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Virginia: Overview of Mental Healthcare Reform Enacted in 2008 and a Preview of What's to Come in 2009


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By Amy Hooper Kearbey*

January 6, 2009

Recap of 2008: Overhaul of Mental Healthcare

In the wake of the tragic attacks at Virginia Tech University on April 16, 2007, Governor Tim Kaine (D) and the Virginia General Assembly enacted legislation that overhauled the delivery and management of mental healthcare in the Commonwealth of Virginia. The legislation was passed unanimously by the Virginia Assembly and was signed by Kaine on April 9, 2008.

The legislation includes several changes, including the following key provisions:

  • Authorizes the sharing of a patient's mental health information and records with other healthcare professionals and law enforcement personnel.
  • Lowers the standard for involuntary commitment of adults or minors with mental health issues to require a finding of a "substantial likelihood" that the person will cause harm to himself or others, replacing the prior standard of imminent danger.
  • Requires mental health providers and case workers to attend and participate in commitment hearings, either in person or via two-way electronic communication.
  • Requires the local Community Service Board to develop a mandatory outpatient treatment plan to be implemented upon a resident's release. The Community Service Board remains responsible for monitoring compliance with the mandatory outpatient treatment plan and establishes procedures for commitment of persons who fail to comply with the mandatory outpatient treatment plan.

Preview of 2009

The start of the Regular Session of the General Assembly on January 14, 2009, will begin the debate over Kaine's proposed amendments to the 2008-2010 budget biennium. Kaine's proposal, announced on December 17, 2008, includes drastic cuts designed to address the projected $2.9 billion shortfall in the state's two-year budget. Included among these proposals are several cuts to the Medicaid program.

The proposed cuts to Medicaid involve significant limitations to the program, including caps on services and termination of certain programs, as well as reductions in provider reimbursement. Key proposals are listed below.

Proposals to Limit Program Services

  • Cap the number of available Elderly and Disabled Waivers at 15,250.
  • Delay the release of 200 mental retardation waiver slots until the 2010-12 biennium.
  • Eliminate funding for the State/Local Hospitalization program.
  • Increase prior authorization requirements for mental health case management, day treatment services, mental health supports, psychosocial rehabilitation, and intensive community treatment services.
  • Exclude certain Medicaid enrollees from participation in the Health Insurance Premium Program (HIPP).
  • Remove environmental modifications and assistive technology from certain long-term-care waivers to limit these services to those recipients participating in the Money Follows the Person (MFP) grant program who need help transitioning from an institutional setting to the community.
  • Eliminate coverage of transportation costs for home health transportation providers.
  • Eliminate the second screening for mental illness or mental retardation that is available to Medicaid waiver recipients in home and community-based waiver programs.
  • Decrease outreach efforts for the Family Access to Medical Insurance Security (FAMIS) program.

Proposals to Modify Reimbursement

  • Modify the monthly payment schedule for Managed Care Organizations to delay payments by one month and delay the fourth quarter hospital payment for FY 2009 to the first quarter of FY 2010.
  • Convert the Medicaid provider payment billing cycle from weekly to bi-weekly.
  • Prohibit Medicaid payments for claims associated with hospital-acquired conditions.
  • Impose a maximum per-person expenditure cap for home and community-based long-term-care waiver recipients.
  • Impose a provider assessment on Intermediate Care Facilities for the Mentally Retarded.
  • Prohibit payment of the special Indirect Medical Education (IME) payment for high Medicaid utilization Neonatal Intensive Care Units (NICU) to non-Virginia hospitals.
  • Modify the reimbursement methodology for long-stay hospitals.
  • Reduce the scheduled rate increase for congregate residential services.
  • Reduce inpatient hospital capital reimbursement for private hospitals to 75% of allowable Medicaid costs (it is currently at 80%), with an exemption for hospitals with a Medicaid utilization in excess of 50%.
  • Reduce inpatient hospital rates for private hospitals from 78% to 75% for acute and rehabilitation hospitals and from 84% to 81% for inpatient psychiatric services, with an exemption for hospitals with a Medicaid utilization in excess of 50%.
  • Reduce reimbursement rates for freestanding psychiatric facilities.
  • Conform the Medicaid claims editing software to the Correct Coding Initiative (CCI) edits.
  • Suspend the Indigent Health Care Trust Fund, which provides funding to hospitals based on the amount of charity care provided.

Kaine proposes to double the tobacco tax to 60 cents per pack to generate additional Medicaid revenue. In light of the long history of tobacco companies in the Commonwealth of Virginia, this proposal has already generated significant opposition and is likely to be one of the most hotly debated aspects of the proposed budget.

Kaine also proposes to close the Commonwealth Center for Children and Adolescents, the last state-operated mental health hospital for children in Virginia, and Southeastern Virginia Training Center, a mental health facility for adults. The Southeastern Virginia Training Center currently houses 175 adults with mental health issues. The proposal would move fifty-five of these residents to other facilities while transitioning the remaining residents into the community.

*We would like to thank Amy Hooper Kearbey, Esquire (McDermott Will & Emery LLP, Washington, DC) for providing this summary.

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