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Funding Substance Use Disorder (SUD) services


Opioid overdose deaths have increased every year for the past 20 years, with over 47,600 dying of an opioid overdose in 2017. Yet in 2016, only 3.8 million of an estimated 21 million Americans with a SUD received treatment. To address this growing public health crisis, cities, counties, and states are looking for ways to lower costs and increase revenues for their SUD treatment programs.

There are a variety of federal funding sources that can be used to fund SUD services, but it is challenging for public health agencies to navigate compliance and regulations to identify how to fund these programs that address the opioid epidemic and other SUD issues.

Medicaid restrictions on Institutes of Mental Disease (IMD)
An IMD is a facility with more than 16 beds that primarily operates to care for and treat individuals with mental diseases. SUD is considered a mental disease and thus its treatment is subject to IMD requirements. Most residential SUD treatment is provided in facilities of more than 16 beds. Therefore, unless there is an exception to the IMD exclusion, states cannot use Medicaid to fund most residential SUD services. However, states may pay for SUD services in an IMD setting under the following circumstances:

  • Patients over 65 – The IMD restriction does not  apply to people under the age of 65
  • Patients under 21 – The IMD exclusion does not apply to a child under 21 who is placed in:
    • Psychiatric hospital
    • Psychiatric wings at a hospital
    • Psychiatric Residential Treatment Facility (PRTF)
  • Disproportionate Share Hospital (DSH) payments are lump sum payments to hospitals that serve a disproportionate share of low income, uninsured patients and states can use DSH funds to support IMDs
  • Medicaid Managed Care Organizations (MMCOs) – States may pay MMCOs for enrollees aged 21 through 64 who are in an IMD receiving SUD services, provided the patient stays fewer than 16 days during the month of the payment
  • Support for Patients and Communities Act – Allows states to develop new Medicaid state plan amendments for SUD patients in an eligible IMD for no more than a period of 30 days during a 12-month period 

1115 SUD waivers
Centers for Medicare and Medicaid Services (CMS) offers states the flexibility under Section 1115 (a) of the Social Security Act, to change their Medicaid programs. With the growing drug crises, more and more states are turning to 1115 waivers to improve their SUD service delivery array. In 2015, CMS issued guidance to states on how to develop 1115 SUD waivers and updated that guidance in 2017.

As of August 2019, CMS had approved 1115 waivers in 31 states, and an additional 9 states have pending applications for changes in states’ behavioral health programs. Many of these states are using the 1115 waivers to expand SUD services. 

Massachusetts 1115 SUD waiver
Massachusetts is working to create a continuum for SUD treatment, aligned with the American Society for Addiction Medicine (ASAM) criteria, ranging from:

  • Outpatient services
  • Lower-intensity residential services, called residential rehabilitation services (RRS) medically-managed intensive inpatient services 

Prior to the waiver, Massachusetts could not reimburse for RRS, because the majority of RRS facilities are IMDs. This created a gap in the SUD treatment coverage continuum. However, Massachusetts found that patients with unmanaged or untreated SUD diagnoses often presented in acute settings where their addiction was not identified and addressed, so providing care in RRS facilities lowers costs. Massachusetts’ MMCOs began coverage of the RRS benefit under the waiver on March 1, 2018.

Individuals with SUD had disproportionately higher annualized costs of care, as compared to other Medicaid members. These higher costs were largely driven by expenditures in acute settings. A continuum of care, including RRS, can reduce avoidable utilization in acute settings and support appropriate placements in community settings. Community settings are often more cost-effective and better equipped to support members’ long-term treatment and recovery.

Support for Patients and Communities Act
The Support for Patients and Communities Act was passed in 2018 and it included a variety of initiatives to increase access to SUD services:

  • Children’s Health Insurance Program (CHIP) must provide mental health and SUD benefits on par with those for physical health conditions
  • States may use Medicaid to pay for services for babies with neonatal abstinence syndrome, including counseling and other services for mothers 
  • Medicare must cover services provided in opioid treatment programs, including Medication Assisted Treatment (MAT) and related counseling
  • Medicaid may cover up to 30 days per year of treatment in certain IMDs for people with a SUD who are 21 to 64 years of age
  • Nurse practitioners and physician assistants are authorized to prescribe buprenorphine to treat Opioid Use Disorders (OUD)
  • Other nurses are temporarily permitted to prescribe the medication, and this liberalizes the patient cap
  • DHHS is required to issue guidance on Medicaid reimbursement for assessment, MAT, counseling, and related SUD services delivered using telehealth
  • Clarifies that buprenorphine may be prescribed using telemedicine
  • Expands Medicare payment for some SUD services provided using telehealth

BerryDunn’s cost analysts, actuaries, health economists, statisticians, government accountants, and lawyers stand ready to help public health agencies identify ways to use these programs to fund critical SUD support services and improve the lives of citizens across the country.

