United States General Accounting Office 

Washington, DC 20548 

August 11, 2003 

ERRATA 

CHILD WELFARE AND JUVENILE JUSTICE: Several Factors Influence the 

Placement of Children Solely to Obtain Mental Health Services (GAO-03-865T, July 

17, 2003) 

Page 6, paragraph at bottom of page, last sentence (and carrying over to page 7) 

should read: 

“Child welfare directors in 6 other states and the District of Columbia advised us that 

their states do not allow parents to place children voluntarily with child welfare 

agencies to access such services.7

” 

Page 7, footnote 7 should read: 

“The 6 states are Florida, Hawaii, Missouri, Montana, New Hampshire, and Texas, 

based on information received in response to our survey concerning placements in 

fiscal year 2001. However, New Hampshire indicated that the state introduced 

voluntary services in state fiscal year 2002 and that it anticipates that some parents 

will seek placement for their children.” 

Page 11, Table 2, the following states should have only the following table notes: 

“Georgia c” 

“Kansas c” 

“Montana d” 

Page 12, Table 2, table note ‘d’ should read: 

“

d

The practice of voluntary placement or relinquishment is either not legal in the state 

or the state generally does not allow parents to place their children solely to receive 

mental health services.” 
 

Testimony 

Before the Committee on Governmental 

Affairs, U.S. Senate 

United States General Accounting Office 

GAO

For Release on Delivery 

Expected at 9:30 a.m. EDT 

Thursday, July 17, 2003 CHILD WELFARE AND 

JUVENILE JUSTICE 

Several Factors Influence 

the Placement of Children 

Solely to Obtain Mental 

Health Services 

Statement of Cornelia M. Ashby, Director 

Education, Workforce, and Income Security Issues 

GAO-03-865T 
Child welfare directors in 19 states and juvenile justice officials in 30 

counties estimated that in fiscal year 2001 parents placed over 12,700 

children into the child welfare or juvenile justice systems so that these 

children could receive mental health services. Nationwide, this number is 

likely higher because many state child welfare directors did not provide data 

and we had limited coverage of county juvenile justice officials. Although no 

agency tracks these children or maintains data on their characteristics, 

officials said most are male, adolescent, often have multiple problems, and 

many exhibit behaviors that threaten the safety of themselves and others. 

Neither the child welfare nor the juvenile justice system was designed to 

serve children who have not been abused or neglected, or who have not 

committed a delinquent act. According to officials in the 6 states we visited, 

limitations of both public and private health insurance, inadequate supplies 

of some mental health services, difficulties accessing services through 

mental health agencies and schools, and difficulties meeting eligibility rules 

for services influence such placements. Despite guidance issued by the 

various federal agencies with responsibilities for serving children with 

mental illness, misunderstandings among state and local officials regarding 

the roles of the various agencies that provide such services pose additional 

challenges to parents seeking such services for their children. 

Officials in the states we visited identified practices that they believe may 

reduce the need for some child welfare or juvenile justice placements. 

These included finding new ways to reduce the cost of or fund mental health 

services, bringing services into a single location to improve access, and 

expanding the array of available services. Few of these practices have been 

rigorously evaluated. 

In a related report, we recommended that (1) the Secretary of Health and 

Human Services (HHS) and the Attorney General investigate the feasibility 

of tracking these children to identify the extent and outcomes of these 

placements, (2) the Secretaries of HHS and Education and the Attorney 

General develop an interagency working group to identify the causes of the 

misunderstandings and create an action plan to address those causes, and 

(3) the agencies continue to encourage states to evaluate the child mental 

health programs that states fund or initiate and that they determine the most 

effective means of disseminating the results of these and other available 

studies to state and local entities. In commenting on a draft of that report, 

Education, HHS, and the Department of Justice generally agreed with our 

findings but did not fully concur with the recommendations, particularly 

related to tracking the children. All three agencies said they would 

participate in any interagency working group that might be established 

based on our recommendation. 

Recent news articles in over 30 

states and prominent mental health 

advocacy organizations have 

described the difficulty many 

parents have in accessing mental 

health services for their children. 

As these reports documented, 

some parents choose to place their 

children in the child welfare or 

juvenile justice systems in order to 

obtain the mental health services 

that their children need. Senators 

Susan Collins and Joseph 

Lieberman of the Senate 

Committee on Governmental 

Affairs asked GAO to testify on: (1) 

the number and characteristics of 

children voluntarily placed in the 

child welfare and juvenile justice 

systems to receive mental health 

services, (2) the factors that 

influence such placements, and (3) 

promising state and local practices 

that may reduce the need for child 

welfare and juvenile justice 

placements. This testimony is 

based on our April 2003 report on 

the results of a study addressing 

these same objectives. For that 

report, we surveyed state child 

welfare directors in all states and 

the District of Columbia and 

juvenile justice officials in 33 

counties in the 17 states with the 

largest populations of children 

under age 18. We surveyed juvenile 

justice officials at the county level 

because of the decentralized nature 

of the juvenile justice system. We 

also researched laws and 

regulations and conducted site 

visits to 6 states. 

 

www.gao.gov/cgi-bin/getrpt?GAO-03-865T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Cornelia Ashby 

at (202) 512-8403 or ashbyc@gao.gov. 

Highlights of GAO-03-865T, a testimony 

for the Committee on Governmental 

Affairs, United States Senate 

July 2003

CHILD WELARE AND JUVENILE JUSTICE

Several Factors Influence the Placement 

of Children Solely to Obtain Mental Health 

Services 
Page 1 GAO-03-865T 

Madam Chairman and Members of the Committee: 

Thank you for inviting me here today to discuss how federal agencies 

could do more to help states reduce the number of children placed in child 

welfare and juvenile justice systems solely to obtain mental health 

services. As recent news articles in over 30 states and prominent mental 

health advocacy organizations have reported, many parents have difficulty 

accessing mental health services for their children with severe mental 

illnesses.1

 In some cases, parents must choose to remove their children 

from their homes and seek alternative living arrangements by 

inappropriately placing them in the child welfare or juvenile justice system 

to obtain mental health services—two systems not designed to care for 

children solely because of their mental health needs.2

 Various federal laws 

require that state and local agencies provide services to mentally ill 

children in the most integrated setting appropriate to their needs; that is, 

children have a right to receive services in their communities unless their 

needs can only be met by the state in residential or institutional 

placements. 

My testimony today will focus on three key issues: (1) the numbers and 

characteristics of children voluntarily placed in the child welfare and 

juvenile justice systems in order to receive mental health services, (2) the 

 1

Federal agencies and states have varying definitions for children with serious emotional 

disturbances (SED). For example, the Department of Health and Human Services’ (HHS) 

Substance Abuse and Mental Health Services Administration (SAMHSA) defines SED as a 

diagnosable mental disorder found in persons from birth to 18 years of age that is so severe 

and long lasting that it seriously interferes with functioning in family, school, community, 

or other major life activities. Because of these differences, we use the term “children with 

severe mental illness” to describe such children throughout this statement. 

2

Child welfare systems are designed to protect children who have been abused or neglected 

by, for example, placing children in foster care or providing family preservation services; 

and juvenile justice systems are designed to rehabilitate children who have committed 

criminal or delinquent acts or status offenses—that is, according to the Department of 

Justice (DOJ), behaviors that are law violations only if committed by juveniles—and to 

prevent such acts from occurring. Consequently, the goals of these systems and the 

background and training of their staff reflect these purposes. In addition, parents cannot 

voluntarily place their children in the juvenile justice system. Children are detained in this 

system as a result of their delinquent acts or status offenses. However, parents sometimes 

request that police arrest their children for behaviors that are related to or stem from their 

mental illness when they cannot obtain services through other means. In this statement, we 

use the term “placed” to refer both to children who have been voluntarily placed in the 

child welfare system and children who enter the juvenile justice system to receive mental 

health services. Because information was not available, we were not able to report on 

whether parents relinquished custody of their children to obtain the services. 
Page 2 GAO-03-865T 

factors that influence such placements, and (3) state and local practices 

that may reduce the need for some child welfare and juvenile justice 

placements. My comments are based on the findings from our April 2003 

report, Child Welfare and Juvenile Justice: Federal Agencies Could Play a 

Stronger Role in Helping States Reduce the Number of Children Placed 

Solely to Obtain Mental Health Services (GAO-03-397, April 21, 2003). In 

conducting that study, we analyzed responses to our survey of state child 

welfare directors in all states and the District of Columbia and our survey 

of juvenile justice officials in 33 counties in the 17 states with the largest 

populations of children under age 18. We surveyed juvenile justice officials 

at the county level, rather than at the state level, because of the 

decentralized nature of the juvenile justice system. In addition, we 

interviewed officials of child-serving agencies,3

 caseworkers, and parents 

in 6 states (Arkansas, California, Kansas, Maryland, Minnesota, and New 

Jersey) and judges in each state we visited except Minnesota.4

 We also 

observed programs that state officials identified as model programs in 

those 6 states; interviewed key federal officials and national experts; and 

researched state laws and regulations regarding voluntary placement and 

relinquishment of parental rights. 

