic therapies, like psychotropic
medications, and wanted little if anything to do with them.
See Hale, The Rise and Crisis of
Psychoanalysis, supra note 148, at 245-247 and 257-299. See also Andreasen, The Broken Brain, supra note
148, at 10-24; Torrey, Surviving Schizophrenia,
supra note 2, at 166-169; and Irving I.
Gottesman, Schizophrenia Genesis The Origins
of Madness 14-15 (1991) (hereinafter Gottesman,
Schizophrenia Genesis). In its place,
these practitioners employed the use of psychoanalysis or "talk therapy" to
treat patients with these disorders and to explain their irrational fears, neuroses, and
psychoses. Id.
In contrast to the American thinking, Europeans in the early twentieth century
accepted the view that serious mental illnesses, such as schizophrenia, were biological
disorders of the brain. Dr. Emil Kraepelin
(1856-1926) was an early physician and research proponent to advocate this biological
view. His clinical studies regarding "dementia
praecox", (the nineteenth century name for schizophrenia), serve as the building
blocks for the modern biological view of serious mental illness. In Europe, Kraepelin is considered to be the
father of psychiatry, whereas in the United States, Freud is considered to be the father
of psychiatry. Andreasen, The Broken Brain, at 14-16, 19, and 26;
Gottesman, Schizophrenia Genesis, at 7-8 and
13-16.
[151] Psychoanalysis was used to a
large extent (and arguably quite successfully) to treat shell-shock or combat neuroses
during and after World War I and World War II in an effort to prevent soldiers from
suffering a mental breakdown. See Hale, The Rise and Crisis of Psychoanalysis, supra
note 148, at 15-24, 187-210, and 245-299.
After World War II, psychoanalysis became identified with the mainstream of American psychiatry. Id. at 187-210 and 245-256. This is was due to the fact that a significant
number of the post-World War II generation of psychiatrists in the United States received
their psychiatric training in military psychoanalytical institutes. Id. at 187-210 and 245-256.
[152] The National Institute of
Mental Health was established through the enactment of the Mental Health Act of 1946. Pub. L. No. 79-487, 60 Stat. 425 (1946), 42 U.S.C.
� 201, at � 232, (1994).
[153] Psychoanalytical psychiatrists,
such as Karl and William Menninger, led efforts to promote the use of outpatient mental
health services, primarily psychoanalytical approaches, to treat individuals suffering
from various neuroses and serious mental illnesses, while deemphasizing the need for
long-term institutional psychiatric care. See
Hale, The Rise and Crisis of Psychoanalysis,
supra note 148, at 187-210, 245-256, and 257-275.
The efforts of the Menninger brothers and others culminated in the enactment of the
Mental Health Act of 1946 and the establishment of the National Institute of Mental Health
(NIMH). Id. at 209-210, 222-223, and
246-256. By 1954, a vast majority of
psychiatrists described their orientation as Freudian or neo-Freudian and pursued a
psychoanalytical approach to their practice. By
1962, the majority of chairmen of psychiatry departments at American medical schools were
members of psychoanalytical organizations. Id.
at 253-256; see also pages 222-230. In
1973, half of all psychiatrists in the United States specialized in psychoanalysis. Id. at 246.
[154] The advent of psychotropic
medications, such as Thorazine, and other organic therapies, such as electroconvulsive
therapy (ECT), in the mid to late 1950s, spurred an interest in brain research and in
finding biological causes for serious mental disorders, a concern which had been kept
alive by "organic" psychiatrists, mainly holdovers from the older, pre-World War
II generation. Id. at 300-321. See also Torrey, Surviving Schizophrenia, supra
note 2, at 167-169, 190; Gottesman, Schizophrenia
Genesis, supra note 150, at 15-16.
[155] Clinical research studies on
new drug therapies began to exhibit positive and scientifically verifiable results for the
treatment of patients with schizophrenia and other serious mental illnesses. For their part, psychoanalytical psychiatrists
were unable to match the efficacy of the new organic therapies or even demonstrate any
verifiable benefits of psychoanalysis in clinical trials of patients with severe mental
illnesses. Id.
[156] Sir Peter Medawar, a British
medical researcher and Nobel prize winner, stated in an article, in the New York Review of Books, in 1975 that the
"doctrinaire psychoanalytical theory [was the] most stupendous intellectual
confidence trick of the twentieth century." See
Hale, The Rise and Crisis of Psychoanalysis,
supra note 148, at 3.
[157] See Andreasen, The Broken Brain, supra note
148, at 14-19, 27-33 and 83-247; Gottesman,
Schizophrenia Genesis, supra note 150, at 7-16 (1991); and Torrey, Surviving Schizophrenia, supra note
2, at 166-172.
[158] See Hale, The Rise and Crisis of Psychoanalysis, supra
note 148, at 303.
As further evidence of the continuing controversy over Freudian theories today, the
Library of Congress decided to postpone an exhibit entitled "Freud: Conflict and
Culture". The Library of Congress
publicly stated that it postponed the planned exhibit due to budgetary concerns. However, the Library received petitions signed by
forty-two scholars from different fields, including the psychiatric community. See D. Smith, Freud May Be Dead, But His
Critics Still Kick, N.Y. Times, December
10, 1995, at D14, col. 1.
Even psychoanalysts now recognize that schizophrenia and other serious mental
illnesses have neurobiological underpinnings. See
M. Robbins, Psychoanalytic and Biological Approaches to Mental Illnesses: Schizophrenia,
40 J. of American Psychoanalytic Association
425-454 (1992) and Hale, The Rise and Crisis of
Psychoanalysis, supra note 148, at 300-379.
