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Medicaid Cuts Would Mean Millions in Losses, Potentially Hindering Mental Health Services

Tuesday, May 17, 2005

Proposed cuts in the state of Ohio Medicaid budget would mean millions of dollars in losses to Cincinnati Children's Hospital Medical Center each year for the next two years, making it difficult for Cincinnati Children's to invest in key services that rely on Medicaid funding, such as mental health services.

At a news conference today, medical center officials discussed the impact of the current Ohio budget, in which the state's six children's hospitals face significant cuts in payment for services, coupled with a freeze in Medicaid reimbursement over the next two years.

"Because children's hospitals in general and the Division of Psychiatry in particular rely so heavily on Medicaid, we hope the legislature will see that cuts disproportionately affect our services," said Mike Sherbun, PhD, RN, senior clinical director of Psychiatry. "Adult facilities are not nearly as reliant on Medicaid: Only about 12 percent of their revenues come from Medicaid, compared to 38 percent at Cincinnati Children's. Across-the-board payment cuts and a reimbursement freeze would have disproportionately harmful affects on children's hospitals and, more important, the patients we care for."

More than 60 percent of patients admitted to Cincinnati Children's for mental health reasons have Medicaid as their primary insurance. Last fiscal year, Cincinnati Children's absorbed a $3 million loss to provide mental health services. Under the current state budget, that loss would increase dramatically.

"We are asking the legislature to hold us harmless and not let our losses grow out of control," says Mike Sorter, MD, director of Psychiatry. "We accept as part of our mission that there will be some services that the community needs that we will provide at a loss to our institution. We simply ask that the loss be contained and reasonable."

Ohio's children's hospitals are asking legislators to:

• Maintain Medicaid eligibility for Ohio's children.
• Eliminate the cut in Medicaid funding for children's hospitals. And, for any changes in the inpatient payment system, require budge neutrality for each children's hospital.
• Remove the freeze on children's hospitals' inpatient reimbursement rates and allow payment levels to be updated annually for inflation.

In recent years, several local hospitals closed their doors or eliminated adolescent psychiatry beds, and many patients were forced to go outside the Cincinnati area to receive inpatient treatment. Ten years ago, Cincinnati Children's had only 16 inpatient psychiatry beds serving children and adolescents. Over the years, the commitment has grown and the number of beds has increased. Still, it was not unusual to have at least two dozen beds meant for medical use to be occupied by psychiatric patients. This not only prevented mental health patients from getting the best possible care, but it also took beds away from medical patients who needed them.

Most recently, Cincinnati Children's responded by opening a residential treatment center in College Hill. Today, Cincinnati Children's has 67 inpatient beds and 34 longer-term residential beds, making Cincinnati Children's the largest mental health provider of any children's hospital in the United States.

"The Division of Psychiatry is committed to expanding services here at Cincinnati Children's and the region," says Dr. Sorter. "Cuts could prevent us from continued expansion and may threaten our ability to provide our current level of services. It's increasingly evident that mental health treatment works, and we have data to demonstrate that many of our children improve significantly."

For example, functional outcomes as measured by a standard mental health scale demonstrate improved everyday functioning among children and adolescents receiving treatment. With treatment, many of these children are able to return to their families and to their neighborhood schools and communities.

"Since we opened our doors, we have been able to bring many children back to Hamilton County who previously had to leave the area to receive care," says Dr. Sherbun. "In addition, we have reduced our recidivism rate by 25 percent since we opened the College Hill facility, largely because we've been able to transition children back into the community in collaboration with local community agencies. Medicaid cuts could have a profound impact on the future of this highly successful community collaboration. Our hope is that the state legislature will recognize that, while our costs of providing care continue to grow, our services are cost-effective for the state in the long run."

Cincinnati Children's is a 423-bed institution devoted to bringing the world the joy of healthier kids. Cincinnati Children's is dedicated to transforming the way health care is delivered by providing care that is timely, efficient, effective, family-centered, equitable and safe. It ranks third nationally among all pediatric centers in research grants from the National Institutes of Health. The Cincinnati Children's vision is to be the leader in improving child health.