In summary, state child welfare officials in 19 states and county juvenile 

justice officials in 30 counties estimated that in fiscal year 2001 parents in 

their jurisdictions placed over 12,700 children—mostly adolescent males—

into the child welfare or juvenile justice systems so that these children 

could receive mental health services. Nationwide, this number is likely 

higher because 32 state child welfare officials, including officials of 5 

states with the largest populations of children, did not provide us with 

data. However, officials in 11 of those states indicated that although they 

did not have an estimate to provide, such placements occurred in their 

state. Also, we surveyed juvenile justice officials in only 33 counties; 30 of 

which responded with an estimate. Although no federal or state agency 

tracks these children or maintains data on their characteristics, officials 

said most are male, adolescent, and often have multiple problems. Many 

exhibited behavior that threatened their safety and the safety of others. In 

addition, these officials said children who were placed came from families 

of all financial levels and that the seriousness of the child’s illness strained 

the family’s ability to function. 

 3

Child-serving agencies include mental health, Medicaid and State Children’s Health 

Insurance Program (SCHIP), juvenile justice, education, and child welfare. 

4

We did not interview judges in Minnesota primarily due to scheduling conflicts. 
Page 3 GAO-03-865T 

A variety of factors influenced whether parents placed their children in the 

child welfare and juvenile justice systems to receive mental health services 

for them; these included limitations in health insurance coverage, 

shortages of mental health services in some localities, difficulties in 

accessing services through mental health or education agencies, eligibility 

requirements for services provided by different agencies and programs, 

and misunderstandings among state and local officials and service 

providers regarding the responsibilities of various agencies to meet 

children’s mental health needs. For example, despite guidance issued by 

various federal agencies with responsibilities for serving children, state 

and local officials’ views of the roles of their own agency and other 

agencies, such as mental health, child welfare, education, and juvenile 

justice, showed that they misunderstood those roles and, therefore, could 

not effectively give parents complete and accurate information about 

available services their agency and other agencies could provide. 

The state officials that we interviewed identified a range of practices in 

their states that they believe may help to prevent some child welfare and 

juvenile justice placements. These included finding new ways to reduce 

the cost of or to fund mental health services, bringing mental health 

services into a single location to improve access, and expanding the array 

of available services. However, the effectiveness of these practices is 

generally unknown because many were new, few were rigorously 

evaluated, and many served a small number of children or only children in 

specific locations. 

To determine the extent to which children may be placed inappropriately 

in the child welfare and juvenile justice systems in order to obtain mental 

health services, we recommended in our April 2003 report that the 

Secretary of Health and Human Services (HHS) and the Attorney General 

investigate the feasibility of tracking these children to identify the extent 

and outcomes of these placements. To help reduce misunderstandings at 

the state and local level, we also recommended that the Secretaries of 

HHS and Education and the Attorney General develop an interagency 

working group to identify the causes of the misunderstandings and to 

create an action plan to address those causes. We further recommended 

that these agencies continue to encourage states to evaluate the child 

mental health programs that states fund or initiate and that the Secretaries 

of HHS and Education and the Attorney General determine the most 

effective means of disseminating the results of these and other available 

studies to state and local entities. In commenting on a draft of the report, 

the Department of Education, HHS, and DOJ generally agreed with our 

findings but did not fully concur with the recommendations. Education 
Page 4 GAO-03-865T 

said that it did not understand how tracking the children would increase 

the likelihood of progressive practices to provide children’s mental health 

services and noted that no recommendations were made for increased 

grant spending to duplicate or disseminate the positive features of such 

practices. HHS said that asking the agencies to track this population of 

children in foster care does not address the larger point of the lack of 

mental health resources for families and communities and does not 

address the problems of the children or their parents. DOJ agreed that 

tracking should occur, but only in the short term, and said that HHS 

should take the lead in this activity. All three agencies said they would 

participate in any interagency working group that might be established 

based on our recommendation. 

As defined by the President’s New Freedom Commission on Mental 

Health, the mental health system in the United States collectively refers to 

the full array of private and public programs for individuals with mental 

illness that deliver or pay for treatment and services. The federal 

government plays a major role in funding mental health services through 

public insurance—Medicaid and SCHIP—and grants to states and local 

agencies, and state and local governments play a major role in delivering 

services. Most families depend on private and public insurance to pay for 

mental health services because such services are expensive, although, as 

we discussed in a previous report, children may face certain limitations in 

coverage barriers depending on their type of coverage and where they 

live.5

At the federal level, several federal agencies—including HHS’s SAMHSA, 

Centers for Medicare & Medicaid Services (CMS), and the Administration 

for Children and Families (ACF); DOJ’s Office of Juvenile Justice and 

Delinquency Prevention (OJJDP); and Education’s Office of Special 

Education and Rehabilitative Services (OSERS)—have a role in addressing 

the mental health needs of children. However, all have individual 

mandates, target different but often overlapping populations, and share 

responsibilities to varying degrees with state and county agencies. (See 

table 1.) 

 5

U.S. General Accounting Office, Mental Health Services: Effectiveness of Insurance 

Coverage and Federal Programs for Children Who Have Experienced Trauma Largely 

Unknown, GAO-02-813 (Washington, D.C.: Aug. 22, 2002). 

Background 
Page 5 GAO-03-865T 

Table 1: Characteristics of Key Agencies with Responsibilities for Mentally Ill Children 

Department and 

agency Key activities related to children’s mental health Statute 

Population targeted and 

definition of mental illness 

HHS (CMS) Administers the Medicaid and SCHIP programs that 

provide health insurance coverage to certain lowincome individuals and disabled children, including 

some children with severe mental illness. 

Awards research grants. 

Provides technical assistance to state agencies. 

Title XIX of the Social 

Security Act 

Certain low-income individuals 

and certain disabled individuals. 

Uses a clinical classification of 

diseases to identify children with a 

mental illness. 

HHS (ACF) Oversees the Adoption and Safe Families Act 

(ASFA) of 1997 that improves the safety of children 

and promotes adoption and permanent homes for 

children who need them and supports families. 

Administers Title IV-B of the Social Security Act that 

provides funds to states for services that protect the 

welfare of children. For example, these services 

address problems that may result in the abuse and 

neglect of children. The funds may also be used to 

provide services to families of children with a 

mental illness. 

Administers the Title IV-E Foster Care Funds 

Program that provides funds to states to partially 

cover the costs of room and board for eligible 

children from low-income families who are placed in 

approved out-of-home living arrangements. 

Maintains the Adoption and Foster Care Analysis 

and Reporting System (AFCARS), to which states 

report demographic data on children in foster care, 

including diagnoses of mental illness. 

Awards development, training, research, and 

demonstration grants. 

Disseminates research. 

Provides technical assistance. 

Title IV, Part B and 

Part E of the Social 

Security Act 

ASFA 

Children and families. 

Uses a clinical classification to 

identify children with a mental 

illness and accepts classifications 

used by individual states in 

identifying children with mental 

health needs. 

Education 

(OSERS) 

Monitors the implementation of the Individuals with 

Disabilities Education Act (IDEA). IDEA established 

the right of disabled children—including children 

with mental illness—to receive special education 

and related services, such as mental health 

services, designed to meet their unique needs and 

prepare them for employment and independent 

living when such services are needed for children to 

make adequate progress in school. IDEA requires 

schools to evaluate children who are referred for 

special education services and, if services are 

required, develop an individualized education 

program (IEP) that documents the type and 

intensity of services that will be provided. 

Funds formula and discretionary grants. 

Provides technical assistance. 

Disseminates research. 

IDEA Promotes improvement in 

educational results for infants, 

toddlers, and children with 

disabilities. 

Under IDEA, the term “child with a 

disability” means a child, who by 

reason of a physical or mental 

disability, needs special education 

and related services. 
Page 6 GAO-03-865T 

Department and 

agency Key activities related to children’s mental health Statute 

Population targeted and 

definition of mental illness 

HHS (SAMHSA) Provides funds to states and local entities to help 

them administer, support, or establish programs 

that specifically target the mental health needs of 

children and block grant funding that enables states 

to maintain and enhance mental health services. 

Sponsors the Systems of Care Initiative to help 

children and adolescents with serious mental 

illnesses and their families receive a variety of 

services from schools, community mental health 

centers, and social services organizations and 

facilitate coordination among these service 

providers. 

Awards formula and discretionary development and 

demonstration grants. 

