Forensic Services, Public Mental Health Policy, and Financing: Charting the Course Ahead

How and Why: The Criminal Justice Door

Although the phenomenon of deinstitutionalization of those in state mental health hospitals and the closing of some facilities have been commonly cited as the reasons for the increase in the number of persons with mental illness in the criminal justice system, the reasons for this increase are more numerous. The criminalization of drug offenses in the 1970s and the complex evolution of the civil commitment laws have been cited among other factors as contributing to the increase.^3,13

Putting aside the reasons that persons with mental illness experience deeper penetration into the criminal justice system, over the years it has become common for police to be the first responders in crises involving such persons. The terms street corner psychiatrist¹⁴ and frontline mental health worker¹⁵ were used in the 1990s to characterize the role that law enforcement plays in individual communities. In these early studies, decisions to arrest were often found to have been based on workable and practical solutions that seemed more effective than did transfer into a health care system that had other challenges. Fisher and colleagues¹⁶ found that 28 percent of state mental health consumers tracked over a 10-year period had experienced at least one arrest. Swanson et al.¹⁰ found that one in four persons with schizophrenia or bipolar disorder in the public mental health and addiction services system in Connecticut had criminal justice involvement of some type during a two-year period. Other studies have found that most officers report having responded to a call involving someone with a mental illness in the past month.^17,18

Correctional systems ultimately house inmates with high rates of substance use and mental health disorders. Baillergeon and colleagues¹⁹ demonstrated that incarcerated individuals with psychiatric disorders had significantly increased histories of having had multiple prior incarcerations. Hoge et al.³ highlighted the critical need for aftercare and re-entry services. Hartwell and colleagues²⁰ found that 61 percent of inmates who were identified while incarcerated as having mental health problems accessed substance use treatment services within 24 months of release from correctional settings.

Taken together, the studies clearly show that persons with mental health and substance use service needs are common both on the way into the criminal justice system and on the way out. Thus, policy level conversations are shifting from simple either/or solutions that only enhance treatment services or only build criminal justice approaches to reducing recidivism. Instead, public systems have been developing models that look at mutual problem-solving through emerging justice and behavioral health collaborations. However, in developing policies and practices that chart a path forward and in providing sustainable funding for these new models, we must understand certain aspects of funding for public mental health services.

Funding History and the Drive Toward Community-Based Care

Traditional mental health services in the United States have incorporated a complex interplay of state and federal funding sources as well as a combination of private and public insurance to help individuals pay for care. State financing funded most mental health care through the 1950s.²¹ The care and treatment of persons with mental illness was viewed as a state responsibility, and each state was allowed to determine how much of its budget to allocate to mental health needs. State dollars were utilized largely to fund state institutions, where most individuals with mental disorders went for treatment at the time.²²

Since the mid-1900s, several initiatives have directed the attention of the federal government toward those with mental illness. In 1946 came the passage of the National Mental Health Act, which established the National Institute of Mental Health, to enhance research and education. The 1963 Mental Retardation and Community Mental Health Centers (CMHC) Construction Act²³ provided grant funding to states to construct local centers for the delivery of mental health care. Although funding and the vision of enhancing community-based services were not fully realized through this initiative, other overarching broad reforms have continued to lead to certain, albeit insufficient, advances in community mental health care.²⁴ The creation of the Substance Abuse and Mental Health Services Administration (SAMHSA) in 1992, under the U.S. Department of Health and Human Services, has further assisted states in system improvements through its distribution of block and competitive grants.²⁵

In 1965, under the amendments to the Social Security Act,²⁶ Medicaid was established as a state-federal partnership, with the states eligible to receive funds from the federal government on the basis of per capita income. This calculation, called FMAP (Federal Matching of Assistance Percentage) generally allows states to receive one dollar for every dollar spent, with states with lower per capita incomes receiving a greater percentage of federal reimbursement for services delivered. Medicaid services are intended for parents of dependent children, children and pregnant women, and certain people with disabilities whose income is below the federal poverty level (FPL). Services traditionally covered by Medicaid include acute care hospitalization, with some exceptions (described later); medications; personal assistance; diagnostic and other clinical services; outpatient services; and certain types of community support services, such as targeted case management.