[160] Congress and the National
Advisory Mental Health Council dedicated the 1990s as the "Decade of the Brain".
[161] However, this should not
preclude people suffering from these psychiatric disorders from receiving equal treatment
under the Medicaid statute. Many other
organic disorders, such as various types of cancer, have unknown causes and origins, and
medically necessary treatments for persons suffering from these disorders are not
categorically singled out or excluded from coverage under the Medicaid program.
[162] See Torrey, Surviving Schizophrenia, supra note
2, at 140-155); Torrey et al., Schizophrenia and
Manic-Depressive Disorder: The Biological Roots of Mental Illness As Revealed By the
Landmark Study of Identical Twins (1994) (hereinafter Torrey et al., Schizophrenia
and Manic-Depressive Disorder); Gottesman,
Schizophrenia Genesis, supra note 150, at 82-246; Andreasen, The Broken Brain, supra note
148, at 83-247; and OTA Rep. Biology of Mental
Disorders, supra note 11.
[163] See Torrey, Surviving Schizophrenia, supra note
2, at 142-155 and OTA Rep., The Biology of Mental
Disorders, supra note 11, at 71-82. Structural
abnormalities in persons with schizophrenia are most notable in the frontal cortex and in
the limbic system of the brain.
[165] Research studies have shown
that patients with bipolar disorders have decreased amounts of norepinephrine (NE)
metabolites during depression and increased amounts of NE during manic episodes. Some research studies have found low concentration
of serotonin in autopsies of persons who have committed suicide. It has been suggested, based on available research
data, that decreased activity within the NE-serotonin system is associated with
depression, while increased activity of the NE-dopamine component is associated with
mania. However, other neurotransmitters,
such as acetylcholine, can also induce mood changes.
It has been hypothesized that increased acetylcholine activity induces depression,
while decreased acetylcholine activity induces mania.
See OTA Rep., The Biology of Mental
Disorders, supra note 11, at 82-88.
Lithium is the most effective medication for controlling mood swings between
depression and mania. It increases serotonin
activity and decreases acetylcholine activity. Lithium
also affects the activity level of both norepinephrine (NE) and dopamine. Id.
Also, with regard to persons with mood
disorders, there appear to be alterations in normal brain activity between the right and
left sides of the brain. Complicating matters
pertaining to the biological causes for depression and bipolar disorders are several other
variables, such as sleep, circadian rhythms, hormonal changes and alterations, and stress
factors. Id. See also George,
Ketter, Parekh, Horwitz, Herscovich, and Post, Brain Activity During Transient Sadness
and Happiness in Healthy Women, American
Journal of Psychiatry, Vol. 152, No. 3, 341-351 (March 1995).
Clinically effective antidepressant medications (e.g., tricyclic antidepressants
and monoamine oxidase inhibitors) block or curb the enzymes involved in the chemical
breakdown or alteration of normal monoamine neurotransmitter activity. See OTA
Rep., The Biology of Mental Disorders, supra note 11, at 82.
[166] Recent research studies have
indicated that most likely there is some genetic linkage involved in the onset of
schizophrenia and mood disorders. However,
there is a continuing debate regarding the exact role of genetics in the development of
these disorders. Irving I. Gottesman, Ph.D.,
a leading researcher in the area of genetics and schizophrenia, expressed in his book that
genetic factors are essential as a predisposition to schizophrenia, but they are not
sufficient, in and of themselves, to cause the onset or actual development of
schizophrenia. Using predisposition
stressors, Dr. Gottesman formulated a risk assessment chart for developing schizophrenia
in one's lifetime when a first or a second degree relative manifests an onset of
schizophrenia. Within his model, Dr.
Gottesman also recognized the role of the psychosocial and environmental stress factors on
the development of schizophrenia and other mental disorders. See Gottesman,
Schizophrenia Genesis, supra note 150, at 82-132. See also Torrey et al., Schizophrenia and Manic-Depressive
Disorder, supra note 162; OTA Rep.,
The Biology of Mental Disorders, supra note 11, at 101-122; J. Egeland, Bipolar
Affective Disorders Linked To DNA Markers On Chromosome 11, 325 Nature 783-787 (Feb. 26, 1987), (a study of Amish
families); and M. Baron, Genetic Linkage Between CHI-Chromosomes Markers and Bipolar
Affective Illness, 326 Nature 289-292
(Mar. 19, 1987).
[167] Section 2 of the Mental
Health Parity Act of 1996, S.B. 2031. This
bill was signed into law by President Clinton on September 26, 1996, as part of the 1997
Veterans Administration / Department of Housing and Urban Development Appropriations Bill.
Pub. L. No. 104-204, tit. 7, 110 Stat.
2874, 2944-2950 (1996).
[168] See the discussion of
"the forgotten population", in part I of this analysis, supra notes 13-17
and 40-46 and accompanying text. Also, as
discussed previously in part I.B, the Community Mental Health Centers Act of 1963 and the
mental health provisions of the 1965 Amendments to the Social Security Act were premised
on the notion that with the development of new medications and an increased number of
psychiatric beds in general hospitals community mental health services would ultimately be
able to replace the need for state mental institutions.
See supra notes 27-34 and accompanying text, citing H.R. Rep.
