Medicaid and heavily medicated foster children

I wrote this paper about half an year ago for an risk management class. Just want to share some of the facts I have learn during the research.

Risk of Antipsychotics Over-Utilization for Children on Medicaid

Children on Medicaid are four times more likely to receive an antipsychotic prescription than children with private insurance (Crystal et al., 2009). Antipsychotics were the most costly drug group for all Medicaid beneficiaries combined, representing 14.6 percent of total Medicaid drug costs in 2009, and accounting for 25 percent of total expenditure growth between 1999 and 2009 (Verdier & Zlatinov, 2013). Many of these prescriptions protect the mentally ill from hurting themselves and others; however, recent studies show a rapid increase in the prescription of antipsychotics for children and adolescents on Medicaid. These same studies suggest that the majority of the prescriptions are being used for reasons far less severe than the drugs are originally approved for (Crystal et al., 2009). Antipsychotics are powerful drugs that have a rapid effect on the patient, but they come with serious side effects. Does the adverse effect overweigh the benefit? What are the risks related to this issue?

Psychiatric treatment for children has recently become a very heated topic. In 2009, the New York Times published an article regarding the concerns for increasing the use of antipsychotic drugs on children in the Medicaid system. Professor Stephen Crystal, Director of the Center for Pharmacotherapy at Rutgers, found that poorer children are more likely to receive antipsychotics for less serious conditions than would typically prompt a prescription for children from a family that made moderate income (and are not Medicaid eligible). In fact, a child on Medicaid is four times more likely to be prescribed an antipsychotic than a child with private insurance (Alliance for Natural Health, 2013). However, Crystal did not conclude that the children in the Medicaid system who were prescribed antipsychotics were mistreated. This is because data is not available to compare the before and after impacts for a sufficient amount of Medicaid children who received antipsychotic medication. Crystal determined that many of the children in the Medicaid system were from dysfunctional families or foster families. He believed that these children may have had traumatic experiences in the past and therefore are more likely to show aggression or are highly irritable. Drugs, like the antipsychotic medicines, are simply keeping them from being moved among foster families or keeping them in school (Wilson, 2009).

Are the drugs appropriate for children? What are the risks and consequences that may occur if a child is being medicated for a prolonged period of time? Is the drug helping them or hurting them? Who should be responsible?

In 2013, the Wall Street Journal revisited this topic and interviewed several subject matter experts. Dr. Stephen Cha, Chief Medical Officer at the Centers for Medicare & Medicaid Services (CMS), said that the government wants to reduce “the unnecessarily high utilization of antipsychotics” (Lagnado, 2013). In this paper, I would like to further research the current state of Medicaid expenditures in antipsychotic drugs on children, the risk it may perpetrate, and its consequences.

Antipsychotic drugs were initially developed in the early 1960s to treat schizophrenia and psychosis for adults. The drugs were often used only during a short period of time and were subsequently dropped due to its severe adverse effects. The second generation of antipsychotic drugs, often known as “atypical,” is supposed to have fewer occurrences and less severity in side effects. The FDA has approved several atypical antipsychotic medications for children and adolescents. Approval of Risperidone in 1993 was followed by Olanzapine (1996), Quetiapine (1997), Ziprasidone (2001), Aripiprazole (2002), and Paliperidone (2006). Having all but replaced previously approved antipsychotics, the atypicals are now prescribed to a much larger and more diverse clinical population (Crystal et al., 2009). These approvals were for labeled use only for schizophrenia, aggression related to autism, and bipolar disorders. However, most of the prescriptions were provided by family doctors or doctors without psychiatric expertise, and were prescribed for “off label” uses such as attention deficit hyperactivity disorder, aggression, persistent defiance, or other conduct disorders (Crystal et al., 2009; Government Accountability Office, 2012; Alliance for Natural Health, 2013).

Data on the efficacy of antipsychotics drugs in children are limited, and the long-term studies of their therapeutic effects and side effects are lacking (Bachmann et al., 2014). Most prescriptions were for externalizing disorders (ADHD, conduct disorders), while only a small fraction was for the approved indication (persistent aggression in a child or adolescent with below-average intellectual ability) (Harrison, Cluxton-Keller, & Gross, 2012; Bachmann et al., 2014; Alliance for Natural Health, 2013; Crystal, Akincigil, Binder, & Walkup, 2014). Moreover, young children are likely to be receiving multiple psychotropic medications. In one large-scale analysis, almost 80 percent of preschool children receiving antipsychotic medications also were prescribed other psychotropic medications to manage their symptoms (Vitiello et al., 2009).