The Medicaid dollar for public services has become an increasingly important component of community-based care, with Medicaid spending surpassing state and local spending for mental health and substance use services for the first time in the early 2000s.²¹ The Center for Medicare and Medicaid Services (CMS) administers the federal Medicaid program and oversees the approvals of the states' activities. Waivers that allow home and community-based services to be covered through Medicaid for certain groups have been increasingly granted in recent years, such as those through § 1915, which help provide for individuals who might otherwise be institutionalized or who present with specific diagnostic criteria.²⁷

With the initiation of the Supplemental Security Income (SSI), dating to the 1970s, and Social Security Disability Income (SSDI) passed in 1956, more individuals with mental illness were eligible to receive supported income that also assisted them in community living.²¹ Medicare was also established as a federally funded insurance program for persons age 65 or older who had been in the workforce and for persons under age 65 with certain disabilities.²⁸

With regard to Medicaid, when it was established, federal Medicaid reimbursement was prohibited for services rendered in Institutions for Mental Disease (IMDs).²² IMDs include any facility with greater than 16 beds (except small community mental health centers, which fell under different provisions) that focus primarily on mental health care. From this exclusion came financial incentives to shift care of persons with mental illness to localities that were not subject to the IMD exclusion, such as psychiatric units in hospitals in which the number of medical beds exceeded that in mental health facilities (when psychiatric beds exceed medical beds, the hospital could be tipped toward emphasis on psychiatric care and come under the framework of the IMD exclusion), smaller community mental health centers, and other community treatment options.

Thus, the IMD exclusion has played a significant role in determining where care is delivered, as the lack of federal reimbursement for care in state mental health institutions places increased burdens on state budgets. As state budgets have tightened, state psychiatric beds have decreased, and the state institutions have been left with more difficult to discharge populations, such as those with complex behavioral challenges, those found incompetent to stand trial, those not guilty by reason of insanity, and those with criminal and risk-related histories. With fewer state hospital beds overall, forensic costs have represented increasing percentages of state hospital expenditures.²⁹

CMS has additionally given recent guidance regarding prisoner services that Medicare may not cover in specific circumstances, including services for those individuals “required to reside in mental health facilities,” and even those on “supervised release,” to name a few.³⁰ Procedures regarding labeling patients as prisoners trigger the Social Security Administration to terminate benefits for some forensically involved individuals. More complicated still is that federal reimbursement (e.g., via Medicaid and Medicare) and private payment, when they might be available for crossover populations, require determinations of medical necessity. Not all court-committed patients meet that threshold (e.g., certain defendants hospitalized for competence restoration services, insanity acquittees, or those hospitalized for forensic evaluations). Thus, attempts to recoup payments as billing is reviewed retrospectively and prohibitions on federal reimbursement for forensic patients place fiscal responsibility on state budgets that require adequate appropriations.

These budgetary forces are complex. Given many of the limitations on federal funding for forensic patients, state appropriations will also continue to play a role and state laws, policies, and practice will govern financing of these services. With that in mind, there is an ongoing need to balance limited resources at both the state and federal levels. More costly inpatient forensic services, as well as perhaps less costly but also financially complex community court-mandated services, will require ongoing analyses of viable long-term financing strategies and models of care that meet the unique needs of the crossover population.