No. 694, 88th Cong., 1st Sess. (1963), reprinted in 1963 U.S.C.C.A.N. 1054, 1064-66
and S. Rep. No. 404, 89th Cong. 1st Sess., pt. 1, at 143-147 (1965), reprinted in
1965 U.S.C.C.A.N. 1943, 2083-87.
[170] Section 1902(a)(19) of the
Social Security Act, 42 U.S.C. � 1396a(a)(19) (1994) and 42 CFR 440.230(c) (1995).
[171] Medicaid has no statutory
exclusions for necessary medical care provided in specialized treatment facilities for
persons with multiple sclerosis, Parkinson's disease, Alzheimer's disease, autism, mental
retardation, and other related brain disorders. After
standard certification of need and utilization review requirements have been met, federal
medical assistance is allowed for treatments of these conditions based upon what is in the
best interest of the patient.
[172] Congress should embrace the
"medically necessary" judicial review approach articulated by Justice Stevens in
his dissent in Harris v. McRae, 448 U.S. 297, 349-357, 100 S.Ct. 2701, 2712-2716 (1980)
(Stevens, J., dissenting). The author notes
that Justice Stevens joined Justice Powell's dissent in Schweiker v. Wilson, 450 U.S. 221,
discussed in part II at supra notes 139-140 and accompanying text.
Justice Stevens asserted, "Individuals who satisfy two neutral criteria -
financial need and medical need - are entitled to equal access to the pool [of Medicaid
benefits]." 448 U.S. at 349, 100 S.Ct.
at 2712. Noting that the Constitution imposes
no obligation on the States to pay for medical care for indigent residents within their
jurisdictions, Justice Stevens stated that, once a State decides to alleviate some of the
hardships of poverty by providing medical care, the manner in which it dispenses benefits
is subject to constitutional limitations. Id.
at 356, 100 S.Ct. 2715 citing Maher v. Roe, 432 U.S. 464, 469-470, 97 S.Ct. 2376,
2380 (1977). Justice Stevens then contended
that the government must use neutral criteria in distributing the benefits, and that it
has a duty to govern impartially. Id.
[174] Id. at 549-550, citing
42 CFR 440.230(c). See the discussion
of this antidiscrimination regulation in part II.A, supra notes 73-76 and
accompanying text.
[175] Id. at 549, note 3, citing
S. Rep. No. 404, 89th Cong., 1st Sess., pt. 1, at 144-147, reprinted in 1965
U.S.C.C.A.N., 1943, 1986.
See also
Minnesota Department of Public Welfare, 257 N.W. 2d 816 (Minn. 1977) and G.B. v. Lackner,
145 Cal. Rptr. (Cal. App. 1978). These cases
also held that sex reassignment surgery was the only "medically necessary"
procedure for some patients with the condition of transsexualism and that the (Minnesota
and California) state Medicaid agencies were required to cover such sex conversion
procedures for Medicaid recipients with this condition.
The court, in G.B. v. Lackner, held that this surgical procedure could not be
arbitrarily denied Medicaid coverage on the grounds that this surgery was considered to be
a "cosmetic procedure" (not covered under most state Medicaid plans). But see Rush v. Johnson, 565 F. Supp. 856
(N.D. Ga. 1983), which held that Georgia's Medicaid agency did not have to pay for a
transsexual operation, performed in 1974, on the grounds that this surgery was found to be
an experimental procedure (also not covered under most state Medicaid plans). However, even the court's holding in Rush v.
Jonson did not dispute the notion that the "medically necessary" standard
applies to sex conversion procedures for Medicaid patients with a diagnosed condition of
transsexualism.
[176] Id. citing S.
Rep. No. 404, 89th Cong., 1st Sess., pt. 1, at 144-147, reprinted in 1965
U.S.C.C.A.N., 1943, 1986.
[177] Part III.C of this analysis, infra
notes 214 through 225 and accompanying text, sets forth reasonable nondiscriminatory
proposals to contain Medicaid costs for specialized inpatient and long-term psychiatric
care, if the IMD exclusion is repealed.
[179] Id. citing the
legislative history to the Community Mental Health Centers Act of 1963, published in
H.R. Rep. No. 694, 88th Cong., 1st Sess. (1963), reprinted in 1963 U.S.C.C.A.N.
1054, at 1064-66.
[180] As discussed in part I of this
analysis, the majority of persons with serious mental illnesses can now be successfully
treated on an outpatient basis with the appropriate medications. See discussion in supra notes
11-12 and accompanying text.
[182] The National Institute of
Mental Health (NIMH) and the National Center for Health Statistics (NCHS) conducted a
national survey in 1989, which concluded that an estimated 200,000 mentally ill persons
are homeless on any given day. See CRS, Medicaid Source Book, Medicaid Services
For The Mentally Ill, supra note 6, at 914.
Some estimates indicate that 20 to 40 percent of the homeless population suffers
from a serious mental illness. Id. at
914-915. Other research studies have
estimated that approximately 35 percent or one-third of the homeless population suffers
from schizophrenia, major depression, or manic depression (bipolar disorder) and have
concluded that approximately 150,000 homeless individuals in America suffer from these
psychiatric disorders. See Torrey, Out Of The Shadows, supra note 1,
at 3 and 13-24, and Torrey, Surviving Schizophrenia,
supra note 2, at 1-2. Closer to
home, it is estimated that there are approximately 7,000 homeless persons in the District
of Columbia, about a third of whom have a serious mental illness, and another third have a
substance abuse disorder. A number of the
District's mentally ill homeless persons were once residents of Saint Elizabeth's
Hospital, who wanted to stay but were either discouraged or prohibited from doing so. See Peele, In Pursuit of the Promise, supra
note 13, at 21 and 48. See also Torrey, Surviving Schizophrenia, supra note
2, at 249.
