Using Medicaid to Support Working Age Adults with Serious Mental Illnesses in the Community: A Handbook. Endnotes


  1. See: Fox-Gage, W., Folkemer, D. and Lewis, J. (2003). The States' Response to the Olmstead Decision: How Are States Complying. Denver: National Conference of State Legislators.

  2. The President's June 2001 Executive Order 13217 called upon the federal government to assist states and localities to swiftly implement the Olmstead v. L.C. decision, stating: "The United States is committed to community-based alternatives for individuals with disabilities and recognizes that such services advance the best interests of the United States." See: For additional information, also see:

  3. The 2004 Consolidated Appropriations Act (P.L. 108-199) provided for a fourth round of grants in 2004. In this round, states had the opportunity to apply for grants to implement evidence-based mental health practices.

  4. CMS State Medicaid Director Letter 02-008. Available at

  5. NASMHPD Research Institute (2002). Length of Stay in State Psychiatric Hospitals. Alexandria VA.

  6. NASMHPD (2000). Closing and Reorganizing State Psychiatric Hospitals: 2000. Alexandria VA.

  7. By one count, about 7.8 percent of nursing facility residents of all ages (approximately 110,000 individuals) has bipolar disorder or schizophrenia. Steve Gold (2003). MR/DD, MI and Nursing Facilities -- Information Bulletin #62.

  8. DHHS Office of the Inspector General (2001). Younger Nursing Facility Residents with Mental Illness: An Unidentified Population. (OEI-05-99-00701).

  9. DHHS Office of the Inspector General (2001). Younger Nursing Facility Residents with Mental Illness: Preadmission Screening and Resident Review (PASRR) Implementation and Oversight. (OEI-05-99-00700). The report found that there was wide variation in how states have implemented PASRR.

  10. The NHRA was part of P.L. 100-203, the Omnibus Budget Reconciliation Act of 1987. These provisions are located in §1919 of the Social Security Act. The PASRR provisions are in §1919(e)(7). The legislation was modified in the Omnibus Budget Reconciliation Act of 1990 (P.L. 101-508).

  11. The original legislation required states to conduct annual resident reviews of nursing facility residents with mental illnesses and mental retardation. In the Balanced Budget Amendment of 1996 (P.L. 104-315), the requirement to conduct annual reviews was removed. Reviews are now required only when there is a major change in a nursing facility resident's condition.

  12. Eiken, S., Stevenson, D., and Burwell, B (2002). The Homecoming Project: Wisconsin's Nursing Home Demonstration Project. Cambridge MA: The MEDSTAT Group. Available at

  13. CMS State Medicaid Director Letter 02-008. Available at

  14. E.g., Washington State provides a "Resident Discharge Allowance" to individuals who return to the community from nursing facilities.

  15. See: Phillips et al. (2003). Lessons from the Implementation of Cash and Counseling in Arkansas, Florida, and New Jersey: Final Report. Princeton, NJ: Mathematica Policy Research. Available at or [from ASPE at]

  16. Information about Independence Plus is available at

  17. The President's New Freedom Initiative for People with Disabilities: The 2004 Progress Report (March 2004). Available at

  18. Michigan Department of Community Health -- Mental Health and Substance Abuse Services (2003). Self-Determination Policy and Practice Guideline. Available at

  19. This section summarizes various materials, including the history of the SDC program, contained in: Self-Directed Care Task Force Report (2001). Self-Directed Care: A Model for Giving Choice and Control To Adult Mental Health Consumers In Baker, Clay, Duval, Nassau, and St. Johns Counties and others available at

  20. In 2001, according to the NASMHPD Research Institute, 14 states had statutes that expressly provide for or encourage the use of advanced directives specific to mental health services. Another 20 states had general advance directive statutes.

  21. These provisions were enacted in the Federal Patient Self-Determination Act, included in P.L. 101-508. Federal regulations concerning these provisions are at 42 CFR 489.102.

  22. President's New Freedom Commission on Mental Health. Achieving the Promise: Transforming Mental Health Care in America. DHHS Pub. No. SMA-03-3832. Rockville, MD: 2003.