Institutions Versus Community Placements: Civil, Forensic, and Correctional

As alluded to already, a major driver of care delivery in mental health has been a shift from institutional to community-based care.²⁴ The premise that individuals with mental illness have the right to live full and meaningful lives in their communities is widely accepted. It is therefore important to understand the legal and fiscal forces that have moved services in that direction. During the period when state hospital beds were eliminated, persons with mental health disabilities gained increasing rights that have helped them move toward more community-based living. As noted, these rights were in part advanced through developments related to Olmstead v. L.C.,³¹ the Americans with Disabilities Act of 1990,³² and access to disability payments through the Social Security Administration. Advances in psychotropic medications have also had a major impact on increasing the number of people served in the community and on the cost of mental health services and health care in general, although this area of focus is beyond the scope of this article.

Olmstead claims and investigations under the purview of the Civil Rights of Institutionalized Persons Act (CRIPA)³³ have created a need for more robust discharge efforts in civil contexts. Leaving aside the sex offenders embedded in some state mental health forensic services, traditional forensic populations have also begun to receive similarly increased scrutiny with regard to whether an institutional level of care is reasonable for certain individuals. In Oregon, an investigation by the Department of Justice related to Olmstead under the provisions of CRIPA created a significant need to examine discharge planning from the Oregon State Hospital, whose patient population largely originated from criminal commitments,³⁴ creating additional challenges in discharge. Bloom³⁴ advised that the problems related to discharge of forensic patients in Oregon were likely to be relevant in other states as well.

Levitt and colleagues³⁵ made the interesting finding that incompetent unrestorable defendants were more likely to be admitted involuntarily, yet less likely to be dangerous, and they had longer hospital stays than did a matched community sample. Such findings raise further important questions regarding the utilization of hospital beds and the parallel forensic and civil systems with differing bases for admission (e.g., medical necessity and need for treatment versus involuntary court placement and need for containment). In the aftermath of Jackson v. Indiana,³⁶ Parker³⁷ identified the need to develop better approaches to unrestorable, incompetent inpatient defendants who become stuck between the public safety concerns of the prosecution and mental health treatment needs. Others have continued to write about the fairness and reasonableness of the length of time an individual can be held in a hospital as incompetent to stand trial.³⁸ Limited inpatient bed capacity has fostered greater front end demand for forensic services and treatment delivered in alternative settings (e.g., jail and community-based competence restoration services) and has increased pressures on discharge processes.

On the correctional side of the coin, the U.S. Supreme Court in 2011 affirmed the judgment of a lower three-judge panel, finding that because of overcrowding, the medical and mental health care that had been available in California's prisons had not met constitutional standards.³⁹ As a result, the Court ordered the state to develop a remedy of dramatically reducing the prison population through a variety of mechanisms, including transfers to county jails or outright release of inmates to community-based programs in certain cases. This ruling has created challenges for treatment of these individuals when released and balanced public safety concerns.⁴⁰

If one follows these threads, higher costs of institutional care with fewer bed resources, risk of poor care in overcrowded settings, and other factors, it becomes clear that they point many of the traditionally forensic or correctional populations toward community services, with only the individuals who have committed very serious offenses or who pose the greatest risks remaining in state psychiatric hospitals or other institutions.

From a public health and public safety perspective, it would be prudent for forensic mental health professionals to be called on to assist in secondary and tertiary preventive approaches to help maintain at-risk individuals in the community. This can increasingly be done through well-informed risk assessment and risk management approaches in collaboration with criminal justice entities. As the forensic field has expanded to embrace correctional psychiatric practice, the current forces at play lead to the need to enlarge the embrace to include working with justice-involved individuals in community settings, thereby enhancing collaborations among mental health services, courts, probation, and parole.