Related Industries

Read this if your organization has to comply with HIPAA.

We have been monitoring HHS Office for Civil Rights (OCR) settlements as part of the HIPAA Right of Access Initiative (16 settlements and counting) and want to dispel some myths about HIPAA enforcement. Myths can be scary. It would be pretty frightening to run into Bigfoot while taking a stroll through the woods, but sometimes myths have the opposite effect, and we become complacent, thinking Bigfoot will never sneak up behind us. He’s just a myth, right?

As we offer our top five HIPAA myths, we invite you to decide whether to address gaps in compliance now, or wait until you are in the middle of the woods, facing Bigfoot, and wondering what to do next.

Myth #1: OCR doesn’t target organizations like mine.

The prevailing wisdom has been that the Office for Civil Rights only pursues settlements with large organizations. As we review the types of organizations that have been targeted in the recent past, we find that they include social services/behavioral health organizations, more than one primary care practice, a psychiatric medical group practice, and a few hospital/health systems. With settlements ranging from $10,000 to $200,000 plus up to two years of monitoring by the OCR, can you really afford to take a chance?

Myth #2: I have privacy policies, procedures, and training protocols documented, so I’m all set if OCR comes calling.

Are you really all set? When did you last review your policies and procedures? Are you sure what your staff actually does is HIPAA compliant? If you don’t regularly review your policies and procedures and train your staff, can you really say you’re all set?

Myth #3: HIPAA gives me 30 days to respond to a patient request, so it’s ok to wait to respond.

Did you try to ship a package during the 2020 holiday season? If so, do you remember checking your tracking number daily to see if your gift was any closer to its destination? Now imagine it was your health records you were waiting for. Frustration builds, goodwill wanes, and you start looking for a higher authority to get involved. 

And beware: if proposed Privacy Rule changes to HIPAA are finalized, the period of time covered entities will have to fulfill patient requests will be reduced from 30 to 15 days.

Myth #4: If I ignore the problem, it will go away.

Right of Access settlement #10 dispels this myth: A medical group was approached by OCR to resolve a complaint in March 2019. Then again in April 2019. This issue was not resolved until October 2020. Now, in addition to a monetary settlement, the group’s Corrective Action Plan (CAP) will be monitored by the OCR for two years. That’s a lot of time, energy, and money that could have been better spent if they worked to resolve the complaint quickly.

Myth #5: OCR will give me a “get out of jail free” card during the pandemic.

As one of our co-workers said, “Just because they are looking aside does not mean they are looking away.” The most recent settlement we have seen to OCR’s Right of Access Initiative was announced February 10, 2021, showing that the initiative is still a priority despite the pandemic.

Are you ready to assess or improve your compliance with HIPAA Right of Access rules now? Contact me and I will help you keep OCR settlements at bay. 

Debunking the myths of HIPAA: Five steps to better compliance

Read this if your facility or organization has received provider relief funds.

The rules over the use of the provider relief funds (PRF) have been in a constant state of flux since the funds started to show up in your bank accounts back in April. Here is a summary of where we are as of November 30, 2020 with allowable uses of the funds.
The most recent Post-Payment Notice of Reporting Requirements is dated November 2, 2020. In accordance with the notice, PRF may be used for two purposes:

  1. Healthcare-related expenses attributable to coronavirus that another source has not reimbursed and is not obligated to reimburse
  2. Lost revenue, up to the amount of the difference between 2019 and 2020 actual patient care revenue

The Department of Health and Human Services (HHS) has issued FAQs as recently as November 18, 2020.  The FAQs include the following clarifications on the allowable uses:

Healthcare related expenses attributable to the coronavirus

  1. PRF may be used for the marginal increased expenses or incremental expenses related to coronavirus.
  2. Expenses cannot be reimbursed by another source or another source cannot be obligated to reimburse the expense.
  3. Other sources include, but are not limited to, direct patient billing, commercial insurance, Medicare/Medicaid/Children’s Health Insurance Program (CHIP), or other funds received from the Federal Emergency Management Agency (FEMA), the Provider Relief Fund COVID-19 Claims Reimbursement to Health Care Providers and Facilities for Testing, Treatment, and Vaccine Administration for the Uninsured, and the Small Business Administration (SBA) and Department of Treasury’s Paycheck Protection Program (PPP). This would also include any state and federal grants received as a result of the coronavirus.
  4. Providers should apply reasonable assumptions when estimating the portion of costs that are reimbursed from other sources.
  5. The examples in the FAQs for increased cost of an office visit and patient billing seem to point to only supplemental coronavirus related reimbursement needing to be offset against the increased expense.
  6. PRF may be used for the full cost of equipment or facility projects if the purchase was directly related to preventing, preparing for and responding to the coronavirus; however, if you claim the full cost, you cannot also claim the depreciation for any items capitalized.
  7. PRF cannot be used to pay salaries at a rate in excess of Executive Level II which is currently set at $197,300.

