The Slatest

States Can Now Provide Broader Mental Health Care Using Medicaid Funds

U.S. Secretary of Health and Human Services Alex Azar speaks on prescription drugs for the market during the 2018 National Academy of Medicine Annual Meeting October 15.
U.S. Secretary of Health and Human Services Alex Azar speaks on prescription drugs for the market during the 2018 National Academy of Medicine Annual Meeting October 15. Alex Wong/Getty Images

People with mental illness, especially the most severe cases, will have more options for treatment now that the federal Medicaid program will let states use Medicaid funds for care in large residential institutions.

In a speech Tuesday to state Medicaid directors, Health and Human Services Secretary Alex Azar said the Centers for Medicare and Medicaid Services will allow states to seek waivers from a rule known as an “IMD exclusion,” so states can carry out more inpatient mental health treatment for Medicaid beneficiaries. The “institution for mental disease” exclusion rule has prohibited states from using Medicaid funding to cover treatments in mental health facilities with more than 16 beds, such as state mental hospitals. The rule was put in place when Medicaid was enacted in 1965 with good intentions—to prevent states from using federal funds to “warehouse” patients into their facilities, which in the past typically provided substandard treatment, often in horrific conditions.

However, the growing number of people suffering from the opioid crisis and the perception that mental illness was a factor in recent mass shootings have prompted the Trump administration to add flexibility to the IMD exclusion, according to the AP.

“We have the worst of both worlds: limited access to inpatient treatment and limited access to other options,” Azar said. “More treatment options are needed, and that includes more inpatient and residential options that can help stabilize Americans with serious mental illness.”

In his speech, Azar mentioned how his agency granted similar waivers in the past to help patients with substance use disorders, first under the Obama administration in 2015 and under the current administration last year, when it approved 13 waivers. So far, the CMS has approved waivers for Medicaid-funded substance abuse treatment for 17 states.

Virginia has benefited from this waiver. An expansion in the number of spots for residential drug treatment programs in 2016 coincided with a 39 percent decrease in opioid-related emergency room visits and a 31 percent decrease in all substance-use-related emergency room visits, according to the Trump administration.

The waiver is likely to benefit people with the most severe mental illnesses, said Angela Kimball, national director of advocacy and public policy at the National Alliance on Mental Illness.

“We’re talking about people with severe mental health conditions that are likely to end up on the streets, in hospitals or even worse, in jail,” Kimball said. “The IMD restrictions tied the hands of delivering the best quality care, but this is opening the door to allow states to do a better job.”

CMS also emphasized the importance for states to provide a “continuum” of care on top of short-term inpatient treatments that this waiver will allow. The letter pointed out that people with serious mental health issues often end up in inpatient facilities when they could be receiving better care from community-based treatments or peer support.

“We will strongly emphasize that inpatient treatment is just one part of what needs to be a complete continuum of care,” Azar said, “and participating states will be expected to take action to improve community-based mental health care.”

While Kimball agrees, she believes the new waiver expansion is critical regardless of what other changes states make.

“When CMS came out with this [letter], they were leaving a breadcrumb trail emphasizing that states need to be responsive, provide peer support, and community-based services that will keep people out of inpatient care and hospitals,” Kimball said. “But we recognize some people will need that inpatient, intensive care and states ought to be able to bill Medicaid for it. It’s the fair and equal thing to do.”