Federal change cuts pay for state's mental health counselors

Behavioral health providers and advocates from across Nebraska say a federal rule change intended to expand the pool of counselors covered by federal health insurance is instead limiting — or threatening to limit — vulnerable patients' access to mental health care.

At issue is a change by the federal Centers for Medicare & Medicaid Services in late 2023 allowing more behavioral health providers to be credentialed — and reimbursed for their services — by Medicare.

Previously, those providers weren't covered by Medicare and were reimbursed by Nebraska's Medicaid program when they saw clients eligible for both Medicare and Medicaid. These so-called dual eligible patients generally are disabled or over 65 and have limited incomes.

But the fact that Medicare's provider rates are significantly lower than the rates paid by Medicaid in Nebraska has resulted in a 50% loss in payments for such clients, said Jon Day, executive director of Blue Valley Behavioral Health. Blue Valley is Nebraska's largest outpatient behavioral health provider with 11 offices in southeast Nebraska, most of them rural, and about 100 staff and almost 6,000 clients.

As a result, the practice had lost about $100,000 through December and has begun spacing out appointments for such clients and stopped taking new ones, he said. As of late last month, it had 70 clients on a waiting list. It has about 140 dual eligible clients.

Another practice in northeast Nebraska has continued to see some nursing home clients at no charge but has paused expansion of that program. A Grand Island practice also has tallied losses but has not decreased services in the hope that the situation will be rectified. One in the Chadron area also reported losses due to the change in billing.

Federal change creates 'unintended consequence'

Annette Dubas, executive director of the Nebraska Association of Behavioral Health Organizations, said the group and its members have worked with the Nebraska Legislature over the past decade or more to raise Medicaid rates in order to build capacity within the behavioral health system. But the change at the federal level, which had a similar aim, is having an "unintended consequence" in Nebraska.

"It's forcing our providers to have to make a business decision over a care-for-client decision," said Dubas, a former state senator from Fullerton. "And they don't like that feeling."

Day said he met with officials from the Nebraska Department of Health and Human Services and representatives from the state's three Medicaid managed care organizations early last year to discuss the change and its impact. The state agreed to delay implementation, initially set for Jan. 1, 2024, until July 1. Medicaid is a state-federal program that covers health care services for low-income Nebraskans.

He said he also communicated with officials at CMS, who recommended that the state seek a state plan amendment through the agency that would allow services to be based on the Medicaid reimbursement rate. The state, he said, declined to take that step.

Instead, providers spoke with State Sen. Myron Dorn of Adams, who recently introduced Legislative Bill 55. The measure would appropriate $1.5 million to the state health agency for fiscal year 2025-26 to provide reimbursement to mental health providers who see dual eligible patients but don't work in hospitals, if Medicare rates are lower than those paid by Medicaid.

"Very simply," Dubas said, "we're just looking to fill the difference between the Medicare and Medicaid rates."

The funds would come from the Hospital Quality Assurance and Access Assessment Fund. The fund was created with last year's passage of LB 1087. Under LB 1087, also known as the State Directed Payment Program, hospitals pay an initial assessment which the state then uses to draw additional federal funds, according to the Nebraska Hospital Association.

The federal funds, officials said, will allow Nebraska's Medicaid program to pay hospitals higher rates without any increase to state expenditures. The bill allows the fund to be used in part to provide funding for rates for providers who practice outside hospitals, including mental health providers.

But Day said a state plan amendment to allow Medicaid to pay the difference after Medicare reimbursements also would have saved the state money, albeit not as much as the current arrangement.

A spokesman for the state agency told the Lincoln Journal Star in an email that its decision not to seek a state plan amendment was not based on cost savings but was intended to "ensure parity for payment and fairness in the process of our payment system."

Clinical psychologists, who are highly trained, have always had to bill through Medicare first. "Aligning reimbursement rates for (licensed mental health professionals) and other mental health professionals to that of clinical psychologists brings stability to the payment system," the spokesman wrote.

But Day said other providers' reimbursements were not affected in the same way by the federal change. Before the change, a licensed independent mental health practitioner would bill Medicaid $187 for an hour of therapy provided to a dual eligible patient.

Under the new protocol, those providers now are required to first bill Medicare, which pays about 80% of a maximum allowed reimbursement of $95. Providers also can bill Medicaid, which picks up the remaining 20% of the cost. Together, however, providers still are paid a total of $95, just less than half the previous reimbursement of $187.

If Nebraska received a state plan amendment, Day said, the provider would bill Medicare and receive 80% of the allowed amount, or $76, and Medicaid could pay the difference, or $111. Providers still would receive the $187 they had been receiving, and Medicaid still would be saving money.

"Our solution means you're not going to spend more money," he said. "You'll save money, and providers will be able to provide the services."

Services are in high demand

Behavioral health services, meanwhile, continue to be in high demand in Nebraska, particularly in rural areas, he said. But it costs more to provide services in rural areas, where providers and patients are spread across multiple locations. Blue Valley receives some extra funding from the state to cover those additional expenses but that, too, has been scaled back.

Tom Barr, CEO of Good Life Counseling, with offices in Norfolk and Columbus, said the organization does not serve a lot of patients covered by both safety net programs.

But it has a rapidly growing program serving nursing home residents, with more homes asking the practice to come in. But the practice has recently paused the program, although providers have continued to see some existing clients. It also has paused its application to seek Medicare certification for more providers.

Barr said some practices don't accept patients covered by either Medicare or Medicaid. If his practice chooses to serve such patients, its income is reduced and it faces a disadvantage when it comes to hiring providers, for whom competition already is fierce.