Welfare Watch - November 23, 2009 - CMS Withdraws Medicaid Rehabilitative Services Proposed Rule

Yesterday, the Centers for Medicare and Medicaid Services (CMS) announced that they were withdrawing their proposed rule for Rehabilitative Services.  This rule required that Rehabilitative Services be provided as part of a Medicaid plan for medical services based on medical necessity.  This rule prohibited federal matching funds for rehabilitative services furnished through non-medical programs such as foster care, adoption services, education, juvenile justice and residential facilities.  This rule as well as others implemented by CMS was designed to save the Federal Government money.  It was estimated that this rule alone would have saved $2.7 billion over 5 years. 

Georgia was one of the first two States to feel the impact of this rule.  Colorado and Georgia were asked to "debundle" their Medicaid services that were provided through private community based therapeutic foster care and group homes. After "debundling" of services, therapeutic services had to be provided through separately licensed Medicaid approved mental health agencies.  The impact on care was immediate.  What was once seen as best practice in care with integrated services, suddenly became fragmented, isolated and "siloed."  Behavioral health care could no longer be provided in the environment in which the children and youth lived, but had to be provided "off site" by a separate licensed provider billing separately for services.  These services no longer could be "bundled" within a per diem rate. 

Private community based foster care and group homes provide not only residential services, but increasingly provide therapeutic services for the most in-need children that are in Georgia's foster care system. The need for these services did not change with the implementation of the rule.  At the Provider G-Force Meeting last week, private providers learned that children placed in private foster care are 50% older than those placed in Georgia's DFCS foster homes.  Children in private placement have been in twice as many placements and are more than three times more likely to be behind in grade level in school.  Privatized care is therapeutic care.  Prior to the "debundling" of Georgia's system, this therapeutic care was integrated with lives of the children within their living environments.

This withdrawal of the rule by CMS that prohibited integrated care  is hopefully a first step toward creating a system that will allow Georgia to create innovative programs that are effective for children.  The fragmentation of services that we now see in Georgia's system is not good for children.  The present system is far too complex, administratively inefficient, and costly to providers, to the State and more importantly to the children, youth and families that it is to serve.

With this withdrawal, we may not be able to put the previous system back together as it was, but the constraints of CMS' draconian rule will allow Georgia once again to ponder what is best for children. 
Memo concerning Withdrawal by CMS
U.S. House and Senate Notification
November 18, 2009
To:       Senate Finance Committee
            House Ways and Means Committee
            House Energy and Commerce Committee
            House and Senate Appropriations Committees
            House and Senate Budget Committees     
            Other Interested Hill Staff                                                                                      
From:   Amy Hall
            Director, Office of Legislation
            Centers for Medicare & Medicaid Services
Re:      CMS Withdraws Medicaid Rehabilitative Services Proposed Rule
The Centers for Medicare & Medicaid Services (CMS) is withdrawing the proposed rule, “Medicaid Program; Coverage for Rehabilitative Services” (72 FR 45201). Originally published in the Federal Register on August 13, 2007, the rule proposed to clarify the definition of Medicaid “rehabilitative services” and establish new documentation and other requirements.
This rule had been subject to a congressional moratorium put in place by two laws, the Medicare, Medicaid, and SCHIP Extension Act of 2007 (Pub. L. 110-173) and the Supplemental Appropriations Act, 2008 (Pub. L. 110-252), that prohibited the Secretary from taking any action, including publication of a final rule that was more restrictive with respect to coverage or payment for rehabilitative services than the requirements in place as of July 1, 2007. Before the expiration of the congressional moratorium, section 5003(d) of the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5), enacted on February 17, 2009, included a “Sense of Congress” that the Secretary should not promulgate as a final regulation the August 13, 2007 proposed regulation. In light of clear congressional concern as well as the complexity of the underlying issues and of the public comments received, CMS decided to withdraw the August 2007 proposed rule in order to assure agency flexibility in re-examining the issues and exploring options and alternatives with Congress and stakeholders.
The attached notice went on display at the Office of the Federal Register yesterday and will be published in the Federal Register on Monday, November 23, 2009. If you have any questions about this withdrawal notice, please contact the CMS Office of Legislation. Thank you.

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