“Landmark” Decision: Federal Government Will Okay Medicaid To Pay For Residential Treatment Beds

(11-14-18) U.S. Health and Human Services Secretary Alex M. Azar II announced yesterday that the Trump Administration will allow states to apply for Medicaid waivers so the federal government can begin paying for mental health treatment delivered in inpatient settings known as IMDs, or institutions of mental disease.

This is a major change that most recently was requested in a  September 12 letter written by National Alliance on Mental Illness CEO Mary Giliberti and signed by eleven of the fourteen non-federal members of the Interdepartmental Serious Mental Illness Coordinating Committee. As a member of ISMICC, I signed that letter. The move was backed by Assistant Secretary for Mental Health Dr. Elinore F. McCance-Katz.

Azar’s announcement should lead to more Americans with serious mental illnesses being able to get short-term, in-patient residential care because the federal government will pay for it.

Approximately 10.4 million adults in the United States had an SMI  (serious mental illness) in 2016, but only 65 percent received mental health services in that year.

Attempts in Congress to overturn the so-called IMD Medicaid Exclusion, which prohibits the use of federal Medicaid financing for care provided to most patients in mental health and substance use disorder residential treatment facilities larger than 16 beds, failed because of lobbying by groups that argued eliminating it would lead to a greater use of inpatient hospital beds and the construction of more hospital-like residential facilities rather than spending federal funds for community services. In the House during hearings about a major overhaul of mental health services, Democrats successfully kept Republicans from removing the IMD exclusion. Granting waivers gives states a pathway around the IMD Exclusion and its supporters.

Azar made the announcement during a speech to the National Association of Medicaid Directors 2018 Fall Conference in Washington D.C..

“Many of you know the history of why Medicaid doesn’t pay for inpatient mental health treatment: The policy was conceived to discourage states, who traditionally provided mental health care, from offloading these responsibilities onto the Medicaid program. But around the same time Medicaid was implemented, states were already pulling back on their investments in treating mental illness—often with good intentions, of course, because this support went to house Americans with mental illness in inhumane conditions that never should have been tolerated.  

“But today, we have the worst of both worlds: limited access to inpatient treatment and limited access to other options. Given the history, it is the responsibility of state and federal governments together, alongside communities and families, to right this wrong. More treatment options are needed, and that includes more inpatient and residential options that can help stabilize Americans with serious mental illness.  

“That is why, today, CMS will be sending a letter to state Medicaid directors laying out how to apply for waivers that provide flexibility around the IMD exclusion for treating patients with serious mental illness.

Several months ago, the Trump Administration announced it would begin offering IMD waivers to states for substance abuse treatment (SUD waivers). This was in response to the opioid crisis. At the time, NAMI and other advocacy groups, including the Treatment Advocacy Center, argued that HHS should grant waivers for mental health services too.

In a press release, HHS stressed that states who apply for waivers also must beef up their community treatment services.

“More treatment options for serious mental illness are needed, and that includes more inpatient and residential options. As with the SUD (drug treatment) waivers, we will strongly emphasize that inpatient treatment is just one part of what needs to be a complete continuum of care, and participating states will be expected to take action to improve community-based mental health care. There are effective methods for treating the seriously mentally ill in the outpatient setting, which have a strong track record of success and which this administration supports. We can support both inpatient and outpatient investments at the same time. Both tools are necessary, and both are too hard to access today.”

In a press release, NAMI CEO Giliberti noted:

While this policy (IMD Exclusion) was intended to reduce inhumane institutionalization, it also resulted in unequal coverage of mental health and, tragically, a lack of appropriate options for people with severe mental health conditions. If we treated other chronic conditions this way, far more people would die from diabetes, epilepsy, hypertension and heart disease.

On September 12th, NAMI and 11 of our colleagues on the Interdepartmental Serious Mental Illness Coordinating Committee (ISMICC) sent a letter to Administrator Seema Verma of the Centers for Medicare & Medicaid Services, calling for Medicaid to cover care provided in inpatient settings, or IMDs and strengthen quality and continuity of care to community services.

The ISMICC letter also asked for greater flexibility to pay for evidence-based outpatient services to reduce reliance on hospitalization, such as Coordinated Specialty Care in early psychosis programs and Assertive Community Treatment (ACT) teams. We are so pleased that our recommendations were well received and are being implemented. These changes will make a positive impact on people living with severe mental illness.

“This is a landmark day for people living with severe mental illness and their families,” according to Mary Giliberti, NAMI’s CEO. “ISMICC played a key role in changing the paradigm from neglect to one of care and compassion for the millions of children, youth and adults of all ages who live with serious mental illness in America. We’re grateful that the Administration listened and provided the flexibility and direction for states to improve access to continuity of care for millions of Americans and their families.”

Click here to read the department’s new guidelines. 

Click here to read Secretary Azar’s speech.

Click here to read NAMI’s press release. 2018 11 13 NAMI Statement on Innovative Service Delivery final

Click here to read HHS Press release. 11-13-2018 Press Release SMI SED SMDL

Click here to read HHS Press release about waivers for opioid use. 11.01.17 Press Release-SUD-v3

About the author:

Pete Earley is the bestselling author of such books as The Hot House and Crazy. When he is not spending time with his family, he tours the globe advocating for mental health reform.

Learn more about Pete.