Coexistence of Legal Mandates and Recovery Principles

As these collaborative models evolve, in addition to funding, it is important to note the specific philosophical frameworks that have been increasingly emphasized. The public mental health care system has put forth principles related to recovery-oriented, person-centered, and family-driven care, that prioritize autonomy, freedom of choice, and hope. SAMHSA's working definition of recovery is “a process of change through which individuals improve their health and wellness, live a self-directed life, and strive to reach their full potential.”⁴¹ These themes were part of the New Freedom Commission's targeted goals.⁸ Even within forensic systems, there have been efforts to incorporate these ideas to enhance outcomes.⁴²

Individuals who travel through forensic settings, however, do so because of certain risk-related behavior, and they may at times lack decision-making capacity, which can signal additional concerns. These factors raise complex questions about recovery, personal responsibility, and clinical responses.^43,44 Psychiatrists in particular, along with certain other mental health professionals, have legal and clinical obligations to act to override self-directed decision-making by seeking care over an individual's objection under certain circumstances, especially when safety is a factor and when local laws further control aspects of forensic patients' autonomy.

Tensions related to the push and pull among individual rights, clinical obligations, prevailing laws, and public safety complicate management and disposition planning and must be attended to as services focused on crossover populations evolve. Forensic patients also must live with complex histories as part of their personal stories and challenges. With those caveats in mind, specific recovery principles can still be embraced to help justice-involved individuals in forensic and community-based settings find hope and meaning to make more positive choices to reduce their risks and reach their full potential when they are able to do so. Trauma-informed care, peer support, and strength-based treatment planning, to name a few, have been helpful for civil patients and have important roles in forensic contexts, as well. Forensic systems, however, are likely to continue to develop and to grapple with some of the more complex areas related to recovery-oriented policies and program models.⁴² The integration of these concepts to enhance positive treatment engagement through support and guidance is an important direction of care delivery, but it should proceed with the recognition of the equal importance of navigating safety and mandated treatment to help individuals avoid more negative outcomes.⁴⁴ Appropriately balancing these approaches can help to establish mechanisms for the care of forensic patients in the least restrictive settings, with cost-effective programs that can help meet individualized needs while carefully attending to public safety.

Health Care Reform: What Might It Mean for Crossover Populations?

Individuals with substance use, medical, and mental health challenges are at increased risk of receiving poorly coordinated care between the physical and behavioral health settings and can incur some of the highest costs in health care. Add criminal justice involvement, and the costs are even higher.¹⁰ Successful health care outcomes and reduced recidivism with overarching reduced cost can be shared goals, and the promise of health care reform on the horizon may offer ways to help achieve improvements. The Patient Protection and Affordable Care Act (known as ACA), signed into law in 2010 and amended via the Health Care and Educational Reconciliation Act (2010), is the current major vehicle for changes to the health care landscape in the United States.⁴⁵ According to a white paper related to the ACA and criminal justice, produced by the Bureau of Justice Assistance, the ACA reform strategies also have “the potential to decrease crime, recidivism, and criminal justice costs, while simultaneously improving the health and safety of communities” (Ref. 46, p 3).

Expanded Medicaid coverage of individuals with low incomes represents a major shift in who is eligible for services that Medicaid provides. With the enactment of the ACA, it is estimated that up to 22.4 million more people will be eligible to enroll in Medicaid.^46,47 This expansion targets those whose incomes are at or below 133 to 138 percent of the federal poverty level (FPL), beginning in 2014. The federal government assumes 100 percent of the costs for newly eligible individuals for two years and will assume 90 percent of their costs thereafter. The ACA requires within the benefit packages for Medicaid-financed plans essential health benefits that include mental health and substance use disorder services.

Features of the ACA include providing additional subsidies to certain individuals and the development of health insurance exchanges to increase access to a broader network of health insurance plans available to consumers. The expansion of coverage includes mechanisms to cover health and wellness promotion in health care. Perhaps more important, it decreases discrimination against mental health care, extending the Mental Health Parity and Addiction Equity Act of 2008,⁴⁸ which mandates coverage for mental health and substance use disorder services on par with medical and surgical benefits, but only when plans offer these benefits. The adoption of federal parity rules in the fall of 2013 marked a major achievement, but will require ongoing oversight, to ensure appropriate implementation.

