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Counties, EDs Could Benefit from Pilot Project

California’s emergency psychiatric demonstration project, approved this week by CMS, may help counties deal with financial stress from a payment system half a century old.

“This is a great opportunity for California to participate in a demonstration that will help ensure patients receive appropriate, high-quality care when they need it most,” Norman Williams of the DHCS said. The project will provide “reimbursement to private psychiatric hospitals for certain services for which Medicaid reimbursement has historically been unavailable,” Williams said.

That is good news for counties, crowded hospital emergency departments and patients with acute psychiatric problems, according to Patricia Ryan, executive director of the California Mental Health Directors Association.

“It’s really the first crack in the door in making an exception for what is known as the IMD (institutional mental disease) exclusion,” Ryan said. “Ultimately, this adds to inpatient capacity, and relieves strain on hospital emergency rooms.”

The IMD class of inpatient psychiatric patient traditionally is not reimbursed with matching federal Medicaid dollars. This pilot changes that, she said.

“The history goes back to the 1960s, when most people with serious mental disorders were in state hospitals,” Ryan said. “So the feds saw it as a state issue.”

In the current system, if a Medi-Cal patient has an acute psychiatric episode and has to be admitted to an inpatient facility, that patient is not eligible for federal matching money, and the county has to pick up the tab.

“This pilot allows two counties (Sacramento and Contra Costa), on a limited basis, to be reimbursed if [an emergency psychiatric] patient is hospitalized,” Ryan said.

“If the pilot shows what we hope it does, then hopefully it’s expandable,” Ryan said. “So we can address what we know is a shortage of acute psychiatric beds, not only in California but in the nation.”

Eleven states, including California, received CMS approval for the emergency psychiatric demonstration. It is a three-year project.

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