Iowa Medicaid starts paying for mental crisis centers, after Centerville program closes

Iowa human-services officials have opened a pipeline for Medicaid money to support informal mental-health crisis centers, shortly after a lack of Medicaid money contributed to the closure of a heralded southern-Iowa program.

Centerville’s Oak Place center closed Oct. 31, despite widespread praise. The “crisis stabilization” center offered an informal alternative for residents with mental-health problems, many of whom otherwise would be transported to faraway hospital psychiatric units.

The Iowa Department of Human Services had said for months that its administrators were working “with a sense of urgency” to write rules allowing such programs to bill Medicaid, which is the giant federal and state health-care program for poor and disabled residents. State officials agreed with the Centerville program's supporters that crisis centers offer practical alternatives to hospitals’ inpatient psychiatric units, which are scarce in rural Iowa and charge Medicaid much more per day. But state administrators said it takes time to craft regulations.

The new Medicaid billing arrangement took effect Wednesday.

Jackie Sharp, who led the Centerville program, applauded the Medicaid change but said it came too late to save Oak Place. The center’s staff had already found other jobs, and the agency had given up its lease on the house where the center was located, she said. But she said media attention to the Centerville situation seemed to spur state officials to change Medicaid rules to help similar efforts elsewhere. “I’m thankful that the sacrifice we made may have opened some eyes,” she said.

A patients' advocate expressed frustration that the Medicaid rules weren’t put in place until after the Centerville program folded. “That was a really sad, sad thing. It never should have happened,” said Teresa Bomhoff, who is president of the Greater Des Moines Chapter of the National Alliance on Mental Illness.

Bomhoff said she understands the Department of Human Services is short-staffed, making it hard for administrators to promptly complete important tasks. Still, she said, “I don’t think it was high enough on their radar screens.”

The Centerville program gained state and national praise during its three-year run. Supporters noted that it provided an alternative in a rural area that has no inpatient psychiatric units. Officials said court-ordered psychiatric hospitalizations for Appanoose County residents dropped 80 percent after the center opened.

But the program ran into financial trouble after a start-up grant from the local hospital expired last year.

Sharp had expected the state to make Medicaid money available for such services. When the Medicaid financing failed to materialize by last summer, Sharp asked her area’s regional mental-health authority for more support from its property tax levy. The authority's leaders balked, saying they believed crisis-stabilization services should be provided in more than one location in their four-county region. They are now seeking a new agency to replace Oak Place's services in three locations. Although they disagree on many details, Oak Place supporters and the regional authority agree that the program likely would have survived if the state’s Medicaid program had had rules in place to reimburse Oak Place for its work.

About 10 other crisis-stabilization centers have cropped up around Iowa in recent years as part of a statewide effort to improve mental-health services. Until now, most of the centers’ money has come from county property taxes disbursed through regional mental-health authorities set up in 2014. Organizers say state officials pledged to arrange for Medicaid to help pay for new services, but it took more than three years for administrators to set up the payment methods. Much of the Medicaid money will come from the federal government.

In an October interview, Department of Human Services Director Jerry Foxhoven said he believes in the concept of crisis-stabilization programs. “That’s certainly a cheaper way to treat people than hospitalization, so it makes sense,” he said. Foxhoven said his department was working out the details with managed-care companies that administrate Medicaid. Foxhoven, who was appointed in June, said he didn’t realize the rules for such payments weren’t set until the Register first raised the issue in September.

One of the remaining crisis-stabilization centers is in Woodward, a Dallas County town west of Des Moines. Darci Alt, who leads the regional authority that includes Dallas County, said she was relieved to hear state officials had finally approved a way for crisis-stabilization services to bill Medicaid. She said it remains to be seen how easily agencies like hers will be able to collect money from the national companies managing Iowa’s Medicaid program. Like many service providers, Alt has seen the companies reject some bills with little explanation. “We do anticipate we’ll get paid for some people but not for everybody,” she said. “That’s the world we’ve been living in for the past year and a half.”

Alt’s regional authority has been paying the entire cost of the crisis-stabilization center at Woodward. If the Medicaid program starts helping, she said, the regional authority should be able to strengthen other efforts, such as mental-health services for children.