Disseminates research. 

Provides technical assistance. 

Public Health Service 

Act 

Individuals with substance abuse 

problems, mental illness, or at risk 

of substance abuse and mental 

illness. 

Children served meet the following 

criteria: 

• age 0 to 18 and 

• have a diagnosed mental, 

behavioral, or emotional 

disorder of sufficient duration 

to meet diagnostic criteria that 

results in impairment that 

substantially interferes with or 

limits the child’s functioning in 

family, school, or community 

activities. 

DOJ (OJJDP) Helps oversee juvenile justice programs across the 

nation and supports states and local communities in 

their efforts to develop and implement effective and 

coordinated prevention and intervention programs. 

Helps improve the juvenile justice system’s ability to 

protect public safety, hold offenders accountable, 

and provide mental health treatment and 

rehabilitative services. 

Funds formula and discretionary grants. 

Provides technical assistance. 

Disseminates research. 

Juvenile Justice and 

Delinquency 

Prevention Act 

Children who commit crimes or 

are delinquent and children at risk 

for delinquency. 

Accepts mental illness 

classifications used by states to 

identify children with mental health 

needs. 

Source: GAO. 

Note: Other agencies, such as HHS’s Social Security Administration, DOJ’s Division of Civil Rights, 

and HHS’s and Education’s Office for Civil Rights, also have responsibilities for children with 

disabilities, including children with a mental illness. 

Federal law does not require parents to relinquish their parental rights to 

place their children with child welfare agencies. However, after children 

are in care for a specific period of time, the law requires that the court be 

involved to determine if termination of the parents’ rights are in the best 

interest of the child. State laws addressing the ability of parents to place 

their children in child welfare systems vary across states. Nationwide, 

laws in 11 states allow parents to place children in child welfare systems 

on a voluntary basis in order to access mental health services for as long 

as necessary without relinquishing custody of the child to the state.6

 Child 

 6

The 11 states are: Alaska, Colorado, Connecticut, Iowa, Maine, Minnesota, North Dakota, 

Oregon, Rhode Island, Wisconsin, and Vermont. 
Page 7 GAO-03-865T 

welfare directors in 6 other states and the District of Columbia advised us 

that their states do not allow parents to place children voluntarily in child 

welfare agencies to access such services.7

 Laws in the remaining states are 

generally silent regarding voluntary placements for mental health. 

Federal agencies with responsibilities for children with mental illness 

support interagency collaboration at the federal and local level. For 

example, officials at SAMHSA are collaborating with officials at Education 

and OJJDP to improve mental health services for children with emotional 

and behavioral disorders who are at risk of violent behavior by developing 

and implementing a large grant program that targets these children. At the 

state and county level, a similar array of agencies provides or funds 

services for mentally ill children, and state and federal laws and policies 

often determine their roles and responsibilities. Importantly, federal 

agencies play a key role in funding research and evaluation studies and 

disseminating the findings of these efforts. For example, SAMSHA, OJJDP, 

and OSERS fund research and evaluation studies that target children with 

mental illness and disseminate the findings of these efforts, descriptions of 

promising practices, and other information through their clearinghouses, 

journals, and Web sites. 

Despite their differences, programs run by agencies at all levels of 

government adhere to the principle of “least restrictive alternative.” Under 

this principal, the state has the burden of demonstrating that state-funded 

out-of-home placements are necessary for the protection of the child or 

society. In 1999, the U.S. Supreme Court established this principle as a 

right for disabled children. In Olmstead v L.C., the Court held that under 

Title II of the Americans with Disabilities Act, states may be required to 

serve people with disabilities in community settings when such 

placements can be reasonably accommodated. 

Mental health treatment can be very expensive, and most families rely 

upon insurance to help cover the cost of these services. For example, one 

outpatient therapy session can cost more than $100, and residential 

treatment facilities, which provides 24 hours of care, 7 days a week, can 

cost $250,000 a year or more. Nationwide, about 87 percent of American 

 7

The 6 states are Florida, Hawaii, Missouri, Montana, New Hampshire, and Texas, based on 

information received in response to our survey concerning placements in fiscal year 2001. 

However, New Hampshire indicated that the state introduced voluntary services in state 

fiscal year 2002 and that it anticipates that some parents will seek placement for their 

children. 
Page 8 GAO-03-865T 

children are covered by private or public health insurance plans. Private 

plans, such as employer-sponsored or individually purchased plans, 

provide health insurance coverage to about 68 percent of American 

children, and public programs, such as Medicaid and SCHIP, provide 

health insurance coverage to about 19 percent.8

Most private health insurance plans offer different coverage for mental 

health services than for physical health services. To ensure more 

comparable coverage, the federal government passed the federal Mental 

Health Parity Act (MHPA) of 1996. MHPA prohibited certain employersponsored group plans from imposing annual or lifetime restrictions on 

mental health benefits that are lower than those imposed on other 

benefits. However, the act did not eliminate other restrictions and 

limitations on mental health coverage, such as limiting the number of 

treatments per year that are reimbursable. In addition, the law does not 

apply to plans sponsored by employers with 50 or fewer employees, group 

plans that experience an increase in plan claims costs of at least 1 percent 

because of compliance, and coverage sold in the individual market. 

According to the National Council of State Legislatures, as of November 

2001, 46 states have passed mental health parity bills. Most of these laws 

meet or exceed the federal MHPA standard. However, the Employee 

Retirement Income Security Act of 1974 preempts states from directly 

regulating self-funded, employer-sponsored health plans; under such 

circumstances, states requirements usually do not apply. 

For more than 30 years, Medicaid has provided comprehensive health 

insurance for children from low-income families. Although individual 

states determine many coverage, eligibility, and administrative details, the 

federal government sets certain requirements for state Medicaid programs. 

These requirements include coverage of screening and necessary 

treatment for children. Under Medicaid, states may apply for and receive 

approval from the federal government to waive certain provisions of the 

Medicaid statute in order to operate a specific program, change the 

benefits offered under Medicaid, or make comprehensive changes to their 

Medicaid or SCHIP programs. For example, states can use the Home and 

Community-Based Services (HCBS) (section 1915(c) of the Social Security 

Act) waiver to provide home and community-based long-term care 

services to targeted groups of individuals who would otherwise require 

 8

U.S. General Accounting Office, Health Insurance: States’ Protections and Programs 

Benefit Some Unemployed Individuals, GAO-03-191 (Washington, D.C.: Oct. 25, 2002). 
Page 9 GAO-03-865T 

care in a hospital, skilled nursing facility, or intermediate care facility. To 

receive the HCBS waiver, states must demonstrate that the cost of the 

services to be provided under the waiver is no more than the cost of 

institutionalized care plus any other Medicaid services provided to 

institutionalized individuals. Additional flexibility is available to states 

under the “Katie Beckett” option, which enables states to use federal 

Medicaid funds more flexibly to cover the costs of health care services in 

the home and community rather than just in institutional settings, 

regardless of the income and assets of the family.9

 States choosing this 

option provide Medicaid coverage for children under age 19 who meet 

certain standards for disability, would be eligible for Medicaid if they were 

in an institution, and are receiving medical care at home that would be 

provided in an institution. Although family income and resources are not 

considered in determining eligibility for services under the Katie Beckett 

option, states can require families to contribute to the cost of the program. 

The Rehabilitation option allows states to provide optional Medicaid 

services such as psychiatric rehabilitation and other diagnostic, screening, 

and preventive services in nonmedical settings. 

States are pursuing a variety of approaches for expanding public health 

insurance for uninsured children from low-income families by 

implementing SCHIP programs. States have three options in designing 

SCHIP programs. For example, 24 states implement SCHIP by expanding 

Medicaid programs to include children from low-income families with 

earnings too high to qualify for Medicaid. Fourteen have developed a 

separate or independent child health insurance program with benefits that 

differ from those offered under Medicaid. Others use a combination of 

Medicaid and non-Medicaid plans to serve children in families at different 

income levels. 

States operating Medicaid programs—including SCHIP Medicaidexpansions—must offer the same benefit package to SCHIP beneficiaries 

 9

This waiver authority for seriously ill children was inspired by the case of a ventilator 

dependent child, Katie Beckett. Katie’s mother successfully argued that the nursing 

services her daughter required could be provided in her home and at a cost less than that of 

providing the same care in a hospital. What resulted was the so-called “Katie Beckett 

Waiver,” enacted as part of the Tax Equity and Fiscal Responsibility Act of 1982. 
Page 10 GAO-03-865T 

as they do to Medicaid beneficiaries.10 These benefits include the Early and 

Periodic Screening, Diagnostic and Treatment (EPSDT) provision that 

requires states to provide children and adolescents under age 21 with 

access to comprehensive, periodic evaluations of physical and mental 

health and developmental and nutritional status, as well as vision, hearing, 

and dental needs. States must provide all services needed for conditions 

discovered through these routine pediatric screenings regardless of 

whether the service is covered by the state Medicaid plan for other 

beneficiaries. In 2000, more than 1 million children were enrolled in SCHIP 

Medicaid expansion programs and were, therefore, eligible for EPSDT 

screens. 

