Medicaid cutback in aid to children comes under attack at state hearing

Minnesota has asked U.S. to withdraw new rule; Coleman and Klobuchar want law forcing a delay.

By WARREN WOLFE, Star Tribune

Last update: January 31, 2008 - 9:29 PM

Faced with the impending loss of more than $60 million in federal money to coordinate care for about 70,000 troubled, abused or foster children, Minnesota has begun distributing $32.7 million in state money to counties to help them cope.

"That will help, but the fact is that most of these important and effective programs are being cut back, and in some cases eliminated," said Patricia Coldwell, a policy analyst for the Minnesota Association of Counties.

"It means harm to children, to families and to older and disabled adults," she said.

A series of state, county and social service agency officials told legislators Thursday that federal changes to a Medicaid rule that take effect March 3 will cut sharply into a county-operated service called targeted case management.

Targeted case management has been used by counties since the early 1990s to revamp a cumbersome social service system in which people with multiple problems often had to deal individually with myriad complex public and private agencies.

Under targeted case management, social workers may assess needs for an entire family, develop a comprehensive plan and then coordinate medical and psychological help, housing, jobs, education, parenting help and other services.

Among other changes, the revised Medicaid rule restricts those services to just medical and psychological care and narrows what case workers can do. It also requires counties to bill Medicaid for each 15 minutes of service instead a flat monthly payment of about $350 for multiple services.

The result will be fewer services and higher costs when, without sophisticated intervention, more children are removed from their families and in some cases placed in treatment for mental health or other treatment, officials said.

Legislation proposed on Wednesday by Minnesota's two senators would delay implementation of the new rule until March 2009.

In a strongly worded letter last week to the federal Centers for Medicare and Medicaid Services (CMS), the state Department of Human Services argued that the rule changes "are so problematic that we request that CMS withdraw this regulation altogether."

Rules too vague to follow?

"We're frustrated with the changes, and we think they go beyond CMS's authority," said Lisa Knazan, a policy expert at the state Department of Human Services. "Equally frustrating, the rules and explanations are so vague that we don't know how to comply with them."

In 2006, counties spent $172 million -- half from Medicaid -- to provide targeted case management services to 98,225 children, families and adults. There is no state money for those programs.

The revised rule was issued in December to cut Medicaid spending under terms of the Federal Deficit Reduction Act of 2005. Congress and President Bush said cuts are needed to restrain Medicaid spending. The goal is to cut $25 billion from Medicaid over the next five years. This year, the federal portion of Medicaid is estimated at $196 billion.

The Legislature last year set aside $32.7 million to help ease the impact of the cuts on counties.

On Tuesday the state began mailing checks to counties and Indian tribes, including $10.3 million to Hennepin County and $4.9 million to Ramsey County. Advocates said they will seek more help from the Legislature this year.

Over the next 17 months, counties stand to lose at least $60.9 million from Medicaid payments for child welfare case management, Knazan said, with more cuts likely from the $38 million Medicaid previously provided for adults with mental illness or retardation.

Warren Wolfe • 612-673-7253

Recent Local + Metro stories

Drug misuse on Minnesota dairy cows prompts federal warning - January 31, 2008

Drug misuse on Minnesota dairy cows prompts federal warning - Two state farms were reprimanded for unsafe levels of antibiotics in animals. The 2 animals were pulled from slaughter lines after testing. More