The Trump administration is loosening restrictions to allow states to better treat patients with serious mental illnesses.
Health and Human Services Secretary Alex Azar wants states to apply for waivers to allow Medicaid to pay for long term mental health at inpatient facilities. The waivers have previously been used to provide more flexibility on substance use disorders.
“Different forms of treatment work for different patients, but the decades-old restriction on Medicaid reimbursement for inpatient treatment at institutions for mental diseases, or IMDs, has been a significant barrier,” Azar said Tuesday during a speech to the National Association of Medicaid Directors.
The initial exclusion was meant to phase out the use of psychiatric wards by preventing Medicaid from paying for treatment in facilities with more than 16 beds. States were responsible for the care of people with severe mental illness in those facilities.
But as the opioid epidemic has worsened, people suffering from serious addiction have not been able to find appropriate residential treatment and instead many wind up in emergency rooms.
The waivers would let Medicaid pay for patients with severe mental illness for an average of 30 days, similar to the substance abuse waivers that have been granted in 17 states.
Medicaid is the single largest payer of behavioral health services, including mental health and substance use services. By one federal estimate, more than a quarter of adults with a serious mental illness rely on Medicaid.
Azar emphasized that inpatient treatment is just one part of “a complete continuum of care,” and participating states will be expected to take action to improve community-based mental health care as well.
"There are so many stories of Americans with serious mental illness, and their families, that end in tragic outcomes because treatment options are not available or not paid for," Azar said. "I urge everyone involved in state Medicaid programs here today to consider applying for the kind of waiver I've just outlined."