Furthermore, there is increasing evidence that atypical antipsychotic drugs, once thought to have a more favorable side-effect profile than classic antipsychotic drugs (which cause extrapyramidal motor manifestations such as early and tardive dyskinesia and akathisia), do in fact have major short- or long-term adverse effects including market weight gain, hyperlipidemia, and extrapyramidal systems. These are more common in children and adolescents than in adults. Atypical antipsychotics drugs were also once thought more effective than the classic ones, but this statement has also become questionable (Bachmann et al., 2014).

If the drugs are so bad, why use them? There are a few reasons: higher acceptance for the drugs during the past decade, wider acknowledgement of mental health symptoms, and the lack of treatment expertise in this area, as well as economic restrictions.

Since the 1980s, more and more publications have been explaining emotion and behavioral disturbance of childhood with medical models. This trend led to the greater utilization of medical interventions early in a child’s diagnosis. At the same time, many researchers believe that psychiatric disorders would show in children’s behaviors. Soon, the diagnosis of depression, bipolar disorder, anxiety disorders, and obsessive-compulsive disorders (which were usually exclusive diagnosis for adults) have been increasingly diagnosed and treated in children and adolescents (Vitiello et al., 2009). An overall increase in pediatric use of psychotropic medication has occurred since the mid 1980s, which created an environment of acceptability of prescribing antipsychotic medications (Harrison et al., 2012).

Another contributor to the popularity of atypical antipsychotics drugs is that clinicians believed that they are safer than the classic or first generation antipsychotics. Other alternatives to “tame” the child may cause more expenses and may many times be difficult to control. For example, lithium has a narrow therapeutic window and requires repeated blood tests during treatment—as do many other antiepileptic mood stabilizers. Atypical antipsychotics were introduced to adult patients with the expectation that they are safer, have less adverse effects, and are thus better than the first-generation antipsychotics. Due to these perceived benefits, treatment with atypical antipsychotics became more accepted not only for schizophrenia and psychosis, but also non-psychotic conditions, such as mood disorders and aggression, both for adults and children (Harrison et al., 2012).

Last but not least, the lack of inpatient services, limited reimbursement by Medicaid, and difficulties to manage psychological treatment pressure clinicians to stabilize the patient as quickly as possible. Especially, as oftentimes the antipsychotics are covered in full, the child’s family usually does not turn down suggestions from their doctors. The free and rapid results brought about by antipsychotics therefore became favorable.

It is expected that poorer children covered by either Medicaid or the Children’s Health Insurance Program (CHIP) generally come from families with low income and foster families. In low-income families, many of the parents suffer from chronic stress, anxiety, and some may even suffer from addiction and mental illness of their own. Many simply don’t have the time and resources to enroll in trainings for cognitive behavioral therapies (Harrison et al., 2012). Many children in foster care or an adoption assistance program suffer from traumatic experiences, abandonment, and mistreatment. These types of children often express their distress with aggression, disobedience, and destructive behaviors. Consequently, many have a diagnosis of mental illness. Many children in this population have the opportunity or resources to see only a family doctor who may not necessarily have experience and expertise in psychological diagnoses. But with the pressing situation to stabilize the patient, antipsychotics are commonly prescribed. In many cases, when a patience is re-diagnosed by a pediatric psychiatrist, the use of dangerous antipsychotic is unnecessary. How many of these children have the ability to refuse the medication? If they do not have a voice or their guardian does not understand the consequences of the medication, the medication may result in disabling lifelong adverse impacts.

Who owns the risk? I believe it is the responsibility of CMS (Medicaid) and the FDA’s responsibility to ensure a child’s welfare in this case. I will explain the specifics below.

Medicaid is a cooperative program between the Federal and State governments to pay for health care and medical services for certain low-income persons in the United States and its Territories. The Federal and the State governments share responsibilities in designing, administering, and funding the program. For the Federal government, the CMS is the agency charged with administering Medicaid. (Department of Health and Human Services, 2012)

According to the official financial report on Medicaid, every one in five persons in the U.S. was enrolled in Medicaid for at least one month in 2012. As the federal matching rate expired in June 2011 (as prescribed by the American Recovery and Reinvestment Act of 2009 and Public Law 111-226), the total Medicaid expenditure in 2012 was $431.9 billion, an increase of 0.8 percent from 2011. This number is expected to grow by 5.9 percent to $456.4 billion in 2013 due to the Affordable Care Act, and continues to grow at an average rate of 7.1 percent per year until $853.6 billion in 2022. As Medicaid is financially supported by both federal and state governments, the federal spending portion of Medicaid has reduced by over $20 billion in 2012, to $250.5 billion. On the other hand, the state expenditure for Medicaid has increased by over $30 billion in 2012 to $181.4 billion (Department of Health and Human Services, 2013).