[183] Studies conducted prior to the
start of deinstitutional-ization concerning the number of former psychiatric patients
arrested after being discharged from state hospitals did not find a higher arrest rate for
such former patients than for the population as a whole.
However, eight studies conducted between 1965 and 1978 found that the arrest and
conviction rates for former psychiatric patients either equalled or exceeded that of the
general population. One study conducted in
California between 1972 and 1975 found that discharged patients were arrested 2.9 times
more frequently than non-psychiatric patients. See
Torrey, Out Of The Shadows, supra
note 1, at 41-42.
[184] Id. at 30 citing
Jemelka, et al., The Mentally Ill In Prisons, 40 Hospital And Community Psychiatry 481-485
(1989). Other studies in various States
indicated that 6.6 to 10 percent of prison inmates had schizophrenia, bipolar disorder, or
major depression. Torrey, Out Of The Shadows, supra note 2,
at 30.
[185] See National Alliance for the Mentally Ill (NAMI) &
Public Citizen Research Group, Criminalizing the Seriously Mentally Ill: The Abuse of
Jails as Mental Hospitals 14-15, 28 (1992) (hereinafter Criminalizing the Seriously Mentally Ill). Additionally, the topic of county jails serving as
"the dumping grounds" for the severely mentally ill in America was one of the
subjects examined on the Cable News Network's weekly news magazine, CNN Presents,
on Sunday, April 28, 1996. CNN Presents:
Breakdown, (CNN television broadcast, Apr. 28, 1996).
This program viewed the "breakdown" in the public mental health system as
a consequence of the reduction in the amount of inpatient psychiatric care services
available to treat individuals suffering from severe psychiatric disorders and the failure
to furnish adequate community mental health services for these individuals. The Los Angeles County Jail is now the largest
single, de-facto psychiatric institution in the country.
See Torrey, Out Of The Shadows,
supra note 1, at 42.
[186] This 150,000 population
estimate is based upon a reasonable assessment that 10 percent of the total jail and
prison population in the United States in 1995 (1,587,791) suffer from a serious mental
illness. See Torrey, Out Of The Shadows, supra note 1,
at 31.
[187] Twenty-nine (28.9) percent of
jails responding to the 1992 jail survey stated that their facilities were sometimes used
to detain or house seriously mentally ill persons without criminal charges being filed
against them, (i.e., for emergency detention before commitment proceedings can be held or
for other noncriminal mental health reasons, such as hallucinating in public or "just
acting strange"). Also, the third most
common offense cited by the jails in the survey for arresting mentally ill individuals,
after assault and/or battery and theft, was "disorderly conduct", (29.4 percent
of total arrests). (Drug and alcohol related
offenses were ranked fourth at 29.0 percent.) See
Criminalizing the Seriously Mentally Ill, supra
note 185, at 16-20 and 44-48.
[188] See Criminalizing the Seriously Mentally Ill, supra
note 185, at 80-85, discussing an ongoing cycle faced by many seriously mentally ill
persons between homelessness and repeated arrests and incarcerations for minor offenses
and/or misdemeanors. The jails survey
identified many individuals with schizophrenia and bipolar disorders who were jailed
and/or hospitalized numerous times. One
person with schizophrenia was jailed at least a hundred times, all on misdemeanor charges,
and other individuals mentioned in the survey were reported to have been hospitalized at
least 30 times. Id. at 82-83. Additionally, a study of mentally ill inmates in
Los Angeles County Jail found that 37 percent of mentally ill males arrested and 42
percent of female inmates in the group had been living on the streets or in shelters at
the time of their arrest. Id. at 82.
Other research studies have found a significant number of readmissions to state
psychiatric hospitals; 30 percent in Illinois were readmitted within thirty days, and 60
percent in New York were readmitted within one year.
Some individuals with schizophrenia have been hospitalized and readmitted over one
hundred times. See Torrey, Surviving Schizophrenia, supra note
2, at 3-4, and Torrey, Out Of The Shadows, supra
note 1, at 13-42, 61-79.
[190] Id. citing 42
U.S.C. �� 1396a(a) and 1396d(a) (1994) and 42 CFR 440.230(c) (1995). This is the case unless the facility in question
is deemed to be an IMD, as in the case of Connecticut Department of Income Maintenance v.
Heckler, 471 U.S. 524 (1985), discussed in part II.C, supra notes 100-110 and
accompanying text.
[191] Id. The placement of chronic and severely mentally ill
individuals (22 to 64 years of age) in nursing facilities rather than state psychiatric
hospitals or other IMDs, in order for such patients to remain eligible for Medicaid
coverage and other federal entitlement programs, can best be described as
"transinstitutionalization". See
Torrey, Out Of The Shadows, supra
note 1, at 102-103.
Illustrating the significance of this cost-shifting, Dr. Torrey testified during a
hearing before the Senate Finance Committee, on May 10, 1994, that federal funding
incentives, such as Medicaid and other entitlement programs, have created "a gigantic
fiscal carrot encouraging states to discharge patients as a means of shifting the cost of
care from the state government to the federal government." Torrey asserted that "States have little
fiscal incentives to ensure that discharged patients receive medication or
aftercare." He further testified that
"In most states today the single most important function of state departments of
mental health is to find additional ways to shift the cost of psychiatric care from the
state government to the federal government." See
Testimony of E. Fuller Torrey, M.D., on Deinstitutionalization, United States
Senate, Committee on Finance, Federal News Service,
(May 10, 1994). The total federal funding
incentives for States to deinstitutionalize or otherwise provide care for psychiatrically
ill individuals in the community has been estimated to be $38 billion, annually. See Torrey,
Out Of The Shadows, supra note 1, at 91-102.