State child welfare and county juvenile justice officials estimated that 

parents in their jurisdictions placed over 12,700 children in fiscal year 

2001, generally adolescent males, in child welfare and juvenile justice 

agencies so that the children could receive mental health services. 

Nationwide, this number is likely higher because officials in 32 states, 

including the 5 states with the largest populations of children, did not 

provide us with estimates. Moreover, we surveyed juvenile justice officials 

in only 33 counties and three did not provide estimates. Only estimates 

were available because no federal or state agency tracked children placed 

to obtain mental health services in a formal or comprehensive manner. 

Officials in the 6 states we visited reported that placed children came from 

families of all financial levels and said that the seriousness of the 

children’s illnesses strained families’ abilities to function. 

State child welfare officials and county juvenile justice officials estimated 

that over 12,700 children entered the child welfare or juvenile justice 

systems in order to receive mental health services in fiscal year 2001. Of 

these children, about 3,700 entered the child welfare system. State child 

welfare officials reported estimates that ranged from 0 to 1,071 children, 

 10A state that chooses a stand-alone or combination SCHIP program may introduce limited 

cost sharing and base its benefit package on one of several benchmarks specified in the 

statute, such as the Federal Employees Health Benefit program, or state coverage. See 42 

U.S.C. §1397cc(a) and (b) and U.S. General Accounting Office, Children’s Health 

Insurance Program: State Implementation Approaches are Evolving, GAO/HEHS-99-65

(Washington, D.C.: May 14, 1999). 

While No Formal 

Tracking Occurs, 

Available Estimates 

Indicate That Many 

Children—Primarily 

Adolescent Males—

Were Placed with the 

State to Access 

Mental Health 

Services 

Some Officials Estimate 

That Parents Placed Over 

12,700 Children to Access 

Mental Health Services 
Page 11 GAO-03-865T 

with a median of 71. Table 2 provides detailed information about the 

estimated number of children placed in the child welfare system. County 

juvenile justice officials reported estimates that totaled to approximately 

9,000 children and ranged from 0 to 1,750, with a median of 140. Table 3 

provides details on the estimated number of children placed in the juvenile 

justice system. 

Table 2: States’ Estimated Number of Children Placed in the Child Welfare System 

to Obtain Mental Health Services in Fiscal Year 2001 

State Number of children placed 

Alaska a 

Alabama 130

Arkansas b 

Arizona b 

California c 

Colorado c 

Connecticut 738

District of Columbia d 

Delaware 0

Florida d 

Georgia c 

Hawaii d 

Iowa b 

Idaho 123

Illinois a 

Indiana 0

Kansas c 

Kentucky 14

Louisiana a 

Massachusetts c 

Maryland 54

Maine b 

Michigan c 

Minnesota 1,071

Missouri d 

Mississippi 13

Montana d 

North Carolina 440

North Dakota b 

Nebraska c 

New Hampshire d 

New Jersey c 

New Mexico c 

Nevada 20
Page 12 GAO-03-865T 

State Number of children placed 

New York c 

Ohio b 

Oklahoma 3

Oregon 101

Pennsylvania 71

Rhode Island 279

South Carolina a 

South Dakota b 

Tennessee b 

Texas d 

Utah b 

Virginia b 

Vermont 60

Washington 423

Wisconsin c 

West Virginia 135

Wyoming 5

Total 3,680

Source: GAO survey. 

a

State did not respond to our survey. 

b

State did not provide the data requested, but indicated that voluntary placement happens. 

c

State did not provide the data requested. 

d

The practice of voluntary placement or relinquishment is either not legal in the state or the state 

generally does not allow parents to place their children solely to receive mental health services. 
Page 13 GAO-03-865T 

Table 3: Estimated Number of Children Placed in the Juvenile Justice System in 33 

Counties to Obtain Mental Health Services in Fiscal Year 2001 

State County Number of children placed 

Arizona Maricopa 60

Arizona Pima 1,750

California Los Angeles a 

California San Diego 200

Colorado El Paso 40

Colorado Jefferson 100

Florida Broward 0

Florida Miami-Dade 999

Georgia Fulton 172

Georgia Gwinnett 100

Illinois Cook 0

Illinois DuPage 35

Indiana Lake 600

Indiana Marion 100

Louisiana Jefferson Parish 50

Michigan Oakland 160

Michigan Wayne 400

New Jersey Bergen a 

New Jersey Middlesex 999

New York Brooklyn 74

New York Queens 49

Ohio Cuyahoga a 

Ohio Franklin 363

Pennsylvania Montgomery 20

Pennsylvania Philadelphia 500

Texas Dallas 200

Texas Harris 200

Virginia Fairfax 350

Virginia Prince William 840

Washington King 575

Washington Pierce 0

Wisconsin Dane 120

Wisconsin Milwaukee 0

Total 9,056

Source: GAO survey. 

a

 County did not provide an estimate of the number of children. 

Nationwide, the number of children placed is likely to be higher. Eleven 

states reported that they could not provide us with an estimate of child 

welfare placements solely to obtain mental health services even though 
Page 14 GAO-03-865T 

they were aware that such placements occurred. Moreover, officials in 9 

additional states that responded to our survey did not provide an estimate 

and did not mention whether or not parents turned to the child welfare 

system to access mental health services. However, child welfare workers 

we interviewed in 2 of these 9 states—California and New Jersey—told us 

that these placements did in fact occur. Although some of the state child 

welfare officials that we visited in California said children do not enter 

that system to obtain mental health services, county child welfare workers 

said that they knew of such placements and explained how the cases were 

coded in their system. Four states did not respond to the survey.11

Information on the prevalence of children present in the juvenile justice 

system is also limited in this statement since we surveyed only 33 

counties. In 3 of those counties, juvenile justice officials reported that 

while they did not have an estimate to provide, they knew that children 

were entering the system to obtain mental health services because they 

were not able to access such services in other ways. 

Federal and state systems that track children in the juvenile justice and 

child welfare systems do not formally or comprehensively track children 

placed to receive mental health services. For example, ACF’s AFCARS, 

which contains data reported by states about children in foster care or 

adopted out of foster care, does not have a data element that identifies this 

population. Similarly, every 2 years OJJDP conducts the Census of 

Juveniles in Residential Placement, which gathers information on children 

in juvenile residential facilities and their characteristics but no data base 

variable exists to isolate children whose parents sought the help of the 

juvenile justice system to meet children’s mental health needs from other 

children in the juvenile justice system who may also have mental health 

problems. OSERS maintains extensive data about children who receive 

special education services, but data are aggregated at the state level and 

do not include information about who has custody of the child. 

According to our survey of state child welfare directors, placed children 

are more likely to be boys than girls and are more likely to be adolescent. 

Child welfare directors in 19 states reported that, in fiscal year 2001, 65 

percent of placed children were male and 67 percent were between the 

ages of 13 and 18. While juvenile justice officials did not provide 

information about the gender and ages of children placed in their system, 

 11These four states were Alaska, Illinois, Louisiana, and South Carolina. 

Officials Said Placed 

Children Were Mostly 

Adolescent Males with 

Severe Mental Health 

Problems 
Page 15 GAO-03-865T 

children in the juvenile justice population are mostly male and range in 

age from 13 to 18.12

The officials from state and county child-serving agencies and parents we 

interviewed in the 6 states that we visited said that children who were 

placed had severe mental illnesses, sometimes in combination with other 

disorders, and their parents believed they required intense treatment that 

could not be provided in their homes. Many of these children were violent 

and had tried to hurt themselves or others, and often prevented their 

parents from meeting the needs of the other children in the family. For 

example, in Maryland, officials told us about a teenage boy who was 

mentally ill, developmentally disabled, autistic,13 and hospitalized. Because 

the boy was both violent and sexually aggressive, the county told his 

mother that if she brought him home from a stay in the hospital, they 

would remove her other children from the house. Caring for children with 

severe mental illness can also prevent parents from obtaining full-time 

work or cause disruptions in their work lives. For example, an Arkansas 

parent now raising her grandchild does not work because of the time 

necessary to care for her mentally ill granddaughter. State and county 

officials from child-serving agencies in 5 of the 6 states that we visited told 

us that finding placements for children who were mentally ill and who also 

had other developmental disabilities was particularly difficult. Children 

who are placed or are at risk of placement come from families that span a 

variety of economic levels. However, officials from state and county childserving agencies in all 6 states that we visited said children from middle 

class families are more likely to be placed because they are not eligible for 

Medicaid and their families do not have the funds to pay for treatments not 

covered by insurance. 

