The Battle over the IMD Exclusion Moves to the State Level

NYAPRS Note: National and state advocacy groups including NYAPRS have opposed changes in the IMD exclusion that have been included in or discussed in relationship to various Congressional mental health bills under consideration. New federal rules will leave final action up to states to make some changes in this policy. Here're more details.

* As background, an IMD can be a free-standing state or privately operated psychiatric hospital or substance abuse treatment facility with more than 16 beds in which more than half of beds are occupied by individuals diagnosed with mental health and/or substance abuse related conditions. Historically, Medicaid has not been permitted to pay for inpatient psychiatric or SU treatment in IMDs.

* Proposals to allow Medicaid to pay for up to 30 day stays in these facilities, such as those introduced by Rep. Tim Murphy, have been estimated to cost between $40-60 billion over the next 5 years by the Congressional Budget Office.

* A broad range of recovery and disability rights groups including NYAPRS have regarded extending Medicaid to these facilities as a regressive alternative to investing the tens of billions into activist and evidence based engagement, treatment, rehabilitation, peer support and prevention services.

* However, The Centers for Medicare and Medicaid Services (CMS) recently released a final ruling that comprehensively updates the Medicaid managed care standards and regulations and that relaxes prohibitions regarding the IMD exclusion.

* Under the new rule, 15 days of coverage per month will be allowed for managed care enrollees in an IMD. Apparently, it is possible that some admissions could cover 14 days of one month and 15 of the next.

* According to Open Minds, 15 days was chosen because the average length of stay in an IMD, under the Medicaid Emergency Psychiatric Demonstration was 8.2 days and a scan of Medicaid claims data from 2013 found that 90% of mental health inpatient stays were 15 days or shorter and 90% of substance abuse stays were 10 days or shorter. In response to opposition to the fifteen day limit, CMS states that if more than 15 days of care are needed, an IMD is probably not a medically appropriate treatment. (

* If a member is in the IMD for more than 15 days in a month, the Managed Care Organization (MCO) can't receive a capitated payment for the person

* Managed care plans do not have to offer the service to enrollees and enrollees can refuse service in an IMD with no repercussions.

* CMS responded to critics with the following: "We take seriously our commitment to community integration approaches and adherence to Olmstead provisions requiring treatment in the least restrictive setting available....We remind states and managed care plans of their obligations under the ADA and the Olmstead decision to provide services in the least restrictive setting possible and to promote community integration. Nothing in this final rules excuses failure to comply with these responsibilities."

* While some of the "final decisions" about the interpretation of the rules will be set by CMS, changes to some rules including those relating to the IMD exclusion will be left up to the states. States can choose to apply these new rules in 2017.

Stay tuned for more information around how advocates can advocate with states to expand community rather than hospital services.