[192] See CRS, Medicaid Source Book, Medicaid Services
For the Mentally Ill, supra note 6, at 931.
See also Torrey, Out Of The Shadows,
supra note 1, at 102-103.
Torrey states, in his book, that the major problem with using nursing and smaller
board and care facilities to care for severely mentally ill individuals is that these
facilities do not have professionally-trained staff, such as a full-time psychiatrist, to
work with these patients; thus nursing facilities are primarily capable of offering only
custodial care for these individuals. Torrey
also mentions that the quality of care provided at state psychiatric hospitals improved
during the 1970s and 1980s and that it became increasingly common to discharge patients
from a relatively good hospital with active rehabilitation programs and transfer them to
nursing facilities with inferior psychiatric care services and no rehabilitation programs
for these patients. Id. See also Torrey, Surviving Schizophrenia, supra
note 2, at 248-250.
[193] CRS, Medicaid Source Book, Medicaid Services
For The Mentally Ill, supra note 6, at 927-928.
Almost two-thirds of the residents displayed symptoms of depression, and nearly
thirty percent of the residents experienced psychotic symptoms. Twenty-nine percent of the residents under
sixty-five years of age, and seventeen percent of the sixty-five and older population had
a primary diagnosis of a mental illness. Id.
at 928. See also Torrey, Out Of The Shadows, supra note 1,
at 91, 102-103.
[194] These nursing facility
population estimates of 232,500 and 435,000 are calculated using the total 1989 nursing
facility population estimate of 1,500,000, multiplied by 15.5 percent and 29 percent,
respectively.
[195] The total nursing facility
population in the United States is estimated to be 2.2 million people. See Torrey,
Surviving Schizophrenia, supra note 2, at 10.
[196] Id. A 1988 survey of nursing facilities in four cities
found that five percent of such residents had a primary diagnosis of schizophrenia, and a
1993 survey of nursing facilities in Rochester, New York revealed that 7.5 percent of such
residents had a diagnosis of schizophrenia. These
observations are consistent with earlier studies which indicated that approximately eight
percent of nursing home residents were "chronic mental patients, formerly residents
of long-term psychiatric hospitals". Id. Additionally, approximately 33 percent of nursing
facility residents under 65 were found to have a diagnosis of schizophrenia. Id.
[197] The Federal
Government has taken steps in an effort to stem the problem of inappropriate placements in
nursing facilities. Congress, in the Omnibus
Budget Reconciliation Act (OBRA) of 1987, Pub. L. No. 100-203, � 4215, (amended in 1990,
by OBRA-90, Pub. L. No. 101-508, � 4801), mandated that States participating in Medicaid
implement pre-admission screening and annual resident review (PASARR) programs to evaluate
whether mentally ill and mentally retarded residents require the services furnished by the
nursing facility or, in the alternative, require specialized services provided by an IMD
or an intermediate care facility for mentally retarded individuals (ICF/MR). Section 1919(e)(7) of the Social Security Act, 42
U.S.C. � 1396r(e)(7) (1994) and 42 CFR 483.100 et seq. (1995).
For long-term patients, those residing in the nursing facility at least 30 months,
who are determined not to require the level of care provided by the nursing facility, but
need specialized services for mental illness or mental retardation, Medicaid-participating
States are obligated to offer such residents the choice between remaining in the facility
or receiving the appropriate alternative care services, in either an institutional or a
noninstitutional setting. 42 U.S.C. �
1396r(e)(7)(C)(i) (1994). If the resident
chooses to leave the facility, the State first must explain to him or her the effect that
this decision may have upon his or her Medicaid eligibility,
under the state plan. Regardless of the
resident's choice, the State has to provide or arrange such specialized services. A State, however, is not denied federal Medicaid
reimbursement for long-term residents who choose to remain in the facility. Id.
The PASARR requirements mandate that for individuals residing in the facility for
less than 30 continuous months, who are determined not to require the level of care
provided by the nursing facility, but require specialized services for mental illness or
mental retardation, the State, in consultation with the resident's family or legal
representative, must arrange for the safe and orderly discharge of the patient and provide
or arrange the specialized services required for the treatment of his or her mental
illness or mental retardation. 42 U.S.C. �
1396r(e)(7)(C)(ii) (1994). However, in
passing these PASARR requirements, Congress did not appropriate any federal funds to
assist States with the costs of providing specialized psychiatric care to these former
nursing facility residents. This has been a
cause for concern on the part of many mental health advocates.
[198] See H.R. Rep. No. 694,
88th Cong., 1st Sess. (1963), reprinted in 1963 U.S.C.C.A.N., 1954, 2064-2066; and
S. Rep. No. 404, 89th Cong., 1st Sess., pt. 1, at 144-147 (1965), reprinted in 1965
U.S.C.C.A.N., 1943, 2084-2087.
[199] It is reasonably foreseeable
that States would try to take advantage of these federal incentives by placing chronically
mentally ill individuals in nursing facilities, rather than state psychiatric hospitals,
in order to receive federal funding for their care. See
the discussion in supra note 191 and the contentions raised in the ensuing
discussion.
