Reports Finds Flaws in Kentucky Medicaid Program for Children With Mental Illness

A Kentucky Medicaid program for children with "severe mental or emotional problems" has cost the state millions more than anticipated, and officials now "must decide" whether to eliminate the program or find another way to provide services, according to a report issued last week. Under Impact Plus, all children who are "deemed eligible for" or "at risk of" institutionalization are eligible for mental health services, according to state Health Services Secretary Marcia Morgan. The Louisville Courier-Journal reports that the state Legislative Research Commission found that expenses for the program have increased from $5 million when it was launched in 1998 to $24 million last year. This rise has contributed to an overall $163 million shortfall in the state's Medicaid program. The report attributed Impact Plus' high cost to the following factors:

• State officials erroneously believed that the program would be budget neutral, as any increased costs would be countered by savings produced by caring for children in-state instead of sending them to "costly" out-of-state psychiatric hospitals. In fact, the program brought in more children, while costs per child increased.
• The state launched Impact Plus believing that the state's Medicaid managed care program "eventually" would help control costs, but the "collapse" of the managed care system allowed program expenses to rise quickly with "little management or control."
• The state failed to set "uniform reimbursement rates," creating a lack of continuity in rates among various mental health providers.
• The program incurred significant new costs when autistic children, who "tend to be among the most costly to serve," were allowed to enroll. The report states that "such children might be better served through other state mental health programs."