Multiple factors influence parents’ decisions to place their children in the 

child welfare and juvenile justice systems so that they can obtain mental 

health services. Private health insurance plans often have gaps and 

limitations in the mental health coverage they provide, and not all children 

 12In commenting on a draft of our April 2003 report, DOJ said that, in the absence of formal 

tracking and official data, describing with any certainty the characteristics of youth placed 

voluntarily by their parents in the juvenile justice system is impossible. 

13Autism is a developmental disability typically affecting the processing, integrating, and 

organizing of information that significantly impacts communication, social interaction, 

functional skills, and educational performance. 

Multiple Factors 

Influence Decisions 

to Place Children 
Page 16 GAO-03-865T 

covered by Medicaid received needed services. Even when parents could 

afford mental health services, some could not access services at times 

when they needed those services because supplies of such services were 

inadequate. In other instances, some mental health agencies and schools 

have limited resources to provide mental health services and are required 

to serve children with a mental illness in the least restrictive environment 

possible—which can limit the alternatives available to parents who believe 

their children need residential placements. In other instances, parents 

sometimes have difficulty obtaining all needed services for their children 

in their communities because eligibility requirements for services provided 

by various agencies differ. Furthermore, some officials and service 

providers have misunderstood the role of their own and other agencies 

and, therefore, gave parents inaccurate or incomplete information about 

available services for families. These misunderstandings created gaps in 

services for some children. 

Almost all state child welfare directors and county juvenile justice officials 

who responded to our surveys reported that private health insurance 

limitations were increasing the number of child welfare and juvenile 

justice placements to obtain mental health services, and well over half 

reported Medicaid rules also increased such placements. For example, 

according to parents and state and local officials in all 6 states that we 

visited, many private insurance plans and separate SCHIP plans offered 

limited coverage for traditional or clinical treatments, such as 

psychotherapy or psychiatric consultations,14 and did not cover residential 

treatment placements. In addition, state officials in 3 of the 6 states we 

visited said that Medicaid rules in some states that require the 

preauthorization of services could result in delays and denials of 

community-based services. 

The legislatures in the 6 states that we visited passed health insurance 

parity laws to increase the coverage that was available for mental health 

services by requiring insurance companies to provide mental health 

coverage that was comparable to what they offered for physical health 

care. Although these laws met or exceeded the standard established by the 

federal MHPA, they did not require private plans to cover intensive, long 

term, and nontraditional services such as respite care and wrap-around 

 14These services are generally provided by licensed or certified psychiatrists, psychologists, 

or masters-level social workers. 

Limitations in Private and 

Public Insurance Often 

Restrict Access to Mental 

Health Care, and Some 

Services are Limited 
Page 17 GAO-03-865T 

services.15 Mental health officials and service providers in the states that 

we visited said these services were often necessary to help families 

maintain children with a severe mental illness in their homes. 

Furthermore, federal law preempts states from directly regulating selffunded, employer-sponsored health insurance plans and in doing so 

exempted many families from protection under state laws. 

In the 6 states that we visited, state and local mental health officials agreed 

that Medicaid had far fewer restrictions and limitations than private health 

insurance plans. In addition, mental health officials in Arkansas, 

California, and Maryland told us that differences between private 

insurance and Medicaid programs had created two distinct systems of 

child mental health services. Under these systems, children covered by 

Medicaid had greater coverage for mental health services than children 

covered by private insurance. 

All 6 of the states that we visited covered optional Medicaid and SCHIP 

services by expanding their programs for children with mental illness who 

were ineligible for Medicaid on the basis of their families’ income. These 

included the HCBS waivers, Katie Beckett option, Rehabilitation option, 

and SCHIP programs. 

For example, states used different approaches to expand Medicaid 

coverage. Medicaid officials in Kansas received permission from CMS to 

implement a HCBS waiver to expand coverage for community-based 

mental health services for a limited number of children who are 

chronically mentally ill. Although Medicaid officials in New Jersey 

financed its new child mental health system through a Medicaid 

Rehabilitation option, the option extends Medicaid coverage to only a 

limited number of children who have exhausted benefits under other 

insurance and who have chronic and severe mental illness. This option 

generally provides 60 days of community-based services and limited 

hospitalization.16 Arkansas, Maryland, and Minnesota used Medicaid’s 

 15Respite care refers to the supervision of mentally ill or other disabled children by a 

trained caretaker for brief periods of time in order to provide parents relief from the strain 

of caring for a child with serious mental illness. Wrap-around services encompass a variety 

of community supports, including counseling, mentoring, tutoring, and economic services 

that are designed to meet the individual needs of children and their families. 

16In commenting on a draft of our April 2003 report, a Kansas official said that the state had 

expanded the services the state provides under the Rehabilitation option and does not limit 

the services to 60 days, but bases services on the individual clinical and medical needs of 

the child. 
Page 18 GAO-03-865T 

Katie Beckett option to expand Medicaid coverage to physically or 

mentally disabled children who meet CMS’s requirements for institutional 

care. Arkansas’ program did not require parents to pay into the program to 

receive services, but Minnesota’s program required parents to pay 

according to their ability as defined by a sliding scale. 

Although Medicaid’s EPSDT provision requires Medicaid coverage for all 

necessary physical and mental health services that are identified during 

routine periodic screening as long as the treatment is reimbursable under 

federal Medicaid guidelines, some state officials said many eligible 

children are unable to access necessary services through Medicaid 

because practitioners in the states implement EPSDT unevenly. For 

example, a Medicaid official in Maryland told us that the implementation 

of EPSDT varied from county to county. Medicaid officials in California 

said implementation varied from practitioner to practitioner although 

access to EPSDT services was increasing as a result of litigation. These 

officials explained that some practitioners are reluctant to recommend 

services if such services are not available, some do not have the time to 

question parents about their child’s mental health, and others are not well 

informed about children’s mental health issues. In a July 2001 report, we 

recommended that the Administrator of CMS work with states to develop 

criteria and timelines for consistently assessing and improving EPSDT 

reporting and provision of services.17 As we stated in that report, 

comprehensive national data on the implementation of EPSDT are needed 

to judge states’ success in implementing EPSDT requirements. 

Low Medicaid reimbursement rates may restrict the participation of some 

practitioners and thus further restrict services. In all 6 states, officials 

from a variety of agencies said Medicaid rates for some services are lower 

than the usual and customary rates in their areas and, in some areas, 

psychiatrists and psychotherapists will not accept Medicaid patients or 

expand the number that they are presently seeing because of low Medicaid 

reimbursements. For example, a psychologist in Minnesota told us that 

Medicaid reimbursement for a psychotherapy session is about half the 

customary rate, and a mental health official in New Jersey said that 

Medicaid reimburses only $5 per visit for monitoring the use and effects of 

psychotherapeutic medication. 

 17U.S. General Accounting Office, Medicaid: Stronger Efforts Needed to Ensure Children’s 

Access to Health Screening Services, GAO-01-749 (Washington, D.C.: July 13, 2001). 
Page 19 GAO-03-865T 

Even when insurance covered the costs of mental health services, some 

mental health officials and parents indicated all parents could not access 

services or placements in their community because the supplies of these 

services were limited. Fifteen of the 28 child welfare officials and 9 of the 

23 juvenile justice officials who responded to our survey question on the 

relationship between community mental health services and voluntary 

placements indicated that the lack of such services increased voluntary 

placements. In every site we visited, officials of state and local childserving agencies and parents reported inadequate supplies of mental 

health service providers and specialized mental health placements. Many 

of these officials said that shortages of child psychiatrists, child 

psychologists, respite care workers, and behavior therapists existed on 

statewide levels and were worse in rural areas. Also, specialized, out-ofhome mental health placements, such as psychiatric in-patient services 

and residential treatment facilities, were often not available or had long 

waiting lists. For example, Arkansas officials said that the state has no 

state-run psychiatric hospital placements for children under age 12, and, in 

California, some children have to wait about 8 months for a residential 

placement. Officials in 3 states noted that relatively fewer residential 

placements are available for girls than are available for boys and that few 

placements would accept children with histories of arson and sexual 

aggression. Moreover, these officials noted children placed in the child 

welfare or juvenile justice systems received preference for services, 

particularly when the services were court-ordered. 

In the 6 states that we visited, limited resources in mental health agencies 

and public schools to fund mental health services and agency officials’ 

attempts to minimize the use of residential services posed additional 

challenges for parents seeking services and placements for their children. 

In addition, some children who needed multiple supports experienced 

gaps in services because of differences in the eligibility requirements for 

obtaining such services. Moreover, some officials and service providers 

often misunderstood the responsibilities and resources of their own and 

other agencies and communicated the misunderstandings to parents, 

compounding service gaps and delays. 

