Analysis: Obamacare won’t replace Connecticut’s mental health cuts

Arielle Levin Becker / The CT Mirror

Mental Health and Addiction Services Commissioner Patricia Rehmer says her department is concerned about funding cuts to providers of outpatient services.

An early analysis suggests that the assumptions behind a $15.2 million cut to mental health and substance abuse treatment services in this year’s budget aren’t being realized and could leave some service providers with significantly less funding than lawmakers intended.

And several legislators said Monday that they’re concerned about what the cuts could mean for access to care.

“We’re going to have to do something because we can’t go down this path,” Rep. Cathy Abercrombie, D-Meriden, said during a work session with other members of the legislature’s Appropriations Committee.

The cut, made as part of the two-year budget adopted last year, was based on the assumption that the health law commonly known as Obamacare would eliminate the need for certain state grants paid to mental health and substance abuse treatment providers. Because more people would have health care coverage, the thinking went, service providers would be able to make up the $15.2 million by billing Medicaid or private insurance.

But an analysis by the state Department of Mental Health and Addiction Services, presented Monday, projected that providers would receive only about $4.4 million in additional payments from Medicaid for the newly covered clients. Medicaid is expected to be the coverage source for most formerly uninsured mental health and substance abuse clients.

The analysis covered the first six months of 2014. During that period, the state budget calls for the providers to see a $13.8 million cut in state grant funding, according to the analysis. (The department’s analysis didn’t include payments for inpatient services, which would lose $1.4 million under the adopted budget.)

And the mental health and substance abuse service providers are slated to face a $10 million cut during the fiscal year that begins July 1.

Abercrombie said she believed lawmakers “put the cart before the horse” in their assumptions about the health law.

“I think that we thought that it was going to fix more than it has, and I think we jumped the gun,” she said.

So far, the $15.2 million cut hasn’t hit service providers because the Department of Mental Health and Addiction Services has managed to move money around in its budget to absorb the cut for the first three-quarters of the year. But it’s not clear if the providers will be spared entirely from the reduction this year, and many expect that the cut scheduled for next year is too large for the department to absorb.

The cuts have drawn opposition and dire warnings from officials at mental health agencies, who say the premise behind them is flawed in two ways. Not all clients will be covered immediately by the new options available under Obamacare, they say. And even if they are, providers say, the rates paid by Medicaid are too low to cover the full cost of care.

Leaders of mental health agencies say they currently rely on state grants to help cover the cost of running clinics because the Medicaid rates alone aren’t enough.

Medicaid rates vary widely by the type of services provided, and the department’s analysis found a broad range in how the shift from state grants to billing Medicaid and other insurance programs would affect different types of providers.

Agencies that provide outpatient services would face the most dramatic loss. Nearly $11.3 million in state grant funding for this fiscal year was cut from the budget, but billing Medicaid for the newly covered clients would bring in only about $1 million, the department projected.

By contrast, methadone clinics are projected to see an overall increase in funding, with a boost of nearly $1.7 million in Medicaid payments offsetting a $904,813 grant cut. Similarly, the Medicaid payment increases for residential detox programs are projected to offset the grant cuts by nearly $156,000.

Mental Health and Addiction Services Commissioner Patricia Rehmer told legislators that her agency is concerned about outpatient services and certain other types of care.

She said department officials are meeting with representatives from Gov. Dannel P. Malloy’s budget office and the state Department of Social Services “to come to some way to ensure that the people that need these services are not turned away.”

The options, Rehmer said, include a targeted increase in Medicaid rates for certain services and moving grant money from services that receive higher Medicaid payment rates to those the program pays less.

In the case of outpatient services, Rehmer said, the Medicaid payment rates might be so low that seeing more patients could mean losing money.

“You may see more people and your bottom line will actually get worse because of the cost of seeing more people as opposed to the cost of care,” she said in an interview.

Rep. Patricia Dillon, D-New Haven, said she worries that if agencies have to cut back on their hours because of the cuts, some people might end up in emergency rooms or jail.

“Where are those people going to go if we’ve shredded the support to the providers through the grant accounts?” she asked.

Dillon acknowledged that she voted for the budget that included the cuts, although she noted that some legislators on the Appropriations Committee opposed the cuts before leaders agreed to them. The cuts were originally proposed by the Malloy administration.

And Dillon said she’s been “hearing howling from all over the state” about the cuts.

Rep. Betsy Ritter, D-Waterford, said she hoped there would be a backup plan that includes restoring some of the funding.

Related: CT mental health clinics brace for state cuts tied to Obamacare