Medicaid is the second largest payer for healthcare is the U.S. (second to Medicare). It is the backbone for healthcare providers, insurance companies, and providers for other health-related services. While it is almost singlehandedly supporting an industry, it’s important to remember that Medicaid funding comes from taxpayers. Thus, effective and quality healthcare is expected.

Antipsychotics were the most costly drug group for all Medicaid beneficiaries combined, representing 10.6 percent of total Medicaid drug costs in 1999 and 14.6 percent in 2009, and accounting for 25 percent of total expenditure growth between 1999 and 2009. The average cost for each antipsychotic medication rose from $120 in 1999 to $274 in 2009, an increase of 128 percent (Verdier & Zlatinov, 2013). The GAO report states that in an Agency for Healthcare Research and Quality (AHRQ) funded research, 12.4 percent of foster children on Medicaid were prescribed psychotropic medicine, whereas 1.4 percent of non-foster Medicaid children were prescribed antipsychotics in 2007 (Government Accountability Office, 2012). More recent data show twenty to forty percent of children in the foster system receive psychotropic medicine (Lagnado, 2013). What is most concerning is the use of antipsychotics on very young children. The percentage of male children age five and under using antipsychotics increased from 1.4 percent in 1999 to 3 percent in 2009 (up 114.3 percent); for females, up 71 percent. The average monthly costs per male child in this group increased from $34 in 1999 to $80 in 2009 (up 135.8 percent), while the costs for female children increased from $33 in 1999 to $73 in 2009 (up 119 percent) (Verdier & Zlatinov, 2013). It is not without doubt that diagnosis of psychiatry needed on very young children is unreliable. Prescribing powerful and harmful antipsychotic drugs may cause complex long-term side effects.

Estimated per capita spending for children on Medicaid has reduced from $2,851 in 2011 to $2,700 in 2012 (Department of Health and Human Services, 2013). However, the percentage of using antipsychotics on children has increased consistently over the years (Verdier & Zlatinov, 2013). There is no available data that explains exactly what caused the expenditure per child to decrease, but with the assumption that in-patient treatment and Evidence Based Treatment (EBT) are more costly than prescribing drugs, many guardians and physicians resort to the use of relatively cheaper antipsychotic drugs.

This cost may seem small at the moment, but the combined cost is high, as well as the cost in treating side effects is large, as antipsychotics may cause dramatic weight gain, diabeties, and other long term neuro-impacts as discussed before.

Antipsychotics have been the largest drug expenditure for Medicaid for many years. In 2007, Medicaid spent over $2.8 billion on antipsychotics. Since physicians can prescribe the drugs easily without restriction, manufacturers lack economic incentives to conduct clinical trials with children. The GAO (2012) also found that most foster children who were prescribed antipsychotics did not receive any psychosocial or Evidence Based Therapy (EBT), while both show high effectiveness in assistant children with behavioral issues.

Who is responsible? A few agencies in the Department of Health and Human Services (HHS) have responsibilities related to children’s mental health, such as the National Institute of Health (NIH), the Food and Drug Administration (FDA), the Agency for Healthcare Research and Quality (AHRQ), and Centers for Disease Control and Prevention (CDC). The Centers for Medicare & Medicaid Services (CMS) oversees and jointly finances (with the states) the Medicaid and CHIP programs, which provide health coverage for low-income children (Government Accountability Office, 2012).

It is not a new concern that the public has brought to the government’s attention. There are many good recommendations, best practices, guidelines, and oversight plans issued by federal agencies and state governments. As a condition of receiving federal child welfare grant funding, state child welfare agencies must annually submit plans to ACF that, among other things, address the mental and other health needs of foster children. In 2011, the Child and Family Services Improvement and Innovation Act (Child Improvement Act) required states, as part of these plans, to identify protocols for monitoring foster children’s use of psychotropic medications and to address how emotional trauma associated with children’s maltreatment and removal from their home will be monitored and treated. Prior to the Child Improvement Act, many states had already implemented policies and practices regarding prescribing psychotropic medications for foster children, such as issuing written guidelines for prescribers, collecting data to monitor prescribing, requiring informed consent from relevant parties before filling a prescription, and requiring consultation with a mental health specialist for prescriptions exceeding certain dosage thresholds. However, the enforcement of these rules has been terribly lacking. In a randomly selected audit by GAO, out of the 26 states that already have a guideline in overseeing the health of foster children, six states were audited and none have any monitoring programs for antipsychotic prescription for children (Government Accountability Office, 2011).