According to some mental health and education officials, budgetary 

shortfalls in the 6 states that we visited contributed to agencies’ attempts 

to cut or control costs, including the cost of mental health services. Mental 

health agencies used a variety of strategies to control costs, such as 

reducing spending, requiring that services covered by Medicaid be 

approved before they are provided, and limiting the number of children 

Difficulties Accessing 

Services through Certain 

Agencies, Difficulties in 

Meeting Service Eligibility 

Requirements, and 

Misunderstandings among 

Officials and Service 

Providers Can Influence 

Placements 

Difficulties Accessing Services 

through Mental Health or 

Education Agencies 
Page 20 GAO-03-865T 

served. In each state we visited, some parents believed the strategies 

affected the quality of the services their children received and created 

unnecessary delays in getting services. In Arkansas, private, nonprofit 

mental health providers that contract with the state to provide community 

mental health said that state officials cut their funding and, as a result, 

they had to reduce the length of treatment sessions and increase the length 

of waiting lists. In Arkansas, Maryland, and New Jersey, state officials said 

that they contracted with private, nonprofit agencies to authorize the 

medical necessity of mental health services covered by Medicaid. 

Arkansas required preauthorization of all Medicaid-financed mental health 

services, including those that were legally required, such as the screening 

of foster children for mental health services. A variety of officials in this 

state and a parent reported that the preauthorization agency often denied 

services for children because they had not benefited from similar services 

in the past. For example, this parent said the preauthorization agency 

refused her son’s therapist’s request to hospitalize him to treat his suicidal 

behavior because past hospitalizations for suicide attempts had not 

reduced the behavior. In New Jersey, state mental health officials reduced 

the number of counties that had been targeted to implement the state’s 

new child mental health system and limited the number of children served 

by the system. For example, officials from a variety of county agencies 

reported that the new system of care limited the number of children 

receiving the highest level of care in their county to 180 a year, although 

juvenile justice officials said that at least 500 children in their system alone 

needed such services. Officials from child welfare, mental health, and 

juvenile justice agencies said eligible children who did not receive the 

highest level of care were placed on waiting lists and provided less 

intensive services. 

Officials from a variety of county agencies and some parents also reported 

that public schools in their county—in order to control costs—were often 

reluctant to provide individualized mental health services for special 

education children beyond services that are routinely available. For 

example, child welfare officials in 3 locations we visited said schools fit 

children with a mental illness into preexisting programs, and school 

officials in two of these locations agreed, stating that children’s IEPs could 

only contain services that were available in the schools. Almost all the 

parents that we interviewed said that school officials were reluctant to 

evaluate their children to determine eligibility for special education 

services or provide specialized services for them. For example, a parent of 

a child with a mental illness in Kansas said officials in her daughter’s 

school refused to evaluate the child for a year and a half. After the 

evaluation, the school recommended that the child work with a learning 
Page 21 GAO-03-865T 

disability specialist for 30 minutes a week, even though the parent said this 

service was insufficient and did not address her daughter’s destructive, 

violent, and aggressive behavior. 

As a result of the difficulties encountered at both mental health agencies 

and schools, some parents could not access the community-based services 

they needed to care for their child at home nor place their child in a 

residential treatment facility. In 4 of the 6 states that we visited, some 

teachers and mental health service providers encouraged parents to refuse 

to bring their child home from a hospital or other supervised placement, 

such as a detention center, when they were informed their child was being 

discharged in order to obtain mental services from child welfare agencies. 

Although these parents realized they were abandoning their child and, as a 

result, could be arrested and lose custody, they believed that this was the 

only alternative that remained to obtain services. Some parents that we 

interviewed told child welfare workers they would physically abuse their 

child in their presence to force them to place the child in their system if 

they could not get help for their child any other way, and juvenile justice 

officials told us other parents asked the police to arrest their children. 

However, officials in 2 of the states that we visited said children often 

remain hospitalized for months without appropriate services because child 

welfare agencies did not have the resources to provide the needed level of 

services or specialized placement, could not obtain resources from other 

agencies, or could not access appropriate services or placements that had 

the capacity to treat another child. In addition, although federal law does 

not require custody relinquishment to obtain mental health services, state 

child welfare officials in two states that we visited said that their state 

required parents to relinquish custody of their child to the state after the 

voluntary placement period ends. In one state, these officials 

misconstrued federal requirements and believed that they required 

relinquishment and in the other state, officials said relinquishment enabled 

them to have more control over the child’s care. 

Eligibility requirements for obtaining mental health services pose several 

challenges for parents. For example, state and local Medicaid officials in 3 

states told us that some children lose their eligibility for Medicaid-funded 

services because their families’ income increased beyond Medicaid’s 

threshold or move in and out of eligibility as their families’ income 

fluctuates. Also, some child welfare officials said some children receive 

Medicaid because they are in foster care and lose their eligibility when 

they return home if the family is not eligible. Alternatively, juvenile justice 

officials in 6 states said that children in juvenile justice correctional or 

Difficulties Meeting Eligibility 

Requirements for Mental 

Health Services 
Page 22 GAO-03-865T 

detention facilities lose Medicaid eligibility and have to reapply to resume 

coverage when they are released from the facility. 

In addition, in all 6 of the school districts we visited, schools used different 

eligibility criteria for mental health services than mental health or other 

child-serving agencies in their area. For example, school officials in 4 

districts told us that some mentally ill children are not eligible for mental 

health services through their special education programs because they 

were making adequate educational progress or because behavior 

problems—rather than mental illness—prevented them from making 

adequate progress. However, mental health officials who work with 

children attending some of these schools reported that schools often have 

a narrow definition of educational progress and do not recognize that 

inappropriate behavior might be a symptom of mental illness. For 

example, a parent of a child with attention deficit18 and bipolar19 disorders 

said her son’s school refused to provide special education services for him 

because his lack of educational progress was due to his failure to pay 

attention and to get his work done, rather than his mental illness, and a 

parent of a bipolar, schizophrenic20 son said school officials told her that 

she was responsible for her son’s behavior and poor school performance. 

Although a variety of officials said schools had more restrictive eligibility 

requirements for mental health than other child-serving agencies, school 

officials in a county in California said that their county mental health 

agency used a more restrictive definition than the schools. In California, 

state law required that county mental health agencies treat children 

covered by Medicaid and SCHIP who were diagnosed as SED or who were 

eligible for special education services.21 California also requires that 

children be evaluated by county mental health agencies and fit a statutory 

definition of SED. School officials said that these children get priority and 

their services consumed all available county child mental health 

resources. According to these officials, other children, including children 

 18Attention deficit disorder is a syndrome characterized by serious and persistent 

difficulties in attention span, impulse control, and, sometimes, hyperactivity. 

19Bipolar disorder is characterized by the occurrence of one or more major depressive 

episodes accompanied by at least one manic episode over a brief time interval. 

20Schizophrenia is a cluster of disorders characterized by delusions, hallucinations, 

disordered thinking, and emotional unresponsiveness. 

21The California legislature transferred the responsibility for providing mental health 

services to children in special education from schools to counties in the late 1980s. 
Page 23 GAO-03-865T 

with dual diagnoses of mental illness and substance abuse, mental 

retardation, or autism-related disorders and children without the required 

diagnoses have to wait for county mental health services or might not 

receive services at all, although some may receive services through their 

school guidance counselors or social workers. 

Program officials’ and service providers’ misunderstandings of agencies’ 

responsibilities and resources also affect service provision. For example, 

misunderstandings about Medicaid coverage created gaps and delays in 

services. In 3 states, some state and county officials did not know the 

Katie Beckett option could expand Medicaid coverage for children with a 

mental illness regardless of family status. In one of these states, a parent 

told us that county Medicaid officials incorrectly told her that her son was 

ineligible for coverage under this option because he had a two-parent 

family. In 2 other states, county mental health officials erroneously told us 

that this option applied only to children with very severe medical 

conditions. In another state, a Medicaid official did not know that children 

enrolled in SCHIP Medicaid expansion programs were eligible for EPSDT 

services. Furthermore, state child welfare officials in 2 states and mental 

health workers in a third did not know Medicaid’s EPSDT provision 

includes mental health screenings, diagnosis, and treatment and thought 

the provision covered only physical health services. 

In all 6 states, some parents, a variety of state and local officials, mental 

health service providers, caseworkers, and judges misunderstood the role 

and responsibilities of schools in implementing IDEA. For example, some 

parents we interviewed in 5 of these states said that their children waited 

over a year to receive special education services because they and the 

mental health professionals they worked with did not understand the 

procedures IDEA required schools to follow. For example, some parents 

were told that referrals for special education had to be in writing. Also, 

some parents and professionals misunderstood that IDEA gives all eligible 

children, including children with a mental illness, the right to a free 

appropriate education and parents did not know that they could appeal a 

school’s decision about providing special education services. For example, 

a parent in Kansas agreed to home-school her 10-year old, sexually 

aggressive, child with a mental illness because the school would not put 

the child in a setting that would ensure the safety of his classmates. 