Even With Promises for Improvements, We Cannot Throw Caution to the Wind

More insurance and better access to care are positive developments. Disparate adoption of reform strategies by the states makes for a complicated landscape. Health care reform efforts are varied works in progress, as was seen with some of the start-up challenges with the Health Insurance Exchanges. Patience and thoughtful solution-based policies and implementation strategies will be critical to the success, not only of expanded coverage where it occurs, but of improved outcomes in all jurisdictions seeking better health care coverage designs.

As Medicaid expands in many states and plans develop for populations that are eligible for both Medicaid and Medicare, management of costs must inevitably be part of the discussion. Development of stratification schemes to distinguish higher risk (i.e., higher cost) plan participants from lower cost participants guide protocols in which the payer (Medicaid) and the provider (e.g., a community mental health center) share financial risk across populations.⁴⁹ The individuals who come to the attention of criminal justice or forensic mental health systems would most likely often be considered high financial risks, given their constellation of mental health, substance use, and physical health care needs.

Especially in the private payer market, many have cautioned about adverse selection, in that individuals in high-risk corridors may inadvertently be left with fewer choices for health care plans, since only certain plans will be able to accommodate their higher costs, leaving the health care plans to require higher payment premiums.⁵⁰ With the higher costs associated with a newly eligible Medicaid population, the need for increased cost containment and tight plan management could also yield unintended collateral consequences. Increased forensic involvement of plan participants, for example, was noted by Fisher et al.⁵¹ who found that the addition of a managed-care Medicaid model increased the risk of forensic commitment⁵² and that individuals under a Medicaid managed care plan were processed differently in court after an arrest. Even though certain tort reform protections are being contemplated, concerns about emerging malpractice claims through new cost-containment–focused standards of care have also been raised.⁵³

Given that justice-involved individuals with mental illness are at risk for a host of social and occupational challenges, including unemployment, homelessness, and arrest, their health care and health insurance coverage are at risk of repeated disruption. Limited access to health care for many individuals can be one of the challenges that contribute to symptom relapse and poor disease management. Insurance status may make a difference in both health and justice outcomes, as noted by McCabe et al.,⁵⁴ who found increased legal difficulties for individuals with mania who lacked health insurance during a period of social and occupational impairment.

On the hospital side of funding, there may be additional challenges ahead. For example, the Omnibus Reconciliation Act of 1987⁵⁵ provided for the further role of federal Disproportionate Share Payments (DSH payments) for safety net hospitals that disproportionately care for Medicaid and low-income patients. Over the years, provision of DSH payments to state funded psychiatric hospitals were reduced, but DSH expenditures have continued to include significant mental health-related costs,⁵⁶ including some care for the uninsured and other expenses. Individuals served in these safety net systems are often those who have cycled between justice and community care systems. With the ACA, DSH reductions are mandated, and it remains unclear whether the advances that the ACA provides will fully address the gap that the DSH payments have provided.⁵⁷

Roads to System Collaborations and the Interplay of Health Care Reform

With the aforementioned cautionary notes in mind, expanded coverage by the ACA offers promising opportunities. Protocol and policy developments leading to a transformed and improved system that attends to behavioral and physical health care at the boundary of the civil, forensic, and criminal justice arenas will require specialized considerations. Highlights of collaborative approaches focused on these areas should include the following broad themes (see Table 1).

Forensic Roles in Emerging Community Services

Forensic mental health professionals must stay abreast of clinical and legal advances to provide high quality forensic evaluations. Forensic practitioners who also understand systems and services can better address a variety of concerns for individual defendants. For example, an integrated care system that maximizes treatment for co-occurring mental health and substance use conditions and uses peer support to optimize engagement may minimize a particular defendant's risk of decompensation and subsequent criminal offenses. A forensic evaluator who opines on disposition options such as in an aid-in-sentencing evaluation would benefit from knowing what re-entry programs are available for a particular defendant after release from the jail, whether a specialty court might be available to help support the defendant's sobriety, and whether the defendant could be eligible for entitlements such as case management and trauma-specific treatment to help him or her succeed.

