Eastern State Hospital in James City County is one of Virginia’s eight publicly run mental hospitals, which have struggled with understaffing and an influx of psychiatric admissions. Expanded mental health services under Medicaid were intended to reduce admissions at state-run facilities. (Virginia Department of Behavioral Health and Developmental Services)

At the start of December, Virginia significantly expanded its mental health coverage under Medicaid, adding six new services and boosting payments for providers as part of a multi-year effort to reduce the state’s reliance on its own struggling psychiatric hospitals .

Six months into the rollout, the demand for at least one treatment option already vastly exceeded predictions, prompting the agency overseeing Medicaid to propose a major change in policy.

Dr. Alyssa Ward, director of the behavioral health division at the state’s Department of Medical Assistance Services, announced in June that the statewide use of community stabilization — a service she described as a “warm handhold” for patients experiencing a mental health crisis — had gone “far beyond” what the agency predicted in its budget request to the General Assembly.

Stabilizing patients during a mental health emergency and preventing future incidents after they’re discharged from residential care typically requires long-term treatment, including therapy and medication management. But in cases when those services aren’t immediately available, community stabilization is considered an intermediate option, allowing crisis providers to be paid for things like prevention and intervention, counseling and referrals to more permanent forms of care.

DMAS did not respond to multiple interview requests or a list of questions from the Mercury asking officials to quantify how extensively use had exceeded  the agency’s predictions. But in a video presentation to Virginia’s mental health providers, Ward announced DMAS was proposing a major regulatory change as part of an effort to be “responsible stewards” of state Medicaid funding. 

“We are really held to our predictions by the General Assembly, and we need to explain when we are seeing things that go beyond that prediction,” she said.

As a result, the agency is proposing to change the approval process for community stabilization services, requiring providers to seek permission from the six insurance companies that cover the vast majority of Virginia’s Medicaid enrollees before they can be reimbursed for the treatment.

The shift from near-automatic approval of the service to what’s known as pre-authorization is raising concerns among many advocates and practitioners about the future of Virginia’s efforts to overhaul its beleaguered mental health system. Dozens of mental health providers have already commented on the proposed change, saying it would likely delay the provision of services to some of the state’s most vulnerable patients.

Moving care into the community

Understanding why the proposal is raising concerns first requires some context about the history of Virginia’s mental health system . For decades, state lawmakers largely depended on nine publicly funded psychiatric hospitals to treat patients with severe mental illness, paying more for beds than they did for community-based services. Even now, those services are still in short supply, driving dangerous levels of overcrowding at many facilities.

In 2017, Virginia officials began a concerted effort to reduce mental health hospitalizations by boosting funding to the state’s 40 community service boards. Those local agencies are tasked with providing mental health, substance abuse and intellectual disability services to low-income Virginians, including assessing patients in crisis to determine if they need inpatient mental health treatment.

Right now, Virginians with serious mental health needs are frequently routed to emergency rooms and then on to state hospitals if a bed is available. But the state’s ultimate goal is to prevent hospitalizations by expanding the number of providers who can treat patients close to home. Community service boards are now required to provide patients a uniform set of treatment options , including crisis response, but there’s wide acknowledgement that they lack the funding and staff to offer help to every Virginian who needs it (especially with the recent launch of a mental health hotline expected to intensify demand for services).

“We’ve always emphasized that CSBs are a safety net,” said Mindy Carlin, executive director for the Virginia Association of Community-Based Providers. “But if you look at state data, it’s private providers who are delivering the bulk of behavioral health services to Virginians with Medicaid.”

That’s where DMAS comes in. As lawmakers boost funding to community service boards, they’ve also allocated more money to reimburse outside agencies that provide treatment to Virginians on Medicaid. The initiative, called Project Bravo, is part of the agency’s broader plan to build a continuum of services by incentivizing more providers to offer a broader range of mental health care.

Community stabilization, once referred to as crisis stabilization, is considered an important part of the state’s continuum, according to planning documents . And in her June presentation, Ward said the goal of the service is to improve long-standing gaps in access to care. 

“It’s folks who are being discharged out of a higher level of care into the community and the community service just isn’t there,” Ward said. “That is the purpose of this service, so we made that very clear.”