Despite her long-term involvement with a community mental health 

agency, this parent believed home schooling was her child’s only option. 

Misunderstandings of Agencies’ 

Responsibilities and Resources 
Page 24 GAO-03-865T 

Although few strategies were developed specifically to prevent mental 

health-related child welfare and juvenile justice placements, state and 

local officials identified a range of practices that they believe may prevent 

such placements by addressing key issues that have limited access to child 

mental health services in their state. State and local practices focused on 

three main areas: finding new ways to reduce costs or to fund services, 

consolidating services in a single location, and expanding community 

mental health services and supporting families. Although some programs 

were modeled on practices that had been evaluated in other settings, the 

effectiveness of the practices is unknown because many of them were 

implemented on a small scale in one location or with a small target group 

or were too new to be rigorously evaluated. 

According to officials in the 6 states that we visited, one way to reduce the 

cost of services is to better match children’s needs to the appropriate level 

of service. One goal of some of the programs we reviewed was to ensure 

that children with lower-level needs were served with lower-level and less 

expensive services, reserving the more expensive services for children 

with more severe mental illnesses. Under New Jersey’s Systems of Care 

Initiative, the state contracted with a private, nonprofit organization for a 

variety of services, such as mental health screenings and assessments to 

determine the level of care needed, authorization of service, insurance 

determination, billing, and care coordination across all agencies involved 

with the children. When the Initiative is fully implemented statewide, the 

contractor in each county will use standardized tools to assess children’s 

mental health and uniform protocols to determine appropriate levels of 

care. Children requiring lower levels of care will be referred to 

community-based providers, while children requiring a higher level of care 

will be approved to receive services from local Care Management 

Organizations specifically created to serve them. Presently, the System of 

Care Initiative has been implemented in 5 of the state’s 21 counties. 

As another cost-saving method, some programs substituted expensive 

traditional mental health providers with nontraditional and less expensive 

providers. Many state and local officials we interviewed in 5 of the states 

we visited told us that the historic way to treat children with a mental 

illness included psychiatrists and residential placements. However, 

officials in New Jersey, Kansas, and Minnesota said their states had 

switched their focus to using less expensive providers such as using 

nurses to distribute medicines instead of psychiatrists or nontraditional 

bachelors-level workers for case management instead of masters-level 

social workers. For example, Uniting Networks for Youth—a private, 

States Have 

Developed a Range of 

Practices That May 

Reduce the Need for 

Some Mental HealthRelated Child Welfare 

and Juvenile Justice 

Placements 

Finding New Ways to 

Reduce Costs or to Fund 

Services May Help 

Agencies Pay for Mental 

Health Treatment 
Page 25 GAO-03-865T 

county-based provider in Minnesota—used two commercially available, 

highly structured programs that allowed them to substitute lowercredentialed bachelor-level staff under the supervision of a masters-level 

clinician as the primary service provider instead of using higher-level 

clinicians. County officials told us this structured program has many 

safeguards, including the collection of extensive data from providers, 

teachers, and families that allow masters-level clinicians to review the 

appropriateness and effectiveness of provided mental health services. 

In addition to reducing the cost of services, state officials in all 6 states 

identified the blending of funds from multiple sources as another way to 

pay for services, thus working around agencies’ limitations on the types of 

mental health services and placement settings each can fund. For example, 

in a county in Maryland, a local Coordinating Council blends funds from 

multiple agencies to provide community-based services to children with a 

mental illness involved with the judicial, child welfare, and mental health 

systems and with district special education programs. The Council, headed 

by a judge, leveraged funding by inviting key decision makers—those who 

could commit resources—from a variety of child-serving agencies and 

organizations, including the local departments of social services and 

juvenile justice, the public defenders office, prosecutors, attorneys, and 

Catholic Charities, to serve on the Council. 

In addition to blending funds to pay for services, state officials in 4 of the 6 

the states that we visited identified the use of flexible funds, with few 

restrictions, to pay for nontraditional services that are not generally 

allowable under state guidelines. For example, Arkansas’s Together We 

Can Program used flexible funds from a federal Social Services Block 

Grant, state general revenue, and the Title IV-B program to provide a wide 

array of nontraditional supportive services, such as in-home counseling, 

community activities, respite care, mentoring, tutoring, clothing, and 

furniture that helped the family care for the child at home and supported 

the child in his community. 

To improve access to mental health services and bring clarity to a 

confusing mental health system, 3 of the states that we visited developed a 

facility to be a single point of entry into the mental health system. 

Typically, several agencies are represented at the facility and children are 

assessed with a common instrument and eligible for the same services 

regardless of what agency had primary responsibility. Kansas’s Shawnee 

County Child and Family Resource Center is a one-stop facility and, 

according to state mental health officials, a model for the rest of the state. 

Bringing Mental Health 

Services into a Single 

Location May Improve 

Access 
Page 26 GAO-03-865T 

The center houses workers from 11 social services agencies, including 

mental health, child welfare, juvenile justice, and education. All children 

with mental health needs, regardless of which agency first encountered 

the child, are referred to the center. Case managers at the Center assess 

the child’s psychological, educational, and functional needs, determine 

appropriate services and placements, make referrals, provide direct 

counseling services, and determine how to pay for services. The facility 

includes four bedrooms for children who need to be removed from their 

homes for short periods of time and a secure juvenile justice intake suite 

that is staffed 24 hours a day. 

State officials in all 6 of the states that we visited also identified colocating services in public facilities such as schools and community 

centers as another way to improve access. In Harford County, Maryland, 

for example, mental health services are collocated at an elementary school 

specifically to improve access to care for students with a mental illness. 

Using county health and mental health funds, the school developed an inhouse mental health clinic that provides mental health services through a 

bachelors-level social worker, a nurse practitioner, and consultative 

services from a physician and a psychiatrist. In addition, the school has a 

variety of internal support staff available to children with a mental illness, 

including a guidance counselor, a behavior specialist, a home visitor who 

supports families and assesses the home situation, and a pupil personnel 

worker who visits homes and helps with transportation issues. The school 

has several programs available to children with a mental illness, including 

an intensive, in-school program staffed with a full-time school 

psychologist; a mentoring program that is run by paid school staff, high 

school students, and volunteer community members; a program that 

provides counseling, tutoring, recreation, social skills groups, home visits, 

referrals, and some psychiatric rehabilitation services; a program to 

identify elementary school children with a mental illness and increase 

their access to services; and two collaborative programs with contracted 

mental health providers that provide community support and prevention 

services and intensive case management services. 
Page 27 GAO-03-865T 

Officials from child-serving agencies in all 6 states we visited identified the 

expansion of the number and range of community-based services to 

provide an entire continuum of care as a way to improve treatment for 

children with a mental illness. Some programs we reviewed developed a 

complete range of community-based mental health services for children, 

including early intervention, diversion,22 transitional services, and crisis 

intervention. In addition, some programs supported families of children 

with a mental illness and encouraged parent involvement in their 

children’s care. Examples of these programs follow. 

Early Intervention: Working with local hospitals, workers from the 

Family Service and Guidance Center in Shawnee County, Kansas, screen 

newborns in local hospitals. If babies appear at-risk, social workers 

conduct home visits and refer families to health care professionals or 

others for support. The Center also developed a therapeutic preschool 

practice directed at 3-5 year old children, with or without a mental illness 

diagnosis, who were likely to need special education services when they 

entered kindergarten. The program serves 32-36 children and provides a 

half-day of services. 

Diversion: Los Angeles’ Juvenile Alternative Defense Effort (JADE) was 

designed to prevent or reduce the time of expensive juvenile justice 

placements for youths with mental illness, by arranging assessments, 

providing referrals to mental health providers and advocating for these 

youth to ensure they receive the treatment they need. Upon referral to 

JADE, a psychiatric social worker performs an extensive psychosocial 

evaluation, including a developmental history, family history, and 

educational history that includes failures and successes, delinquency 

behaviors, and a mental health status exam. Based on the evaluation, the 

social worker makes placement and service recommendations to the 

juvenile court judge. JADE officials said that the evaluations and 

recommendations give the judges the information they need to consider 

alternatives to incarceration. 

Transitional Services: State and county juvenile justice and mental 

health officials in all 6 states we visited stressed the importance of 

including transitional services in a continuum of care. These services are 

typically provided to a child leaving a residential setting and returning to 

 22Diversion programs attempt to prevent or reduce the time children spend in inappropriate 

placements. 