Forensic practitioners should also be informed on interventions that target criminogenic factors that are likely to cause persons with mental illness to come in contact with the justice system,⁸⁰ which moves beyond simply thinking about the criminalization of mental illness. Successful models of justice and mental health collaboration are likely to be increasingly informed by recidivism data and Risk-Need-Responsivity (R-N-R) models^12,81 and will need to focus on trauma and co-occurring disorders.^12,59 National models advancing the ability to look simultaneously at needs across these dimensions¹² will further drive treatment and justice supervision approaches (e.g., through probation and parole), and forensic mental health professionals should stay abreast of these approaches. Development of these service models is already under way.⁸²

Forensic Practitioners: Gearing Up and Stepping Up

The review provided in this article has aimed to help forensic professionals improve their understanding of mental health economics, policy, and service delivery systems that intersect with and impact public sector forensic work. Although it is only focused on the U.S. system, it is hoped that this article inspires a broader perspective of the health care landscape. Forensic mental health professionals may be particularly well-suited for administrative functions and policy development in this arena, given their training and experience in navigating across systems, laws, and clinical practice. Such roles require attention to both an overarching vision and the minutiae of operational details. For every policy that is advanced related to crossover populations, unintended challenging consequences and political push back may need to be addressed. Thus, there is an urgency to have strong clinicians and administrators who both understand the needs of these populations and can take on roles to help shape the future for patients, evaluees, and the systems and professions that work with them.

Although there will likely always be a need for deep-end forensic services and forensic institutional care, many of the individuals with mental illness seen in the forensic and correctional systems can be better served, and collaborative care will be increasingly delivered, in community settings. As such, specific training and experiential goals should become part of a national standard for forensic specialists (Table 2). First, it will be important to expand the general training of forensic mental health clinicians in foundational areas related to co-occurring substance use disorders, trauma, criminogenic factors, and integrated justice and behavioral and physical health program models that use evidence-based approaches, while emphasizing the critical importance of basic psychiatric treatment as a mainstay of care.⁸³ In doing so, forensic mental health care can be brought under the aegis of the Institute for Healthcare Improvement's well established “Triple Aim” for better care, better health, and lower costs.⁸⁴ Quality measures for better mental health care are complex, and those in forensic settings are all the more complicated by local laws, regulations, and political forces, making improvements in care and discharge planning challenging. These are areas ripe for discussion and future research. Training should include an overview of administrative data and their use to inform quality improvement and service development. Seminars on public policy and psychiatric administration in forensic services should be incorporated into an educational effort that inspires future leaders to carry forward system improvements. Training on funding and economic factors behind forensic mental health care and the acquisition of entitlements (e.g., health insurance, housing, and disability) and barriers to these entitlements for certain offender categories will also help enhance the skills of forensic practitioners. Forensic training should include a focus on privacy protections and information-sharing across various systems of care, especially in light of emerging electronic data-sharing approaches.

Second, forensic mental health practitioners will likely find themselves increasingly involved in services that are relatively new, such as emerging specialty courts, expanded re-entry designs, or specialized probation or pretrial types of programs for persons with co-occurring disorders. Many states already offer an array of programs that are mandated by courts or local laws (e.g., conditional release and assisted outpatient treatment). These models of care require thoughtful planning and risk management for those individuals with mental illness who may pose risks of harm to themselves or others and risk of recidivism. Early exposure to these programs will be increasingly important, with knowledgeable supervisors and peers who can provide education and broad perspectives.

Traditionally, state mental health agencies identify clinical standards related to many of these mandated services, although over time state Medicaid agencies may need to become more familiar with these legally complex models of care when and if treatment is funded through the Medicaid dollar. The expertise of forensic mental health professionals in legal and regulatory requirements, risk assessment, and risk management can be a helpful asset for providers and insurers that are managing care within these contexts.