Substance abuse

Opioid Crisis Drives Push to End Medicaid Treatment Exclusion

Advocates for the use of federal Medicaid funds to help patients recover from opioids are pushing to renew legislation that allows this temporarily and to find a permanent solution.

Medicaid prohibits states from using federal funds for inpatient and residential substance use disorder treatment in “institutions for mental diseases,” such as psychiatric hospitals, with over 16 beds for up to 30 days per year—a provision known as the “IMD exclusion.” The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act, or SUPPORT Act, (Public Law 115-271) provides temporary workarounds, but it will expire Sept. 30 unless Congress renews it.

Some lawmakers and patient advocates are pushing to get rid of the IMD exclusion, which is part of the original Medicaid statute, and was designed to prevent states from shifting their mental health expenses to the federal government. Many now see it as hampering the fight against opioids and as discriminatory in that it treats mental health differently from other health issues.

New legislation by Reps. Michael Burgess (R-Texas) and Ritchie Torres (D-N.Y.) seeks to permanently lift the IMD exclusion by extending coverage to 45 days and implementing timely treatment assessments.

“There needs to be some certainty and the IMD exclusion itself, in my opinion, made it harder to provide care to people,” Burgess said in an interview. “The IMD exclusion prevents more beds being available to Medicaid patients, when they’re in a crisis situation, whether it’s a problem from addiction or any other mental health crisis.”

Waiving the Rules

The Centers for Medicare & Medicaid Services has approved Section 1115 waivers allowing 35 states to temporarily lift the IMD exclusion. Section 1115 of the Social Security Act allows the CMS to approve experimental, pilot, or demonstration projects to give states flexibility to design and improve their Medicaid programs.

The SUPPORT Act includes a state plan option to provide Medicaid coverage of enrollees ages 21 to 64 with at least one substance use disorder who are patients in an eligible IMD for no more than 30 days during a 12-month period. But, so far, Tennessee and South Dakota are the only states to pursue such a state plan option.

One Democrat expressed concern about making the state plan option permanent during a House Energy and Commerce Health subcommittee hearing June 21.

“We should acknowledge that this policy has not lived up to the expectation of its supporters and should not look to be permanently extended,” Rep. Frank Pallone (D-N.J.) said. “I think it would be far better off allowing states to cover IMD stays with the 1115 waivers, which CMS does not need any additional statutory authority to approve rather than doubling down on what I considered a failed approach of the state plan amendment.”

The CMS approved the state plan amendment faster than it approved the 1115 waiver, Jonathan Blum, principal deputy administrator and chief operating officer for the CMS, said in the hearing.

States opted for waivers instead of state plans due to the Covid-19 disruption, said Shawn Coughlin, president of the National Association for Behavioral Healthcare, which was closely involved in developing the state plan option in 2018.

“The state plan amendment being made to permanent option will be a much more attractive alternative for states moving forward because it’s a permanent adjustment as opposed to a time-limited waiver that has to be renewed and may or may not be supported by subsequent administrations,” Coughlin said.

The 1115 waivers offer more negotiation flexibility, while state plan options have a simpler application process and are more “uniform and broad-based,” said Jack Rollins, director of federal policy of the National Association of Medicaid Directors. He said the waivers have a “budget neutrality” requirement where federal spending does not exceed what would have been spent on the state’s Medicaid program.

“It’s going to be a really tough sell for health systems or community providers to expand services in ways that they can’t be reimbursed for,” Mitchell Crawford, medical director of specialized treatment and recovery and director of addiction services at WellSpan Health, testified before the House health panel June 9.

As the Centers for Disease Control and Prevention reported more than 71,000 people died from a synthetic opioid overdose in 2021, 94% of people aged 12 or older with a substance use disorder did not receive any treatment, according to the 2021 national survey of Substance Abuse and Mental Health Services Administration.

Rollins said the IMD exclusion undermines Congress’s policy goals, hindering the creation of crisis stabilization centers and Qualified Residential Treatment Facilities for foster youth. He added if these settings have over 16 beds, they may be classified as IMDs and lose eligibility for Medicaid match.

Notable Fiscal Impact

Permanently extending the state plan option would result in a net increase of federal Medicaid expenditures by $155 million to $560 million from 2024 to 2033, according to the Congressional Budget Office report in April. If the exclusion is eliminated, federal Medicaid expenditures would increase by $7.7 billion.

Jennifer Lav, a senior attorney in the National Health Law Program, said funding would be better spent focusing on barriers to care, including improving access to medication within communities and eliminating barriers such as long-distance travel.

The state plan amendment says treatment sites have to offer at least two kinds of medications on site whereas the waivers say patients just have to be offered access to it, Lav said.

She said lifting the IMD exclusion is an example of “misuse of Section 1115 waivers” since the repeated approvals of waivers beyond the experimental time frame, despite the availability of state plan options, contradicts the original purpose of testing novel approaches and pilot programs.

Other Options

“We are hopeful that it will be extended past September. If the SUPPORT Act option is not extended, then we will consider other options to ensure that we’re able to continue providing this care to our members,” Amy Lawrence, the spokesperson for TennCare, wrote in an email.

The CMS’s interpretation of “persons with mental diseases” to encompass substance use disorders has prompted stakeholders to push for language revisions that explicitly exclude individuals with substance use disorders from the IMD definition, according to Gabrielle de la Guéronnière, vice president of health and justice policy at Legal Action Center. She added that raising the 16-bed cap would be another way to allow larger facilities to fall outside the scope of the IMD exclusion.

“It’s been a little bit oversimplified in that people think you either have the exclusion or you don’t,” Lav said, adding that states can choose to reduce facility size or use acute care hospital settings to provide substance use disorder treatment services.

States that have managed care systems can use the in-lieu of payments option to cover services 15 days per month. An in-lieu of service is a service that is not included under the state plan, but is a clinically appropriate, cost-effective substitution for a similar, covered service.

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