What’s not clear is why so many providers have been billing for the service. Carlin suspects that part of the reason is simply high need across the state, but there’s also concern that fraud is playing a role. Some of the agencies she represents have reported cases of unscrupulous providers waiting outside emergency rooms and offering hotel rooms to homeless patients discharged from mental health-related visits.

“They’ll say, ‘Oh, I see you’re out — we can set you up in a hotel room and your insurance will pay for it,’” Carlin said. “So they’re not actually providing community stabilization, but they bill it.” 

In her presentation to providers, Ward also said that “misuse” of the service played a role in the proposed regulatory changes, emphasizing that the federal government banned states from paying for housing with Medicaid funds. The agency did not respond to a question on whether there had been efforts to discipline or revoke the licenses of Virginia providers who inappropriately billed Medicaid for community stabilization treatment. 

‘It really seems as though DMAS simply does not want us to utilize community stabilization at all’ 

Despite the concern over bad actors, dozens of providers worry that requiring insurance companies to pre-approve stabilization services will ultimately hurt patients along with Virginia’s effort to build out a broader network of mental health services.

When the state initially expanded community stabilization services under Medicaid, providers could request reimbursement through a simple registration form, which essentially enrolled patients in the service for a set amount of time. Under the pre-authorization process, though, the state’s contracted insurance companies — known as managed care organizations — have the power to approve or deny the request and dictate how long an individual receives care.

In theory, the process is designed to be a safeguard against inappropriate billing and help control the state’s spending on Medicaid services. But many providers say pre-authorization imposes a major administrative burden, especially on smaller agencies.

“It continues to put us at the will of insurance providers,” said Katie Francis, the mental health services program manager for ChildSavers, a Richmond-based nonprofit. The agency still offers child and family therapy but stopped providing crisis intervention services in December partially due to changes in the state’s Medicaid program.

One of ChildSavers’ biggest challenges concerned a new manual that set more specific requirements for how many mental health services could be delivered and which practitioners could provide them in order to be reimbursed. But Francis said the proposal to mandate prior authorization for community stabilization on top of other regulatory changes would make it even harder for ChildSavers to reimplement crisis services given their experience with the process.

It continues to put us at the will of insurance providers.

– Katie Francis, mental health services program manager for ChildSavers in Richmond

Like other providers, she said one of the major difficulties was that each of the state’s six managed care organizations had its own authorization system. Some had several, depending on the type of insurance plan. According to Francis, receiving pre-authorization for a service often required dozens of pages of paperwork and hours of phone calls just to make sure the forms ended up with the right person.

“We have a one-person billing team who’s managing 30 different clinicians, so our providers ended up doing a lot of it themselves just because it took so much time,” she said.

The same concerns were shared in written public comments on the proposed regulatory changes. Multiple practitioners pointed out that while DMAS would require mental health agencies to submit their pre-authorization requests within one business day, there’s no mandated response time for insurance companies. Francis said that in her experience, authorizations could be unpredictable, arriving within a day in some cases or taking up to a month in others.

“This will likely put providers in a scenario where they are unable to start crisis services for a client in immediate need due to a delay in receiving authorization,” one anonymous comment read. Others pointed out that there also seemed to be no requirement for managed care organizations to approve legitimate requests for community stabilization, writing that the new policy seemed designed to make the service unusable.

“It really seems as though DMAS simply does not want us to utilize community stabilization at all with these recent changes,” wrote another provider. “If that is the case please just remove/replace the service entirely instead of slowly causing the service to deteriorate due to administrative burdens.”

The agency did not respond to a question on whether it planned to establish a timeline for insurance companies to respond to requests. But if the process results in long delays or denials, Carlin predicts that some providers will simply stop offering the service.

“We’ve seen this already with therapeutic day treatment — we have large agencies that no longer provide it because the services aren’t authorized and they can’t afford it,” she said. “So, if this is a situation where our concerns are realized to a large degree, I think it will be a deterrent.”

by Kate Masters, Virginia Mercury August 15, 2022

by Kate Masters, Virginia Mercury August 15, 2022

At the start of December, Virginia significantly expanded its mental health coverage under Medicaid, adding six new services and boosting payments for providers as part of a multi-year effort to reduce the state’s reliance on its own struggling psychiatric hospitals.

