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Key Questions about Medicaid Payment for Services in “Institutions for Mental Disease”

Issue Brief
  1. An antiquated term in the statute.

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  2. Ages 21 to 64.

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  3. 42 U.S.C. § 1396d (a)(29)(B). States can use federal Medicaid funds for inpatient hospital and nursing facility services in IMDs for individuals age 65 and older and inpatient psychiatric hospital services for individuals under age 21. 42 U.S.C. § 1396d (a)(14) and (16)(A).

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  4. 42 U.S.C. § 1396d (i).

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  5. David G. Smith and Judith D. Moore, Medicaid Politics and Policy, at 188-89 (2008).

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  6. Section 1115 of the Social Security Act allows the Health and Human Services Secretary to waive certain provisions of federal Medicaid law for an “experimental, pilot, or demonstration project” that “is likely to assist in promoting the objectives of” the program. 42 U.S.C. § 1315 (a). The Secretary’s Section 1115 waiver authority is limited to provisions contained in 42 U.S.C. § 1396a, while the IMD payment exclusion is contained in 42 U.S.C. § 1396d. However, the Secretary has approved IMD payment exclusion waivers under Section 1115 expenditure authority, which has been interpreted to independently permit the “costs of such [demonstration] project[s] which would not otherwise be included as [federal Medicaid] expenditures. . . [to] be regarded as expenditures under the State [Medicaid] plan. . . .”  42 U.S.C. § 1315 (a)(2).

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  7. Another state (Maryland) indicated that CMS denied its request for IMD mental health payment waiver authority, while approving its request for IMD SUD payment authority. GAO, States Fund Services for Adults in Institutions for Mental Disease Using a Variety of Strategies, GAO-17-652 at 34 (Aug. 2017), https://www.gao.gov/assets/690/686456.pdf.

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  8. Vermont must submit a schedule to CMS by the end of 2018 to begin reducing federal Medicaid IMD spending in January, 2021, and completely end this spending by the end of 2025.

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  9. Letter from CMS, CMCS Acting Director Timothy B. Hill to Vermont Agency of Human Services Secretary Al Gobeille, at 1 (June 6, 2018), https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/vt/vt-global-commitment-to-health-ca.pdf.

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  10. Letter from CMS Administrator Seema Verma to Illinois Healthcare and Family Services Director Felicia Norwood at 1 (May 7, 2018), https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/il/il-behave-health-transform-ca.pdf.

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  11. Five states report that they do not use this authority, and eight answered “undetermined.” Kaiser Family Foundation, Medicaid Moving Ahead in Uncertain Times: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2017 and 2018, at 19 (Oct. 2017), https://www.kff.org/medicaid/report/medicaid-moving-ahead-in-uncertain-times-results-from-a-50-state-medicaid-budget-survey-for-state-fiscal-years-2017-and-2018/.

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  12. Kaiser Family Foundation, CMS’s Final Rule on Medicaid Managed Care:  A Summary of Major Provisions (June 2016), https://www.kff.org/medicaid/issue-brief/cmss-final-rule-on-medicaid-managed-care-a-summary-of-major-provisions/.

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  13. States can effectively receive federal matching funds for capitation payments made for enrollees with IMD stays up to 30 days if the stay does not exceed 15 days in a single month. Id.

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  14. DSH payments to IMDs are limited to the lesser of the state’s FY 1995 DSH payment to IMDs and other mental health facilities or one-third of the state’s FY 1995 DSH allotment. 42 U.S.C. § 1396r-4 (h); GAO, States Fund Services for Adults in Institutions for Mental Disease Using a Variety of Strategies, GAO-17-652 at 34 (Aug. 2017), https://www.gao.gov/assets/690/686456.pdf.

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  15. CMS, New Service Delivery Opportunities for Individuals with a Substance Use Disorder, SMD #15-003, (July 27, 2015), https://www.medicaid.gov/federal-policy-guidance/downloads/smd15003.pdf.

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  16. CMS, Strategies to Address the Opioid Epidemic, SMD #17-003 (Nov. 1, 2017), https://www.medicaid.gov/federal-policy-guidance/downloads/smd17003.pdf.

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  17. California allows a one-time 30-day extension if medically necessary, and peri-natal patients may stay for the duration of pregnancy and 60 days post-partum. California’s waiver notes that the average length of stay is 30 days. Massachusetts has waiver authority for specified diversionary behavioral health services in IMDs provided by managed care plans, expanded SUD treatment services in IMDs provided to all full benefit enrollees regardless of delivery system, and payments to IMDs through the waiver’s safety net care pool.

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  18. Virginia and West Virginia’s waivers note that the average length of stay is 30 days.

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  19. CMS Special Terms and Conditions, Illinois Behavioral Health Transformation Demonstration, at p.8, section V., ¶ 20 (July 1, 2018-June 30, 2023), https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/il/il-behave-health-transform-ca.pdf; CMS Special Terms and Conditions, Vermont Global Commitment to Health Demonstration at p. 53-54, section XV., ¶ 92 (Jan. 1, 2017-Dec. 31, 2021, amended June 6, 2017), https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/vt/vt-global-commitment-to-health-ca.pdf.

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  20. Medicaid community-based behavioral health services can be covered under state plan or waiver authority.

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  21. CMS, New Service Delivery Opportunities for Individuals with a Substance Use Disorder, SMD #15-003, (July 27, 2015), https://www.medicaid.gov/federal-policy-guidance/downloads/smd15003.pdf.

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  22. Id. The revised guidance requires states to address certain components, such as residential treatment provider qualifications and capacity, opioid prescribing guidelines, access to naloxone, prescription drug monitoring programs, and care coordination between residential and community settings. States must report on core and state-specific quality measures and perform waiver evaluations.