[200] For example, a class-action
lawsuit was filed in United States District Court, on behalf of patients (mostly
long-term) in South Florida State Hospital (SFSH), who received virtually no services in
the hospital designed to rehabilitate them for eventual release back into the community. In June 1993, during the pendency of this
class-action, the State of Florida decided to close this state psychiatric hospital. Subsequently, in a settlement, the State agreed
only to provide thirty days of supportive aftercare services for former patients. Sanbourne v. Chiles, Case 89-6283-CIV-NESSBITT,
(S.D. Fla. 1993). However, this settlement
did not provide for ongoing rehabilitative aftercare services or adequately address the
needs of long-term patients who are released into the community.
Other States also have reduced the patient population at state psychiatric
hospitals without recouping the savings for other state mental health programs. See Kevin Sack, Why Politics, as Usual,
Is Not Helping The Mentally Ill, N.Y. Times,
July 25, 1993, ' 4, at 5. See also
discussion in supra note 200, in part VI, citing Wyatt v. Stickney, 225 F.
Supp. 781 and 334 Supp. 1341 (M.D. Ala. 1971 and 1972), and other cases and articles
pertaining to state psychiatric patients' rights and the inadequacy of public mental
health funding for services provided to patients at state psychiatric hospitals.
New York is trying to rectify some funding inequities in its state mental health
program by designating cost savings from the closure of five state psychiatric hospitals
for use for outpatient mental health and substance abuse treatment programs. See Celia W. Dugger, Albany Accord
Supports Clinics For Mentally Ill, N.Y. Times,
November 17, 1993, at A-1, col. 1. This
agreement, however, does not ensure that most severely disabled, treatment-resistant
mentally ill patients in New York will be able to receive adequate long-term psychiatric
care.
Other States and municipalities have neglected to provide adequate funding for
outpatient mental health programs. Thus, even
today, many severely mentally ill individuals would fare better, in terms of quality of
life, in a state psychiatric hospital where they could receive intensive psychiatric
treatment and rehabilitative services, provided in an environment which promotes
continuity of care, rather than trying to survive on their own, living in the streets. See Peter Rowe, County mental health
system is outrageous, The San Diego
Union-Tribune, Oct. 3, 1996, at E-1. This
article is based on an interview with Robert C. Coates, a San Diego Municipal Court judge
and author of A Street Is Not A Home: Solving
America's Homeless Dilemma (1990), regarding serious shortcomings in San Diego's
public mental health system, with the burden falling upon the judicial system to find and
secure treatment for these individuals. See
also Torrey, Surviving Schizophrenia, supra
note 2, at 249.
[201] The term
"transinstitutionalization" is used to describe the phenomenal increase of the
number of mentally ill patients who have been admitted to nursing facilities (and other
Medicaid-eligible facilities) in recent years, who would otherwise have been placed in
state psychiatric hospitals or other institutions for mental diseases (IMDs), "but
for" the lack of availability of federal Medicaid reimbursement. See CRS,
Medicaid Source Book, Medicaid Services For The Mentally Ill, supra
note 6, at 927.
[202] If there were no categorical
exclusions of federal financial participation for services provided in psychiatric
facilities, States would be better able to serve a larger number of persons who suffer
from these severe and disabling disorders, without being predisposed to make inappropriate
treatment and placement decisions for individuals strictly on the basis of whether federal
reimbursement is available to help pay for such care and services.
Abolishing the IMD exclusion will not in itself eliminate the social problems
discussed herein. However, the availability
of federal Medicaid funds, pooled together with state and local resources, could go a long
way towards providing "medically necessary" psychiatric treatment and
rehabilitation services for this unprotected, and so often neglected, population.
[203] The ensuing discussion will
examine the budgetary aspects of repealing the IMD exclusion and will set forth some
nondiscriminatory proposals to contain Medicaid costs for psychiatric care, if this
exclusion were to be abolished.
[204] Health Care Financing Administration (HCFA), U.S. Dep't
of Health and Human Services (HHS), HCFA Pub. No. 03339, Report to Congress: Medicaid and
Institutions for Mental Diseases (December 1992), (hereinafter HCFA IMD Rep.).
Congress had previously directed the Secretary of H.H.S. to conduct a review of the
IMD statutory policy exclusion and provide Medicaid cost estimates of federal medical
assistance to cover services provided in public subacute psychiatric facilities. See Section 6408 of the Omnibus Budget
Reconciliation Act (OBRA) of 1989, Pub. L. No. 101-239.
Note, Section 6408 of OBRA uses the term "public subacute psychiatric
facilities", but, as discussed in part II of this analysis, the Medicaid statute's
definitions of covered services, set forth in Section 1905(a) of the Social Security Act,
only uses the terms "institutions for mental diseases" and "inpatient
psychiatric hospital services for individuals under age 21". See 42 U.S.C. � 1396d(a)(1-16) (1994).
[205] Although commonly lumped
together under the general category of alcohol, drug abuse, and mental health (ADM)
services, serious mental illnesses, such as schizophrenia and bipolar disorders, are
fundamentally different from substance abuse disorders in that these psychiatric illnesses
have been determined to be neurobiological disorders of the brain. It is on this basis that this analysis contends
that the Medicaid IMD exclusion should be abolished to allow otherwise-eligible recipients
(of all ages) with these organic medical disorders to receive the most appropriate care
and treatment for their conditions.
This analysis, however, recognizes that the Medicaid antidiscrimination provision,
in 42 CFR 440.230(c) (1995) of the regulations, discussed in part II.A, supra notes
73-76 and accompanying text, is nonspecific in nature as to diagnosis, type of illness, or
condition. Thus, this regulatory provision
has been interpreted to require coverage of treatments for alcohol and substance abuse
disorders on the same or similar basis as Medicaid coverage of psychiatric and mental
health services for serious mental illnesses.