Six months into the rollout, the demand for at least one treatment option already vastly exceeded predictions, prompting the agency overseeing Medicaid to propose a major change in policy.

Dr. Alyssa Ward, director of the behavioral health division at the state’s Department of Medical Assistance Services, announced in June that the statewide use of community stabilization — a service she described as a “warm handhold” for patients experiencing a mental health crisis — had gone “far beyond” what the agency predicted in its budget request to the General Assembly.

Stabilizing patients during a mental health emergency and preventing future incidents after they’re discharged from residential care typically requires long-term treatment, including therapy and medication management. But in cases when those services aren’t immediately available, community stabilization is considered an intermediate option, allowing crisis providers to be paid for things like prevention and intervention, counseling and referrals to more permanent forms of care.

DMAS did not respond to multiple interview requests or a list of questions from the Mercury asking officials to quantify how extensively use had exceeded the agency’s predictions. But in a video presentation to Virginia’s mental health providers, Ward announced DMAS was proposing a major regulatory change as part of an effort to be “responsible stewards” of state Medicaid funding. 

“We are really held to our predictions by the General Assembly, and we need to explain when we are seeing things that go beyond that prediction,” she said.

As a result, the agency is proposing to change the approval process for community stabilization services, requiring providers to seek permission from the six insurance companies that cover the vast majority of Virginia’s Medicaid enrollees before they can be reimbursed for the treatment.

The shift from near-automatic approval of the service to what’s known as pre-authorization is raising concerns among many advocates and practitioners about the future of Virginia’s efforts to overhaul its beleaguered mental health system. Dozens of mental health providers have already commented on the proposed change, saying it would likely delay the provision of services to some of the state’s most vulnerable patients.

Moving care into the community

Understanding why the proposal is raising concerns first requires some context about the history of Virginia’s mental health system. For decades, state lawmakers largely depended on nine publicly funded psychiatric hospitals to treat patients with severe mental illness, paying more for beds than they did for community-based services. Even now, those services are still in short supply, driving dangerous levels of overcrowding at many facilities.

In 2017, Virginia officials began a concerted effort to reduce mental health hospitalizations by boosting funding to the state’s 40 community service boards. Those local agencies are tasked with providing mental health, substance abuse and intellectual disability services to low-income Virginians, including assessing patients in crisis to determine if they need inpatient mental health treatment.

Right now, Virginians with serious mental health needs are frequently routed to emergency rooms and then on to state hospitals if a bed is available. But the state’s ultimate goal is to prevent hospitalizations by expanding the number of providers who can treat patients close to home. Community service boards are now required to provide patients a uniform set of treatment options, including crisis response, but there’s wide acknowledgement that they lack the funding and staff to offer help to every Virginian who needs it (especially with the recent launch of a mental health hotline expected to intensify demand for services).

“We’ve always emphasized that CSBs are a safety net,” said Mindy Carlin, executive director for the Virginia Association of Community-Based Providers. “But if you look at state data, it’s private providers who are delivering the bulk of behavioral health services to Virginians with Medicaid.”

That’s where DMAS comes in. As lawmakers boost funding to community service boards, they’ve also allocated more money to reimburse outside agencies that provide treatment to Virginians on Medicaid. The initiative, called Project Bravo, is part of the agency’s broader plan to build a continuum of services by incentivizing more providers to offer a broader range of mental health care.

Community stabilization, once referred to as crisis stabilization, is considered an important part of the state’s continuum, according to planning documents. And in her June presentation, Ward said the goal of the service is to improve long-standing gaps in access to care. 

“It’s folks who are being discharged out of a higher level of care into the community and the community service just isn’t there,” Ward said. “That is the purpose of this service, so we made that very clear.”

What’s not clear is why so many providers have been billing for the service. Carlin suspects that part of the reason is simply high need across the state, but there’s also concern that fraud is playing a role. Some of the agencies she represents have reported cases of unscrupulous providers waiting outside emergency rooms and offering hotel rooms to homeless patients discharged from mental health-related visits.

“They’ll say, ‘Oh, I see you’re out — we can set you up in a hotel room and your insurance will pay for it,’” Carlin said. “So they’re not actually providing community stabilization, but they bill it.” 

