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Panel Mulls Medicaid Exclusion of Some Residential Tx Facilities

Panel Mulls Medicaid Exclusion of Some Residential Tx Facilities

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WASHINGTON — The Trump administration may want to re-think existing rules that exclude certain mental health and substance use residential treatment facilities from Medicaid reimbursement, members of the Medicaid and CHIP Payment and Access Commission (MACPAC) said Thursday.

When MACPAC gives Congress its annual report in June, “we have to be open with people who read our stuff to say [opioid addiction] is a crisis, we need to do something; that seems to be a good hypothesis and way to start,” said Christopher “Kit” Gorton, MD, former president for public plans at Tufts Health Plan, in Medford, Mass. However, he added, although current demonstration projects seem to indicate that including these facilities will likely lead to good outcomes, “I just think there should be a note of caution in what we write; we should be careful to say the jury’s still out.”

Gorton was referring to Medicaid’s “Institutions for Mental Diseases” (IMD) exclusion, which bars federal Medicaid dollars from being used to reimburse mental health or substance abuse treatment facilities with more than 16 beds.

Commission member Alan Weil, JD, editor-in-chief of Health Affairs, reminded his fellow MACPAC commissioners of how the exclusion came about. “The origin of the IMD exclusions was when they were large [state] facilities mostly, and the federal government didn’t want to pay for a state facility.” Today, many such treatment facilities are privately owned.

Erin McMullen, a principal analyst at MACPAC, pointed out in her introduction to the topic that there are two ways that states can work around the exclusion: they can apply for an 1115 waiver to do so, or they can adhere to the so-called “in lieu of” regulation, which allows manged care organizations that contract with Medicaid to use the facilities as long as they can be seen as medically necessary.

So far, eight states have used the 1115 waiver, and “and many others have applications pending,” McMullen said. In addition, “many states have expressed their intent to utilize the ‘in lieu of’ provision.” However, she added, “there is little information on whether substance use disorder patients experience treatment gains in residential settings, or whether [they would reap similar gains] from outpatient treatment.”

Residential treatment facilities need to be considered an important part of the continuum of care for patients with substance use disorders, along with acute care hospitals and outpatient treatment, said Yngvild Olsen, MD, MPH, medical director of REACH Health Services, a substance use recovery program in Baltimore, in her testimony to the commission.

Olsen said examples of typical patients who might benefit from residential care include:

  • An adult with polysubstance use disorders, including alcohol and/or benzodiazepines
  • A patient with no acute medical issues needing acute hospital care
  • Someone who is not actively suicidal or homicidal but who may have had passive thoughts of suicide in the past
  • Someone who is motivated at the moment for treatment
  • A patient with unstable housing and high relapse potential

In addition to the types of patients above, adolescents and pregnant women have a lower threshold for receiving residential care because of their special needs, she added.

Virginia was one of the states that used an 1115 waiver to avoid the IMD exclusion, explained Matthew Keats, MD, behavioral health medical director at the Virginia Department of Medical Assistance Services, in Richmond. Virginia’s waiver allows for federal matching funds to go toward treatment in an IMD, as along as the state and its Medicaid health plans use criteria developed by the American Society for Addiction Medicine to determine who gets which substance use disorder treatments.

The waiver was part of a new Medicaid substance use benefit program — known as Addiction Recovery and Treatment Services (ARTS) that the state started last July, Keats said. “Up to this point, we had very inadequate substance abuse coverage for members — no inpatient detox [services], a residential treatment program that was limited to pregnant women, and rates that were utterly inadequate — they didn’t even cover the cost of intensive outpatient treatment or residential treatment, so this was really a sea change,” he said. The state also raised its payment rates for substance use disorder treatment providers, “in some cases higher than commercial rates.”

Virginia saw a huge increase in the number of residential treatment providers as a result of the new program — it went from zero to 78, Keats said, adding that the use of substance use disorder services rose by 40%. In addition, opioid use disorder-related visits to emergency departments dropped 39% in the program’s first 5 months, he said.

The issue of changing the IMD rules raises other questions, said MACPAC chair Penny Thompson, MPA, a healthcare consultant in Ellicott City, Md. “If someone goes into residential treatment without a plan for maintaining treatment when they come out, or there is a question about what kind of treatment is actually being delivered in that residential setting … there is a need for additional guidelines” to be developed to address these issues, she said. “In the meantime, we have [an opioid addiction] crisis.”

Commissioner Martha Carter, CEO of FamilyCare Health Centers, a community health center in Scott Depot, W.Va., noted that health centers are also a major part of the continuum of care in many communities for these patients; federal funding for the health centers ran out in September and has not been renewed. “I have to assume they are going to get funded, but it makes business and hiring decisions very difficult,” she said.

Although residential treatment can be helpful, a note of caution would be good, said commissioner Charles Milligan, JD, MPH, CEO of UnitedHealthcare Community Plan of New Mexico, a Medicaid managed care plan. “There is sometimes a tendency to overbuild brick and mortar, and I think going to the highest level of care [should be done] most prudently and cautiously” so it doesn’t displace community health centers.


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