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November 14, 2018

How CMS wants to expand Medicaid coverage for mental health care

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    CMS in a letter sent Tuesday to state Medicaid directors announced that it is expanding opportunities for states to cover mental health and substance use disorder treatments under Medicaid.


    The federal government since 1965 has excluded most residential treatment facilities with 16 beds or more from qualifying for Medicaid reimbursements. The federal government excluded the facilities to gradually move away from the use of psychiatric wards.

    But CMS in 2016 released a rule allowing state Medicaid programs to cover 15 days of inpatient care at institutions of mental disease (IMDs) for Medicaid beneficiaries enrolled in managed care plans. CMS also began approving waiver requests that allow states to use federal funding for their Medicaid programs to cover 30 days of inpatient care at an IMD for Medicaid beneficiaries with substance use disorders. CMS so far has approved waiver requests from 17 states seeking to cover substance use disorder treatments at IMDs for Medicaid beneficiaries.

    Further, President Trump last month signed into law a bill that partially lifted restrictions on Medicaid coverage for health care services provided at IMDs. However, HHS Secretary Alex Azar in a speech at the National Association of Medicaid Directors conference on Tuesday said the Trump administration remained concerned that current policies restrict Medicaid beneficiaries' access to care from IMDs. "Today, we have the worst of both worlds: limited access to inpatient treatment and limited access to other options. It is the responsibility of state and federal governments together, alongside communities and families, to right this wrong," he said.

    CMS allows states to cover more inpatient care under Medicaid

    To address that issue, CMS in the letter announced that states can now apply for a new Medicaid waiver that will allow them to cover more services provided at IMDs under Medicaid. Specifically, CMS wrote that, under the new waiver, states will be able to use federal funding to pay for up to 30 days of treatment for all Medicaid beneficiaries who are being treated at IMDs primarily for a mental health condition, up from 15 days under the agency's current policies.

    CMS said it will only approve the waiver requests if they are budget-neutral. The agency also said it will require states that are granted the waivers to improve community-based mental health services and report on information detailing those improvements (Diamond, "Pulse," Politico, 11/13; Weixel, The Hill, 11/13; Morse, Healthcare Finance News, 11/13; Dickson, Modern Healthcare, 11/13; Williams, CQ Health, 11/13 [subscription required]).

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