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The high demand for treatment for children with behavioral and substance abuse problems has led Montana health officials to spend Medicaid funds to send kids, including those who are foster children and wards of the state, to residential programs in other states with less stringent oversight.

This story also appeared in Kaiser Health News

Some of those children have been sent to out-of-state programs that have been accused of abuse and mistreatment, according to documents from state agencies and media reports.

Shipping those kids out of state for treatment for behavioral and substance use disorders comes with a high price tag, and often the children’s issues are not resolved or are even worse, said Michael Chavers, CEO of Yellowstone Boys and Girls Ranch. “When they return to us, they return with worse outcomes and for higher cost,” Chavers told Montana lawmakers last fall.

In 2019, Montana increased its oversight of private alternative treatment programs for young people, abolishing an industry-controlled oversight board and making the programs subject to Montana Department of Public Health and Human Services’ regulations and inspections. By the end of 2020, 11 of the 19 programs operating in Montana had closed.

This month, approximately 90 children from Montana were attending facilities approved by Montana’s Medicaid program in 10 other states, according to state officials. The facilities were in Arkansas, Florida, Georgia, Iowa, Kansas, Mississippi, Oklahoma, Tennessee, Utah, and Wyoming.

By comparison, Medicaid paid for 171 Montana children to be treated at in-state psychiatric residential facilities and 407 kids to live in in-state therapeutic group homes during the state’s previous fiscal year, which ended June 30, according to health department officials.

Nearly all the out-of-state programs that have been approved by Montana’s Medicaid program and are currently housing kids from Montana have faced allegations of abuse or have histories of noncompliance with state regulations, according to state documents, inspection reports, and investigations by news organizations.

Jon Ebelt, a Montana health department spokesperson, confirmed that there have been reports of abuse or neglect of young people from Montana at out-of-state facilities during the past two years, although he did not specify which facilities or how many reports. In some cases, Montana has moved young people from out-of-state programs because of concerns about facilities, he added, without providing details.

The state where an allegation of abuse or neglect of a Montana child occurs is responsible for investigating it, Ebelt said.

Why Out of State?

The majority of children attending out-of-state Medicaid-funded treatment facilities are sent by their parents or guardians, although some are referred by the state health department’s Child and Family Services Division or by the state’s juvenile justice system as wards of the state, Ebelt said.

Kids are sent to programs out of state because of a lack of available beds at in-state facilities stemming from the state’s low rate of reimbursement and staffing shortages, said program administrators of Montana’s psychiatric residential treatment facilities and therapeutic group homes. In-state providers are reimbursed an average of $405 per day per child, while out-of-state providers are reimbursed an average of $615 per day per child.

For the fiscal year that ended June 30, Montana spent a total of $12.6 million for out-of-state psychiatric residential treatment facility stays and $4.7 million for out-of-state therapeutic group home stays, Ebelt said.

“It is always our preference to serve youth with serious emotional disturbances in or near their home communities,” Ebelt said. “However, sometimes, due to a variety of factors, including acuity of symptoms, need for specialized care, or in-state bed availability, youth are referred to out-of-state providers.”

Among the programs eligible for Montana Medicaid and that are currently housing kids from Montana is Provo Canyon School in Utah, where Paris Hilton and hundreds of other students have alleged they were abused, according to lawsuits, former students who have shared accusations about abuse at the program, news organizations’ investigations, and state documents. Those allegations led Utah to increase oversight of residential youth programs.

When reached for comment, Provo Canyon School sent a statement, last updated in August 2021, that says Provo does not “condone or promote any form of abuse” and that the program is “committed to providing high-quality care to youth with special, and often complex, emotional, behavioral and psychiatric needs.”

Montana is also sending kids to another Utah facility, Falcon Ridge Ranch, an employee of which was arrested and charged with multiple counts of sexual battery and distributing harmful material to minors in March 2021, according to the St. George Spectrum & Daily News. The employee pleaded guilty to three misdemeanor counts of sexual battery in a plea agreement with prosecutors in January, said Cade Stubbs, the clerk of court for Utah’s 5th District Court. Falcon Ridge Ranch was owned by Sequel Youth and Family Services at the time, and is now owned by Rite of Passage.