HHS invested in the effort of understanding antipsychotics and other non-medicine therapeutic treatment for children with behavioral issues and mental illness. HHSs spent an estimated $1.2 billion on children’s mental health research projects in 2008 through 2011. The CDC spent about $2.7 million on two external research projects in 2008 through 2011, while the NICHD spent about $218 million to sponsor research projects related to mental health in children during the same years (Government Accountability Office, 2012).

I have a few ideas on how to better manage these issues. I believe the quality of health care for foster children comes from the collaboration of many parties: FDA regulators and lawmakers, CMS and state monitoring programs, research driven by both government and pharmaceutical companies, case workers for the foster children programs, and the public.

First of all, since FDA is the driving force and gatekeeper who has the power to influence pharmaceutical companies, the regulations on how antipsychotic drugs should be prescribed to children must change. Currently, some states have a “second opinion” program that allows physicians to work with experts in pediatric psychiatry to better pinpoint the child’s behavioral issue’s root cause. However, these programs are not well publicized and many physicians do not use it. In terms of prescription regulations, the FDA could require pharmaceutical companies to print warning information on the prescription and supply education and training services to physicians. To resolve the low supply of psychiatrists, CMS should provide incentives for psychiatrists to accept Medicaid.

Secondly, states should enforce the programs to monitor foster children’s mental health status. The good news is that almost half of the states have completed or at least started the design of mentoring programs for antipsychotics drug uses on children on Medicaid. The bad news, however, is that very little has been done to implement the programs. CMS should pressure the states and follow through these programs.

The other party that we shall not forget is the caseworkers. Oftentimes, caseworkers are overloaded with cases, and each case is just as complex as the other. To reduce the paper load and help caseworkers better manage psychiatry needs for foster children, electronic document management tools and trained specialty assistance can be provided. Reporting a foster child with psychiatry needs should be easy and quick, which itself will be an incentive to many caseworkers.

Last but not least, the public should be educated on the truth and myth about antipsychotics before they make a decision to use these drugs. This way, families would have a fair discussion with their physicians before they give the drugs to their children.


Alliance for Natural Health. (2013). Medicaid is drowning our kids in toxic psychiatric drugs! Retrieved from

Bachmann, C.J., Lempp, T., Glaeske, G., & Hoffmann, F. (2014). Antipsychotic prescription in children and adolescents. Retrieved from

Crystal, S., Akincigil, A., Binder, S., & Walkup, J. (2014). Studying prescription drug use and outcomes with Medicaid claims data: Strengths, limitations, and strategies. Medical Care, 11(45):S58-65. Doi: 10.1097/MLR.0b013e31805371bf.

Crystal, S., Olfson, M., Huang, C., Pincus, H., & Gerhard, T. (2009). Broadened use of atypical antipsychotics: Safety, effectiveness, and policy changes. Health Affairs, 28(5): w770–w781. doi:10.1377/hlthaff.28.5.w770

Department of Health and Human Services. (2012). 2012 actuarial report on the financial outlook for Medicaid. Retrieved from

Department of Health and Human Services. (2013). 2013 actuarial report on the financial outlook for Medicaid. Retrieved from

Government Accountability Office. (2011). Foster children: HHS guidance could help states improve oversight of psychotropic prescriptions. Retrieved from

Government Accountability Office. (2012). Children’s mental health. Retrieved from

Harrison, J.N., Cluxton-Keller, F., & Gross, D. (2012.) Antipsychotic medicaiton prescribing trends in children and adolescents. Journal of Pediatric Health Care, 26(2): 139-45. Doi:10.1016/j.pedhc.2011.10.009.

Lagnado, L. (2013.) U.S. probes psych drug use on kids. Wall Street Journal, Eastern Edition, August 12.

Verdier, J.M. & Zlatinov, A. (2013.) Trends and patterns in the use of prescription drugs among Medicaid beneficiaries: 1999 to 2009. Mathematica Policy Research. REtrieved from

Vitiello, B., Correll, C., van Zwieten-Boot, B., Zuddas, A., Parellada, M., & Arango, C. (2009.) Antipsychotics in children and adolescents: Increasing use, evidence for efficacy and safety concerns. European Neuropsychopharmacology, 19(9): 629-35. Doi:10.1016/j.euroneuro.2009.04.008.

Wilson, D. (2009.) Poor children likelier to get antipsychotics. The New York Times. Retrieved from


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