December 2004
Is there a way to fund services that can improve daily functioning for adolescents with severe emotional disturbances? Can Medicaid fund these services?
State Medicaid agencies have the option, but are not obliged, to provide services that improve daily functioning for youths with SED. These services are known as “Rehabilitative Services” under Medicaid. Colloquially, these services are known as the “Rehab Option.” There are several references in the Federal regulations and in the State Medicaid Manual/Guidelines that address rehabilitative services. These references are useful to know when talking to your Medicaid state agency. Rehabilitative services include “any medical or remedial services recommended by a physician or other licensed practitioner of the healing arts, within the scope of his practice under State law, for maximum reduction of physical or mental disability and restoration of a recipient to his best possible functional level.” 1
The State Medicaid Manual describes in some detail what preventive and rehabilitative services may be covered if the State so chooses to do so. Since the inception of the Medicaid program in 1965, it has covered “preventive” and “remedial” services under certain conditions. These services include those that:
- Involve direct patient care; and
- Are for the express purpose of diagnosing, treating or preventing (or minimizing the adverse effects) of illness, injury or other impairments to an individual's physical or mental health.
In order for a service to be covered, it must meet both of these elements. 2
An example of coverable preventive and remedial services that addresses broader social or environmental concerns is as follows:
- Preventive group counseling by a licensed practitioner of the healing arts can be covered when it allows direct, one to one interaction between the counselor and the individual recipient.
An example of non-covered services and non-medical services that addresses broader social or environmental concerns is as follows:
- By contrast, disseminating general information on prevention or rehabilitation approaches through the mass media and involves no direct patient care is not covered. 3
The Centers for Medicare and Medicaid Services web site states that the services may be provided in any setting (at the state's option) and can include occupational and physical therapy services, as well as mental health services such as individual and group psychological therapies, psychosocial services, and addiction treatment services. 4
Medicaid regulations contain requirements and options for interagency agreements in order to provide the services. 5 States are mandated to have agreements with the State Title V/Maternal and Child Health agency and State Vocational Rehabilitation agency. They are also encouraged to have agreements with a wide variety of other agencies including Head Start, Social Services, case management and transportation agencies, and Mental Health State agencies. Such entities can utilize their cooperative agreements to leverage funding for a variety of rehabilitative service through Medicaid. Systems of Care programs should work with their Medicaid State agencies if they are interested in the “Rehab Option.”
1 42 CFR Section 440.130 (a)-(d) [CFR = Code of Federal Regulations]
2 State Medicaid Manual,HCFA-Pub 45-4, Section 4385, Transmittal No. 41 (Feb. 1989)
3 State Medicaid Manual,HCFA-Pub 45-4, Section 4385, Transmittal No. 41 (Feb. 1989)
4 http://www.cms.hhs.gov/medicaid/services/rehab.asp
5 42 CFR Part 431, Subpart M