APA Applauds New Opportunity for States to Use Medicaid for Inpatient MH Care

APA is applauding a Trump administration guidance encouraging states to improve community-based mental health care that would also allow federal Medicaid financing for short-term residential care for serious mental illness (SMI).

The guidance, mandated by the 21st Century Cures Act, was written by the Centers for Medicare and Medicaid Services (CMS) and issued in a letter to state Medicaid directors. It offers a new opportunity for states to apply to use federal Medicaid financing for patients aged 21 to 64 who have SMI and need residential treatment in a facility with more than 16 beds (known as institutions for mental disease, or IMDs).

“We applaud the administration for encouraging states to strengthen their community-based and inpatient residential treatment options to provide a continuum of care for individuals with serious mental illness,” said APA CEO and Medical Director Saul Levin, M.D., M.P.A. “Nearly 4 in 10 adults with serious mental illness do not receive care. APA is also pleased that CMS is seeking state expansion of evidence-based treatments, such as telepsychiatry, the collaborative care model, and early intervention for psychosis.”

At the same time, Levin expressed concern about another Medicaid demonstration project approved by CMS: Medicaid work requirements. “These limit access to care for those most in need,” Levin said.

Seven states had obtained waivers from CMS to implement work and work-reporting requirements as of January 5 (Arkansas, Indiana, Kentucky, Maine, Michigan, New Hampshire, and Wisconsin). Arkansas was the first state to implement work requirements, which took effect in June of last year. Since then, nearly 17,000 of the state’s most vulnerable residents have lost their health coverage as a result. Another eight states have requests to add work requirements pending with CMS.

Medicaid is the single largest payer of mental health services, and more than a quarter of adults with SMI rely on Medicaid coverage for their care.States are barred from using federal Medicaid financing for treating most adults in IMDs in a provision of the Social Security Act known as the “IMD exclusion.” However, one year ago, CMS began allowing states to apply for exceptions known as “Section 1115 waivers” to cover short-term treatment of people with substance use disorders (SUD) at such facilities as part of a state’s overall plan to address the opioid epidemic. To date, 17 states have been granted such waivers by CMS. About 3.4 million nonelderly Medicaid beneficiaries have a substance use disorder.

Early results are promising: since implementing its program, the state of Virginia has seen opioid-related emergency department (ED) visits drop 39 percent and substance-use related ED visits drop 31 percent.

The guidance outlines initiatives states may use to expand and improve service delivery systems for adults with SMI and children with serious emotional disturbance (SED). These include telepsychiatry, the Collaborative Care Model, and the coordinated specialty care model, which helps identify and engage individuals with psychosis early in the course of their illness.

States that wish to participate by expanding mental health care are expected to take a number of steps: improve community-based care, ensure good quality of care in IMDs, improve handoffs to community-based care following acute care stays, ensure a continuum of care is available to address the chronic needs of individuals with SMI and SED, provide a full array of crisis-stabilization services, and engage beneficiaries in early intervention treatment. At the same time, state plans must be budget neutral, CMS advised.

CMS will allow states that gain approval under these new waivers to begin receiving federal financing for short-term residential care for patients with serious mental illness in IMDs. Such patients must have a primary mental illness diagnosis and be hospitalized for treatment purposes. The guidance gives a path forward for the 12 states that have shown interest in expanding access to both community-based and residential mental health and substance abuse treatment.

The guidance also identifies ways states can improve crisis-stabilization services, care coordination, and services to address social risk factors, such as housing and supported education and employment. ■