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  23. House Energy and Commerce Committee Vote on Opioids Legislation (May 17, 2018), https://energycommerce.house.gov/markups/energy-and-commerce-committee-vote-on-opioids-legislation/; House Energy and Commerce Committee, Combatting the Opioid Crisis:  Legislation, https://energycommerce.house.gov/opioids-legislation/; Individuals in Medicaid Deserve Care that is Appropriate and Responsible in its Exclusion Act, H.R. 5797, http://docs.house.gov/meetings/IF/IF14/20180517/108343/BILLS-1155797ih-U1.pdf, as amended by  https://docs.house.gov/meetings/IF/IF14/20180517/108343/BILLS-115-5797-W000820-Amdt-CMT-AMD_01-U1.pdf.

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  24. The state’s plan should include the process by which individuals will transition from IMD services to outpatient care and the process the state will use to ensure that care is provided in the most integrated setting appropriate to the individual’s needs. H.R. 5797.   

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  25. These factors are to be based on the American Society of Addiction Medicine criteria.  Id.

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  26. Congressional Budget Office Cost Estimate, Opioid Legislation, as ordered reported by the House Committee on Energy and Commerce on May 9 and May 17, 2018 at 7 (June 6, 2018), https://www.cbo.gov/system/files/115th-congress-2017-2018/costestimate/53949-opioid.pdf.

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  27. House Energy and Commerce Committee, Combatting the Opioid Crisis:  Legislation, https://energycommerce.house.gov/opioids-legislation/; Medicaid IMD Additional Info Act, H.R. 5800, https://docs.house.gov/meetings/IF/IF14/20180517/108343/BILLS-1155800ih-U1.pdf.

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  28. United States Senate Committee on Finance, Open Executive Session to Consider an Original Bill Entitled Helping to End Addiction and Lessen Substance Use Disorders Act of 2018 (June 12, 2018), https://www.finance.senate.gov/hearings/open-executive-session-to-consider-an-original-bill-ihelping-to-end-addition-and-lessen-heal-substance-use-disorders-act-of-2018.

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  29. Senate Committee on Finance, Description of the Chairman’s Mark, The Helping to End Addiction and Lessen Substance Use Disorders Act of 2018 at § 206 (June 12, 2018), https://www.finance.senate.gov/imo/media/doc/HEAL%20Substance%20Use%20Disorders%20Act%20Mark%20Final%206.7.18.pdf.; see also Help for Moms and Babies Act, S. 2922 (introduced May 22, 2018), https://www.congress.gov/bill/115th-congress/senate-bill/2922/text. CBO estimates that this provision will cost $48 million from 2019-2028.  Senate Finance Committee Opioid Legislation, Preliminary Estimate, ERN18252 with modifications based on discussions with staff (June 4, 2018), https://www.finance.senate.gov/imo/media/doc/SFC%20Opioid%20Legislation%20preliminary%20estimate,%20June%204,%202018_203pm.pdf.

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  30. Senate Committee on Finance, Description of the Chairman’s Mark, The Helping to End Addiction and Lessen Substance Use Disorders Act of 2018 at § 207 (June 12, 2018), https://www.finance.senate.gov/imo/media/doc/HEAL%20Substance%20Use%20Disorders%20Act%20Mark%20Final%206.7.18.pdf.; Securing Flexibility to Treat Substance Use Disorders Act, S. 2921 (introduced May 22, 2018), https://www.congress.gov/bill/115th-congress/senate-bill/2921.

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  31. Portman Amendment #2, Medicaid Coverage for Addiction Recovery Expansion Act, https://www.finance.senate.gov/imo/media/doc/Amendments%20HEAL%20Act1.pdf.

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  32. For example, two of the larger Affordable Care Act repeal and replace bills that failed in Congress last year (the Better Care Reconciliation Act and the Graham-Cassidy-Heller-Johnson Amendment) included a state option to cover IMD services for nonelderly adults up to 30 consecutive days and up to 90 days in a calendar year. Both of those bills also would have fundamentally changed the federal financing structure of Medicaid from guaranteed matching funds to a limited per capita cap or block grant, which was estimated to result in overall substantially reduced federal funding to states. See, e.g., Kaiser Family Foundation, Medicaid: What We Learned from the Recent Debate and What to Watch for in September 2017 (Sept. 2017), https://www.kff.org/medicaid/issue-brief/medicaid-what-we-learned-from-the-recent-debate-and-what-to-watch-for-in-september-2017/.

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  33. Kaiser Family Foundation, Olmstead’s Role in Community Integration for People with Disabilities Under Medicaid:  15 Years After the Supreme Court’s Olmstead Decision (June, 2014), https://www.kff.org/medicaid/issue-brief/olmsteads-role-in-community-integration-for-people-with-disabilities-under-medicaid-15-years-after-the-supreme-courts-olmstead-decision/. Although the ADA’s anti-discrimination provisions do not apply to individuals who are currently using illegal drugs, the ADA does protect people who previously used illegal drugs and people with mental health disabilities.  ADA Title II Technical Assistance Manual, § II-2.3000, https://www.ada.gov/taman2.html.

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  34. Kaiser Family Foundation, Medicaid Long-Term Services and Supports: A Primer (Dec. 2015), https://www.kff.org/medicaid/report/medicaid-and-long-term-services-and-supports-a-primer/.

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  35. Kaiser Family Foundation, Medicaid’s Role in Financing Behavioral Health Services for Low-Income Individuals (June 2017), https://www.kff.org/medicaid/issue-brief/medicaids-role-in-financing-behavioral-health-services-for-low-income-individuals/.

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