In spite of this, there is statutory precedent for making distinctions, under the
law, as a matter of public policy, between coverage of severe mental illnesses and
coverage of drug addictions or alcoholism. As
evidence of such legal distinction, Congress, in the recently enacted Mental Health Parity
Act of 1996, mandated that private health insurers cannot impose annual and lifetime caps
for treatment of mental illness (when no such limitations are imposed for treatments of
other physical illnesses). Section 2 (B)(2)
of the Parity Act specifically states that this parity provision shall not be applicable
to substance abuse or chemical dependency benefits. See
the discussion of the Mental Health Parity Act of 1996, Pub. L. No. 104-204, tit. 7, 110
Stat. 2874, 2944-2950 (1996), in supra note 167.
Similarly, parity bills, enacted on the state level, have also made such a
distinction between these two types of health insurance benefits.
[206] The Report estimated that the
eliminating the IMD exclusion would increase total Medicaid expenditures by 3.10 billion
dollars annually, 1.73 billion in federal dollars and
1.36 billion coming out of State Medicaid coffers.
HCFA also viewed the lifting of the Medicaid IMD exclusion as providing an
estimated annual cost savings of 870 million dollars for State and local governments. HCFA IMD
Rep., supra note 204, at ES-4, ch. VII, at 1-4.
[207] Id. at ch. V, pages
1-11. However, this finding ignores the fact
that individuals with the most severe and chronic forms of schizophrenia and other serious
mental illnesses are often treatment-resistant to common psychotropic medications and are
unable to benefit from community mental health programs and outpatient psychiatric
services.
[209] See discussion in parts
I, II, and III, supra notes 13-19, 112-114, and 168-169, respectively, and
accompanying text.
[210] See the discussion in
part III.B, supra notes 179-197, and
accompanying text.
Additionally, the introduction to this HCFA report noted that the IMD policy
exclusion has been criticized as being inequitable and discriminatory against individuals
with mental illness, but it specifically stated that this report would not address the
criticism that the IMD exclusion is inequitable and discriminatory. See the HCFA IMD Report, supra note
204, at ch. I, pages 2-3. The failure to
address these issues shows an inherent bias, on the part of the Federal Government,
against the need to provide inpatient or residential psychiatric care for the most
severely disabled, mentally ill individuals in our society.
As a result, this report is arguably fundamentally flawed, and thus the conclusions
expressed therein should be appropriately discounted to reflect this prejudice on the part
of the Federal Government.
[211] Continuity of care is an
important component in the provision of ongoing psychiatric care and mental health
services. Trust and confidentiality are
vitally important in developing and maintaining a good patient-psychiatrist (or
patient-therapist) relationship, which takes time to establish. An open and honest relationship between the
patient and the physician/therapist is crucial from a medical standpoint in order to allow
the physician to more accurately access and monitor the effects of medication, changes in
prescriptions or dosage thereof, and other therapeutic or rehabilitative treatment
options.
Consequently, a coordinated staff of psychiatrists, psychiatric nurses, and other
clinical mental health professionals practicing within a specialty psychiatric hospital
facility are better able to cultivate and maintain an ongoing confidential relationship
with patients, providing them with a greater continuity of care than would be available
through a general hospital setting and separately operated community mental health
programs. This greater continuity of care,
provided through a continuum of care services furnished by or under the supervision of
psychiatric and mental health professionals at psychiatric hospitals, can help reduce the
rate of recidivism or decompensation of mentally ill Medicaid patients requiring further
inpatient hospitalization.
[212] General hospitals typically
like to admit psychiatric patients with less severe illnesses, such as depression, but are
less unwilling to treat patients with more severe conditions, like schizophrenia. See Torrey,
Out of the Shadows, supra note 1, at 104, citing two such studies
finding that general hospital admissions were more easily obtained for individuals with
symptoms of depression than for persons suffering from schizophrenia.
[213] HCFA is beginning to recognize
the value of inpatient psychiatric care provided by specialty hospitals. See the discussion in infra note
217, regarding HCFA using its authority, under Section 1115 of the Social Security Act, 42
U.S.C. � 1315 (1994), to grant demonstration waivers of the IMD exclusion rules to cover
acute care in psychiatric hospitals for some States which have adopted managed-care
Medicaid programs.
[214] Allen Dobson et al., Policy
Options: Opening the Medicaid Market for Non-elderly Adult Services to Freestanding
Facilities (May 1995) (unpublished manuscript, available through the National Association
of Psychiatric Health Systems) (NAPHS), in Washington, D.C.), (hereinafter NAPHS, IMD
Policy Options).
[215] Id. at 18-22 and 25. This cost comparison included 464 freestanding
psychiatric hospitals and 965 general hospital psychiatric units. State psychiatric hospital costs were not
calculated because such cost data is not comparable to other types of inpatient
psychiatric care. However, on this note, Dr.
Torrey mentioned, in his book, that psychiatric care in general hospitals often costs
$200.00 or more per day than the cost of such treatment in public psychiatric hospitals. See Torrey,
Out of the Shadows, supra note 1, at 104.
[216] Id. at 18-22 and 24. The slightly shorter ALOS in general hospitals
can, in part, be attributed to inclusion of many general hospitals with emergency rooms
(particularly county hospitals) that receive large numbers of short-term admissions of
patients awaiting a 72-hour hearing (for possible commitment). Also, the average length of stay in state
psychiatric hospitals today is 82.83 days. Additionally,
this traditional institutional psychiatric
care is more analogous to residential care programs provided by some nursing facilities
than to short-term inpatient hospitalizations in general and specialty hospitals to treat
acute episodes. See discussion in infra
notes 218-221 and accompanying text.