  23. CMS has outlined its policy regarding telemedicine services as they relate to Medicaid on its website at

  24. Utah state Medicaid plan.

  25. Colorado Department of Health Care Policy and Financing rules: 8.212.18. Available online at

  26. AR, CA, CO, GA, IA, IL, KS, LA, MT, NE, NC, ND, OK, SD, TX, UT, VA, and WV.

  27. CA, CO, KS, MT, UT, and VA

  28. This section of the report relies heavily on O'Brien et al. (2003). Op. Cit.

  29. Under a managed care arrangement, the state makes capitated payments to the managed care organization. The managed care organization establishes its own fee schedule. and provider rates.

  30. The main provision in the Medicaid Act concerning payments for services is located in §1902(a)(30)(A) of the Social Security Act. In its state plan, a state must: "provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan … as may be necessary to safeguard against unnecessary utilization of such care and services, and to assure that payments are consistent with efficiency, economy, and quality of care, and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area."

  31. Access is defined with reference to the extent to which similar services are available in a region or locality.

  32. However, the interpretation of this statute has been the subject of considerable litigation over the years.

  33. In the case of residential services (but others as well), a mixture of covered rehabilitative services and other supports are provided. To establish a per diem or monthly rate, the state may need to conduct a time study in order to identify costs that are attributable to Medicaid services.

  34. In order to be paid, the claim must be checked to determine that the individual was eligible for Medicaid and the provider has been enrolled to furnish Medicaid services. An MMIS system also checks utilization limits (if any) and the amount charged for the service.

  35. The Administrative Simplification provisions of HIPAA mandated the adoption of uniform coding and formatting of electronic health claims across all health care payors, including Medicaid. Additional information concerning this topic is at

  36. The federal Office of Management and Budget has circulated announcements that apply government-wide to federal "grant" funds, including Medicaid. These announcements establish that certain costs may not be paid using federal funds (e.g., lobbying costs). In addition, states frequently apply Medicare principles concerning "reasonable and necessary costs."

  37. In the case of some services, payments also are subject to an Upper Payment Limit test.

  38. For a more complete discussion of this topic, see O'Brien, J., Lanahan, P. and Jackson, E. (2003). Recovery in the Community. Volume II. Program and Reimbursement Strategies for Mental Health Rehabilitative Approaches Under Medicaid. Washington DC: Bazelon Center for Mental Health Law..

  39. Ibid.

  40. Federal regulations concerning the authority of the SSMA are located at 42 CFR 431.10(e).

  41. NASMHPD Research Institute (2002). State Mental Health Agency Relationship to Medicaid for Funding and Organizing Mental Health Services.

  42. In many states, the SMHA is a separate department or is located in a different agency than the SSMA. In these cases, an interagency agreement is required in order for the SMHA to conduct (and receive payment for) Medicaid administrative activities. In some states (e.g., Pennsylvania), the designated SSMA is a cabinet-level umbrella department and the SMHA is thereby a part of the SSMA.

  43. Interagency Agreement between the Agency for Health Care Administration and the Department of Children and Family Services for the Administration of Community Mental Health, Substance Abuse and Targeted Case Management Services (November 1, 2004). This agreement is required by Florida state statute.

  44. Ibid.

  45. For a discussion of regional profiling, see: Technical Assistance Collaborative (2002). Behavioral Health Needs and Gaps in New Mexico. Chapter VIII: Regional Profiles of New Mexico's Service Delivery Systems. Boston MA.

  46. NASMHPD Research Institute (2004). State Mental Health Agency (SMHA) Relationship to Medicaid for Funding and Organizing Mental Health Services: 2002-2003. Alexandria, VA.

  47. Provisions concerning federal financial participation rates are located in §1903 of the Social Security Act (Payments to States). The Act provides for a 75 percent rate of federal financial participation for the costs of skilled professional medical personnel and support staff involved in the administration of the plan (e.g., medical personnel who evaluate requests for prior authorization of health care services) but only to the extent their expertise is necessary to perform an administrative activity. There are also higher rates for the costs of the development of information systems to process claims and perform other related functions (90 percent) and for their ongoing operation (75 percent).

  48. See the CMS State Medicaid Director letter dated August 31, 2000 available at Federal policies concerning accommodations for persons with Limited English Proficiency include Presidential Executive Order #13166 issued August 11, 2000, and guidance issued by the Civil Rights Division of the U.S. Department of Justice. Additional information is available at .

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