Minnesota, Oregon, and Maryland stopped sending children to Sequel programs after the May 2020 death of a 16-year-old student at a Michigan facility. Cornelius Frederick died after staff members restrained him at Sequel’s now-closed Lakeside Academy, according to an investigation report by Michigan child welfare officials. California and Washington also severed ties with Sequel after an article published by APM Reports in September 2020 detailed abuse and noncompliance with state regulations at Sequel facilities across the country.

An investigation by The Imprint and the San Francisco Chronicle found that of the hundreds of alleged violations or deficiencies at Sequel facilities that child welfare officials in California and other states have investigated, more than 75% resulted in confirmation by state authorities that violations had occurred.

Officials from Sequel did not respond to multiple requests for comment.

Regulatory Confusion

A January report from the federal Government Accountability Office found that monitoring out-of-state youth treatment facilities is difficult because of “state challenges in collecting and reporting facility-level information.” It also found that different definitions of maltreatment, fear of retaliation, and the inability of the residents to communicate with others outside the program posed challenges for reporting maltreatment and data collection.

The report found that federal agencies have been inconsistent in addressing state and federal program noncompliance and recommended improved state oversight and stronger enforcement to hold facilities accountable.

Oregon state Sen. Sara Gelser Blouin, a Democrat from Corvallis, experienced those regulatory problems firsthand when she was investigating reports that Oregon children had been mistreated at Sequel’s Northern Illinois Academy in 2019.

Gelser Blouin said she contacted Oregon’s abuse investigator and the state health department but found no agency officials able to investigate the matter. Gelser Blouin then contacted officials in Illinois she thought might have the authority to investigate Northern Illinois Academy, with the same result.

“Nobody thought they had the authority to investigate,” Gelser Blouin said. “They just kept saying, ‘Well they’re accredited by the Joint Commission.’ So I called the Joint Commission, and the Joint Commission told me that they are not a ‘Betty Crocker seal of approval’ for child safety.”

The Joint Commission is a private organization that accredits health care organizations and programs in the United States and is funded primarily by the fees it charges facilities for accreditation. In some states, accreditation from the Joint Commission can relieve treatment facilities of oversight from most other organizations.

At Gelser Blouin’s request, the federal Centers for Medicare & Medicaid Services initiated an unannounced survey of Northern Illinois Academy. CMS surveyors declared all the kids at Northern Illinois Academy at immediate risk of serious injury or death.

One month earlier, in November 2019, the Joint Commission had reaccredited all Sequel facilities, including Northern Illinois Academy, in a pilot systemwide accreditation.

Northern Illinois Academy closed last year after a state-funded report by a disability-rights organization documented allegations of abuse and neglect, leading the state to remove all the kids in its care.

Oregon and California Lead With Bans

Oregon and California are the only states that have passed legislation to prevent young people from being placed in facilities that are not overseen by a youth’s home state.

California banned the practice of sending foster children charged with crimes to out-of-state programs in July 2021. That same month, Oregon, driven largely by the work of Gelser Blouin, became the first and only state to require any out-of-state facility housing Oregon children to comply with Oregon regulations and be licensed by the Oregon Department of Human Services.

Gelser Blouin is now working with other youth rights advocates, including Paris Hilton, to champion a federal bill called the Accountability for Congregate Care Act. It would establish standard regulations and common definitions for abuse and treatment across the states and identify the rights of children in institutional settings.

The bill would also create a federal database to track placements of young people, critical incident reports, and complaints, among other information. Currently, complaints against programs are funneled through various state agencies and accrediting bodies.

In Montana, for example, Ebelt said complaints about out-of-state programs housing Montana’s young people can be filed in various ways “due to the various people and entities who interact with or have oversight of out-of-state programs.”

The bill would also define different types of programs, which Caroline Lorson, an advocate working on the federal legislation, said is at the heart of the need for change.

“They all have different requirements, they all have different standards, and they all have different agencies that interact with them, and that’s why they’ve been hard to regulate,” Lorson said.

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