Lost revenues attributable to the coronavirus

  1. Lost revenues attributable to coronavirus are calculated based upon a calendar year comparison of 2019 to 2020 actual revenue/net charges from patient care (prior to netting with expenses).
  2. Any unexpended PRF at 12/31/20 is then eligible for use through June 30, 2021 and calculated lost revenues in 2021 are compared to January to June 2019.
  3. Reported patient care revenue is net of uncollectible patient service revenue recognized as bad debts and includes 340B contract pharmacy revenue.
  4. This comparison is cumulative, for example, if your net income improves in Q4, it will reduce lost revenues from Q2.
  5. Retroactive cost report settlements or other payments received that are not related to care provided in 2019 or 2020 can be excluded from the calculation.

Whether you are tracking expenses or lost revenues, the accounting treatment for both is to be consistent with your normal basis of accounting (cash or accrual).
As a reminder, the first reporting period (through December 31, 2020) is due February 15, 2021. The reporting portal is supposed to open January 15, 2021. Any unexpended PRF at December 31, 2020 can be used from January 1, 2021 through June 30, 2021, with final reporting due July 31, 2021.

The guidance continues to change rapidly and new FAQs are issued each week. Please check back here for any updates, or contact Mary Dowes for more information.

Provider relief funds: Allowable uses 

The American Public Health Association annual conference’s thematic focus on preventing violence provided an illustration of the extent of the overwhelming demands on state public health agencies right now. Not only do you need to face the daily challenges of responding to the COVID-19 pandemic, you also need to address ongoing, complex issues like violence prevention.

The sheer breadth of sessions available at APHA shows the broad scope of public health’s reach and the need for multi-level, multi-sector interventions, all with a shrinking public health workforce. The conference’s sessions painted clear pictures of the critical public health issues our country currently faces, but did not showcase many solutions, perhaps leaving state health agency leaders wondering how to tackle these taxing demands coming from every direction with no end in sight.

BerryDunn has a suggestion: practice organizational self-care! It might seem antithetical to focus maxed-out resources on strengthening systems and infrastructure right now, but state public health agencies have little choice. You have to be healthy yourself in order to effectively protect the public’s health. Organizational health is driven by high-functioning systems, from disease surveillance and case investigation to performance management, and quality improvement to data-informed decision-making.  

State health agencies can use COVID-19 funding to support organizational self-care, prioritizing three areas: workforce, technology, and processes. Leveraging this funding to build organizational capacity can increase human resources, replace legacy data systems, and purchase equipment and supplies. 

  1. Funding new positions with COVID sources can create upward paths for existing staff as well as expanding the workforce
  2. Assessing the current functioning of public health data systems identifies and clarifies gaps that can be addressed by adopting new technology platforms, which can also be done with COVID funding.
  3. Examining the processes used for major functions like surveillance or case investigation can eliminate unproductive steps and introduce efficiencies. 

So what now? Where to start? BerryDunn brings expertise in process analysis and redesign, an accreditation readiness tool, and an approach to data systems planning and procurement―all of which are paths forward toward organizational self-care. 

  1. Process analysis and redesign can be applied to data systems or other areas of focus to prioritize incremental changes. Conduct process redesign on a broad or narrow scale to improve efficiency and effectiveness of your projects. 

  2. Accreditation readiness provides a lens to examine state health agency operations against best practices to focus development in areas with the most significant gaps. Evaluate gaps in your agency’s readiness for Public Health Accreditation Board (PHAB) review and track every piece of documentation needed to meet PHAB standards.
  3. Data system planning and procurement assistance incorporates process analysis to assess your current system functioning, define your desired future state, and address the gaps, and then find, source, and implement faster, more effective systems. 

Pursuing any of these three paths allows state health agency leaders to engage in organizational self-care in a realistic, productive manner so that the agency can meet the seemingly unceasing demands for public health action now and into the future.

Three paths to organizational self-care for state public health agency survival