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Minn. children's mental health facilities forced to adapt or cut back to stay open

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Nearly a dozen residential treatment centers for children who suffer from mental illness are scrambling to find new funding after receiving word this week that they're no longer eligible for federal Medicaid dollars. Some of the centers are changing their model of care in order to stay open. 

Paying for children's mental health treatment in Minnesota has long been something of a balancing act. Since Medicare and Medicaid began more than a half century ago, the federal government has generally avoided covering care at big institutions. 

But in 2001, the Centers for Medicare and Medicaid Services made an exception. The agency began allowing children in Minnesota who are eligible for Medical Assistance to receive treatment at large facilities — defined as those with more than 16 beds.

Now, that exception has ended. The move means that 11 centers in Minnesota, Wisconsin and South Dakota that care for 580 children are no longer getting federal funds. 

Volunteers of America runs three of those facilities — all in the Twin Cities metro. CEO Paula Hart said the children there usually have nowhere else to turn.

"The young people that we serve in these settings are very high need. Almost 100 percent of them have experienced significant trauma in their lives," Hart said.  

Avanti Center For Girls, the Children's Residential Treatment Center and Omegon treat 165 young people each year. Hart said there's no way to absorb the federal funding cuts without eliminating services.

In 2017, the Legislature approved stopgap funding, but it runs out in less than a year. 

Richard Wolleat is president and CEO of Northwood Children's Services in Duluth, which has 98 residential beds. The funding cut hits the organization hard since most of the kids treated there are Medicaid-eligible.  

To keep the federal dollars flowing, Northwood is converting many of its beds to a different model of care that Medicaid will pay for. It's called PRTF, or psychiatric residential treatment facility. Wolleat said the changeover presents its own challenges.

"We've had to staff up and get our census down to meet the levels. This is a brand new program, so it's taken a while for us to come into compliance with all of the myriad statutes and regulations that are involved," he said.

That's the same solution another children's mental health provider is pursuing. Dr. Michelle Murray is interim CEO of Nexus, which operates Gerard Academy in Austin and Mille Lacs Academy in Onamia. Nexus is looking at converting all 168 of its beds to the new standard, but Murray said they shouldn't have to. 

"When the federal government is not willing to allow states to use the Medicaid dollars in the way that they know best to help their populations, and when they eliminate that possibility, it's not going to eliminate the problem, it's only going to make it worse," Murray said.

Though expensive, the residential treatment may be the best option for children with serious mental illnesses, particularly those who have experienced trauma, Murray said. She expects without more residential treatment programs, school teachers, emergency room staff and police officers will be left picking up the slack.