Expanding Community 

Mental Health Services and 

Supporting Families May 

Improve Treatment for 

Children with a Mental 

Illness 
Page 28 GAO-03-865T 

his or her home or community. For example, Minnesota’s Red Wing facility 

is a secure juvenile justice facility that provides in-house mental health 

services and places a strong focus on transitional services so youth can 

successfully reenter their own community. The transition program is 

designed with various levels that allow youth who exhibit good behavior 

to move to lower levels of supervision. For instance, at level 4, youth begin 

to transition back to the community by making periodic visits to their 

homes. At level 5, youth move to a transitional living unit at Red Wing that 

focuses on applying new skills to activities in their homes and 

communities. After youth leave Red Wing, a county juvenile justice worker 

monitors them for 90 days. 

Crisis Intervention: Programs we reviewed in 4 states had a mobile 

crisis unit consisting of teams of staff that visit homes to stabilize crisis 

situations. Funding, staffing, and authority of these teams vary. Some of 

the crisis teams can provide direct mental health services; others conduct 

assessments and make emergency petitions to psychiatric hospitals on 

behalf of the family. One of the difficulties noted by program officials is 

determining how to pay for crisis services since these services may not be 

covered by insurance and families may not have the ability to pay. In 

Harford County, Maryland, the mobile crisis team is not a fee-for-service 

provider but is funded by a grant. The team—a psychiatrist, a psychologist, 

and a licensed social worker—provide direct mental health services and 

are authorized to make emergency petitions to get a child with a mental 

illness admitted to a hospital psychiatric unit. 

A second way some states improve treatment for children with a mental 

illness is to provide services to support families and encourage parental 

involvement in their child’s care. State and local officials in all 6 states 

pointed out that involving parents was a fundamental change in 

philosophy. Previously, services were provided solely to the children and 

parents were not included in the decisions about their child’s care. Now, 

the focus is on providing the services parents need to maintain the child in 

the home and helping parents make informed decisions about their child’s 

care. For example, The Sycamores, a residential mental health facility in 

Los Angeles County, California, works extensively with parents of children 

with severe mental illness at its facility and requires their participation. 

The Sycamores also provides a variety of supportive services, including 

household items and services such as transportation to and from the 

facility. In addition, as part of its transitional program, The Sycamores 

uses Therapeutic Behavioral Services (TBS), one-on-one services provided 

whenever needed 24 hours a day, 7 days a week to assist youth in 
Page 29 GAO-03-865T 

maintaining their current living situation and in developing the coping and 

problem-solving skills needed. 

Some parents are placing their children, mostly adolescent boys with 

severe mental illness, in the child welfare and juvenile justice systems to 

access mental health services. Although these children may not have been 

abused or neglected, or may not have committed a criminal or delinquent 

act, parents are turning to these agencies because they see no alternatives 

for obtaining comprehensive services for them. Because federal, state, and 

local agencies do not systematically track these children, the extent and 

outcomes of these placements are not fully known. To determine the 

extent to which children may be placed inappropriately in the child 

welfare and juvenile justice systems in order to obtain mental health 

services, we recommended in our April 2003 report that the Secretary of 

HHS and the Attorney General investigate the feasibility of tracking these 

children to determine the extent and outcomes of these placements. In 

commenting on a draft of that report, DOJ agreed that tracking should 

take place, but only in the short term, and that HHS should take the lead in 

such an effort. HHS said that asking agencies to track this population does 

not address the lack of mental health resources for families and 

communities and does not address the problems of the children and their 

families. However, we believe that knowledge of the extent of this practice 

is a necessary first step to determine what corrective actions might be 

taken and may be useful in identifying which progressive practices will 

most benefit these children. 

Experts, agency officials, and service providers agree that agencies must 

work together to meet the needs of children with severe mental illness 

because these children have complex problems and are likely to need 

services from multiple agencies if they are to remain in their communities 

or if they are to successfully transition from a residential facility back to 

their communities. However, in some cases, state and local officials’ 

misunderstandings of each agency’s service requirements, responsibilities, 

and resources prevent the provision of interagency services that have the 

potential to address the needs of these children and their families. In our 

April 2003 report, we recommended that the Secretaries of HHS and 

Education and the Attorney General develop an interagency working 

group (including representatives from CMS, SAMHSA, and ACF) to 

identify the causes of these misunderstandings and to create an action 

plan to address those causes. All three agencies said they would 

participate in any interagency working group that might be established 

based on our recommendation and DOJ recommended using the existing 

Concluding 

Observations 
Page 30 GAO-03-865T 

Coordinating Council on Juvenile Justice and Delinquency Prevention for 

the purposes we stated. We believe several organizational entities may be 

appropriate and that the member agencies forming this group should 

determine the entity that is best suited. 

Although states and counties are implementing practices that may reduce 

the need for parents to place their children with child welfare or juvenile 

justice agencies, many of the programs are new, small, and only serve 

children in specific localities. Furthermore, their effectiveness in achieving 

their multiple goals—such as reducing the cost of mental health services, 

supporting families, and helping children overcome their mental 

illnesses—has not yet been fully evaluated. Given that states and localities 

are developing new approaches to meeting the needs of children with 

mental illness, it is important that the federal government continue its role 

in supporting evaluations of these programs and disseminating the results. 

To further such efforts, we recommended in the report that the agencies 

continue to encourage states to evaluate the child mental health programs 

that the states fund or initiate. In commenting on a draft of our April 2003 

report, Education said that no recommendations were made for increased 

grant spending to duplicate or disseminate the positive features of the 

practices we highlighted. As a result, we added a recommendation that the 

Secretaries of HHS and Education and the Attorney General determine the 

most effective means of disseminating the results of these and other 

available studies to state and local entities. 

Madam Chairman, this concludes my prepared statement. I would be 

pleased to respond to any questions that you or other members of the 

Committee may have. 

For further contacts regarding this testimony, please call Cornelia M. 

Ashby at (202) 512-8403. Individuals making key contributions to this 

testimony include Diana Pietrowiak and Kathleen D. White. 

GAO Contact and 

Acknowledgments 
Page 31 GAO-03-865T 

Child Welfare and Juvenile Justice: Federal Agencies Could Play a 

Stronger Role in Helping States Reduce the Number of Children Placed 

Solely to Obtain Mental Health Services. GAO-03-397. Washington, D.C.: 

April 21, 2003. 

Medicaid and SCHIP: States Use Varying Approaches to Monitor 

Children’s Access to Care. GAO-03-222. Washington, D.C.: January 14, 

2003. 

Mental Health Services: Effectiveness of Insurance Coverage and Federal 

Programs for Children Who Have Experienced Trauma Largely 

Unknown. GAO-02-813. Washington, D.C.: August 22, 2002. 

Medicaid and SCHIP: Recent HHS Approvals of Demonstration Waiver 

Projects Raise Concerns. GAO-02-817. Washington, D.C.: July 12, 2002. 

Foster Care: Recent Legislation Helps States Focus on Finding 

Permanent Homes for Children, but Longstanding Barriers Remain. 

GAO-02-585. Washington, D.C.: June 28, 2002. 

Long-term Care: Implications of Supreme Court’s Olmstead Decision 

Are Still Unfolding. GAO-01-1167T. Washington, D.C.: September 24, 2001. 

Medicaid and SCHIP: States’ Enrollment and Payment Policies Can 

Affect Children’s Access to Care. GAO-01-883. Washington, D.C.: 

September 10, 2001. 

Medicaid: Stronger Efforts Needed to Ensure Children’s Access to Health 

Screening Services. GAO-01-749. Washington, D.C.: July 13, 2001. 

Medicaid Managed Care: States’ Safeguards for Children With Special 

Needs Vary Significantly. GAO/HEHS-00-169. Washington, D.C.: 

September 29, 2000. 

Children with Disabilities: Medicaid Can Offer Important Benefits and 

Services. GAO/T-HEHS-00-152. Washington, D.C.: July 12, 2000. 

Mental Health Parity Act: Employer’s Mental Health Benefits Remain 

Limited Despite New Federal Standards. GAO/T-HEHS-00-113. 

Washington, D.C.: May 18, 2000. 

Related GAO Products 
Page 32 GAO-03-865T 

Mental Health Parity Act: Despite New Federal Standards, Mental Health 

Benefits Remain Limited. GAO/HEHS-00-95. Washington, D.C.: May 10, 

2000. 

Medicaid Managed Care: Challenges in Implementing Safeguards for 

Children with Special Needs. GAO/HEHS-00-37. Washington, D.C.: March 

3, 2000. 

Children’s Health Insurance Program: State Implementation Approaches 

are Evolving, GAO/HEHS-99-65. Washington, D.C.: May 14, 1999. 

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