In her presentation to providers, Ward also said that “misuse” of the service played a role in the proposed regulatory changes, emphasizing that the federal government banned states from paying for housing with Medicaid funds. The agency did not respond to a question on whether there had been efforts to discipline or revoke the licenses ofVirginia providers who inappropriately billed Medicaid for community stabilization treatment. 

‘It really seems as though DMAS simply does not want us to utilize community stabilization at all’ 

Despite the concern over bad actors, dozens of providers worry that requiring insurance companies to pre-approve stabilization services will ultimately hurt patients along with Virginia’s effort to build out a broader network of mental health services.

When the state initially expanded community stabilization services under Medicaid, providers could request reimbursement through a simple registration form, which essentially enrolled patients in the service for a set amount of time. Under the pre-authorization process, though, the state’s contracted insurance companies — known as managed care organizations — have the power to approve or deny the request and dictate how long an individual receives care.

In theory, the process is designed to be a safeguard against inappropriate billing and help control the state’s spending on Medicaid services. But many providers say pre-authorization imposes a major administrative burden, especially on smaller agencies.

“It continues to put us at the will of insurance providers,” said Katie Francis, the mental health services program manager for ChildSavers, a Richmond-based nonprofit. The agency still offers child and family therapy but stopped providing crisis intervention services in December partially due to changes in the state’s Medicaid program.

One of ChildSavers’ biggest challenges concerned a new manual that set more specific requirements for how many mental health services could be delivered and which practitioners could provide them in order to be reimbursed. But Francis said the proposal to mandate prior authorization for community stabilization on top of other regulatory changes would make it even harder for ChildSavers to reimplement crisis services given their experience with the process.

– Katie Francis, mental health services program manager for ChildSavers in Richmond

Like other providers, she said one of the major difficulties was that each of the state’s six managed care organizations had its own authorization system. Some had several, depending on the type of insurance plan. According to Francis, receiving pre-authorization for a service often required dozens of pages of paperwork and hours of phone calls just to make sure the forms ended up with the right person.

“We have a one-person billing team who’s managing 30 different clinicians, so our providers ended up doing a lot of it themselves just because it took so much time,” she said.

The same concerns were shared in written public comments on the proposed regulatory changes. Multiple practitioners pointed out that while DMAS would require mental health agencies to submit their pre-authorization requests within one business day, there’s no mandated response time for insurance companies. Francis said that in her experience, authorizations could be unpredictable, arriving within a day in some cases or taking up to a month in others.

“This will likely put providers in a scenario where they are unable to start crisis services for a client in immediate need due to a delay in receiving authorization,” one anonymous comment read. Others pointed out that there also seemed to be no requirement for managed care organizations to approve legitimate requests for community stabilization, writing that the new policy seemed designed to make the service unusable.

“It really seems as though DMAS simply does not want us to utilize community stabilization at all with these recent changes,” wrote another provider. “If that is the case please just remove/replace the service entirely instead of slowly causing the service to deteriorate due to administrative burdens.”

The agency did not respond to a question on whether it planned to establish a timeline for insurance companies to respond to requests. But if the process results in long delays or denials, Carlin predicts that some providers will simply stop offering the service.

“We’ve seen this already with therapeutic day treatment — we have large agencies that no longer provide it because the services aren’t authorized and they can’t afford it,” she said. “So, if this is a situation where our concerns are realized to a large degree, I think it will be a deterrent.”

Virginia Mercury is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence. Contact Editor Sarah Vogelsong for questions: info@virginiamercury.com. Follow Virginia Mercury on Facebook and Twitter.

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.

Kate grew up in Northern Virginia before moving to the Midwest, earning her degree in journalism from the University of Missouri. She spent a year covering gun violence and public health for The Trace in Boston before joining The Frederick News-Post in Frederick County, Md. Before joining the Mercury in 2020, she covered state and county politics for the Bethesda Beat in Montgomery County, Md. She was named Virginia's outstanding young journalist for 2021 by the Virginia Press Association.

Nonprofit. Nonpartisan. No paywalls. Fair and tough reporting on the policy and politics that affect all of us is more important than ever. The Mercury brings you coverage of the commonwealth's biggest issues from a team of veteran Virginia journalists.

DEIJ Policy | Ethics Policy | Privacy Policy

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site.