[217] Recognizing this, HCFA in
recent years has granted a number of demonstration project waivers, under Section 1115 of
the Social Security Act, 42 U.S.C � 1315 (1994), for States to implement managed-care
Medicaid programs, in which the agency waived the IMD exclusion rules to cover acute
inpatient psychiatric care in freestanding psychiatric hospitals, generally covering 30
days per episode, with a 60-day annual limit.
Massachusetts and Tennessee are two such
States which have received Section 1115 waivers to implement a managed-care Medicaid
program, including a waiver of the IMD exclusion for acute inpatient psychiatric care. Massachusetts contracted with six hospitals
previously identified as IMDs. The State has
experienced modest utilization of such IMD services; the rates of for such psychiatric
services are in the same range or less than the costs of such care in general hospitals. Id. at 13.
In 1995, the average per diem cost for inpatient hospitalization in psychiatric
hospitals in Massachusetts was $440.89, as compared to $539.12 in general hospitals. Id. at 25.
Likewise, in Tennessee (in 1992), prior to the implementation of Tenn-Care, the
State was paying in excess of $400.00 per day for inpatient psychiatric care; after
receiving the waiver to implement Tenn-Care, the State was ability to negotiate rates for
inpatient psychiatric services in the range of $300.00 per day. Id. at 21, n. 31. The 1995 average per diem rates for inpatient care
in psychiatric hospitals under Tennessee's Tenn-Care was $413.38, as compared to $489.28
in general hospital settings. Id. at
25.
[218] It is estimated that
approximately 232,500 residents in nursing facilities suffer from serious mental illnesses
(other than a dementia-related disorder), and 150,000 (over 60 percent) of such residents
are estimated to have a diagnosis of schizophrenia. See
the discussion in part III.B, supra notes 190-197 and accompanying text.
[219] A recent figure from the
National Institute of Mental Health (NIMH), released in December 1994, places the total
population of persons residing in public psychiatric hospitals at 71,619. See the discussion in part I.B, supra
note 39, citing Torrey, Out of the Shadows,
at page 8.
[220] The federal Medicaid funds
saved through the elimination of inappropriate placements in nursing facilities could be
applied to help cover the Federal Government's share of the assumed costs of psychiatric
care services furnished in psychiatric hospitals, upon the repeal of the IMD exclusion. This would be a more sensible and efficient use of
federal resources because it would provide greater access to medically necessary treatment
and the most appropriate care based primarily upon the best interests of the recipient,
rather than just benefitting state Medicaid coffers.
[221] Congress previously tried to
combat the problem of inappropriate placements of psychiatric patients in nursing
facilities through the enactment of the pre-admission screening and annual resident review
(PASARR) requirements, in OBRA-87 and OBRA-90. See
discussion of the PASARR requirements in part III.B, supra note 197. However, Congress failed to appropriate
federal funds, under the PASARR amendments, to assist States with the cost of furnishing
inpatient and/or residential psychiatric care for (former) nursing facility residents who
are found to be inappropriately placed in such nursing facilities.
[222] As part of this, the Federal
Government should encourage States and local communities to furnish targeted mental health
programs for individuals with serious mental illnesses.
This could sharply reduce the number of persons requiring intensive treatment in
psychiatric facilities, due to a deterioration in their conditions resulting from the lack
of adequate psychiatric and mental health services available in their communities.
[223] The Medicaid statute requires
the adoption of utilization control procedures before a hospital or a nursing facility is
eligible to receive federal medical assistance. 42
U.S.C. � 1396a(a)(30) (1994). These same
utilization control requirements could and should be implemented with regard to
psychiatric hospital services.
[224] Even if federal payments are
restricted to cover only medical and related therapeutic services, the States would be
better able to reallocate state appropriations for educational/vocational rehabilitation
services and social activities to enhance the patients' quality of life in psychiatric
hospitals.
[225] Congress could fashion a
legislative compromise concerning patients requiring extended and/or long-term care in
psychiatric facilities in which States would be able to receive limited reimbursements for
nursing care services, which would otherwise have been provided in a nursing facility.
Additionally, the suggestions raised herein are not intended to be an exhaustive
list of cost-containment measures that Congress and HCFA may wish to utilize in
restraining federal expenditures for inpatient care furnished in psychiatric hospitals, if
the Medicaid IMD exclusion were to be abolished, but rather to establish that there are
less drastic proposals that can be adopted, without singling out for exclusion this vulnerable group of disabled individuals in our
society today.
[226] The Federal Government is
partly responsible for the foreseeable harm suffered by chronically and severely mentally
ill Medicaid recipients (i.e., former state psychiatric patients who are now homeless and
more recent severely mentally ill persons who have been denied access to medically
necessary and appropriate psychiatric hospital services due to the IMD exclusion) because
it usurped the States' traditional authority in setting mental health policy. The problem with the Federal Government's mental
health policy lies in its overly optimistic assumptions that modern medications, community
mental health services, and, if need be, short-term hospitalizations in general hospitals
can successfully treat and maintain persons with serious mental illnesses. Such a policy however ignores the fact that there
continues to be a small, but significant, number of individuals who are
treatment-resistant and need extended and/or long-term care in a psychiatric facility. See discussion in parts I.B and III.B supra
notes 26-46 and 179-203 and accompanying text.
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