Feds’ Call on Medicaid Spending Makes Family First Implementation Trickier

The Family First Act was signed into law in February 2018, and mostly takes effect in October 2019

The federal Administration for Children and Families (ACF) just made a decision that on its face appears like the minutiae of protocol and procedure, but is likely to make implementing the Family First Prevention Services Act all the more difficult for states.

The decision pertains to a fairly complicated piece of the law about how states will prove they are spending enough money on services with the highest rating of effectiveness. Youth Services Insider will attempt to break this down in a linear fashion. Here goes…

One of the Family First Act’s two major provisions amends the Title IV-E entitlement – heretofore usable only for foster care and adoption-related costs – so that states can use it for substance abuse, mental health and parenting services. This allows states unlimited federal matching money to help prevent the use of foster care in some child welfare cases.

But those funds can only be accessed for services and programs that appear on an approved list overseen by a newly constituted, federal clearinghouse. That clearinghouse will classify approved models under three tiers based on the breadth of their evidence base and the length of impact shown by that evidence.

Those three tiers are: Promising, Supported and Well-Supported. And under the law, half of all spending on these prevention funds must be for programs that qualify as Well-Supported.

Of the nine services that have been approved thus far by the clearinghouse, six have that highest rating of evidence. That would seem to bode well for states being able to meet the 50 percent threshold. But there’s a wrinkle.

ACF has also made clear in guidance on Family First that IV-E would be a “payer of last resort” for services that could be funded under Medicaid, the much larger entitlement that covers health insurance for millions of low-income Americans. In other words, if Medicaid would pay for a service, then Medicaid should be used instead of IV-E to pay for a service.

Agencies expecting to implement Family First in 2019: Alaska, Ark., Del., D.C., Kan., Ky., Md., Mo., Neb., N.M., N.D., Utah, Wash., W.V.

All state Medicaid plans are different, but in some of them, several of the Well-Supported evidence-based services approved under Family First are approved. And in those states, under the payer of last resort rule, Medicaid will have to be the funding vehicle for those, not IV-E prevention.

And this is where the new decision comes into play.

Kentucky’s child welfare agency asked its ACF regional office for clarification about the rule on spending half of the prevention services funds on Well-Supported programs. Specifically, Kentucky wanted to know if it could count the Well-Supported programs it paid for with Medicaid, or if its tally could only include the IV-E funds spent on such programs.

This week, ACF informed Kentucky that it could not count the Medicaid spending used for those services.

This creates a tough situation for states where the Well-Supported services are fundable under Medicaid. They have to use Medicaid instead of IV-E, per ACF’s earlier guidance making IV-E the payer of last resort, and now they can’t count that Medicaid spending toward Family First compliance, per ACF’s new guidance to Kentucky. That posture negatively impacts states with a more generous list of approved Medicaid services.

So to sum up: To comply with Family First, half of the prevention spending has to be on the highest-rated stuff. And in some states, a lot of that stuff can’t be paid for under Family First, because it would have to be paid for by Medicaid.

This adds another layer of complexity, especially for the states that have indicated a desire to implement Family First this year. The law takes effect in October, but about three dozen states are planning to seek a permitted delay of up to two years.

Fourteen states and the District of Columbia have told The Chronicle of Social Change they plan to do Family First this year, but of those, only D.C. has formally submitted a plan yet.

Kentucky is hardly the only state grappling with how Medicaid intersects with Family First. Heather Baker, manager of human services for the Public Consulting Group, said on a recent webinar this monthwith The Chronicle that ACF should first delay the 50 percent Well-Supported rule for a few years, and allow states to calculate in their Medicaid expenditures when it does take effect. Several advocacy groups, including Kentucky’s Children’s Alliance, have developed social media messaging to push for that as well.

A bill introduced over the summer – first by Sens. Debbie Stabenow (D-Mich.) and Sherrod Brown (D-Ohio), then in the House by a bipartisan group of members – includes a delay of the 50 percent rule until fiscal 2026.

Some advocacy groups have used social media pitches to call for a delay on the rules around evidence-based services in the Family First Act

There is one caveat that perhaps was not addressed in the response to Kentucky. The payer of last resort rules do stipulate that if initial payment for IV-E is more efficient, states can do that and then obtain reimbursement through Medicaid – which is probably as complicated as it sounds. But that enables a system to say, pay for immediate drug treatment for a parent where using Medicaid right away would have meant a waiting list.

But it’s hard to imagine ACF will interpret that as a different scenario, since the ultimate payer would be Medicaid. You would expect that permitting expenditures under this exception to count would sort of incentivize systems to always claim a need to use IV-E first.

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John Kelly
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John Kelly is editor-in-chief of The Chronicle of Social Change.