Washington, DC Receives First CMS Approval of Expanded Medicaid Coverage for Inpatient Mental Health Services

Milbank State Leadership Network Mental Health

In November, the District of Columbia’s (DC) Medicaid program became the first to receive approval from the Centers for Medicare & Medicaid Services (CMS) for a demonstration that will address gaps in Medicaid’s coverage of behavioral health services by reimbursing institutions for mental diseases (IMDs) for treatment of adults with serious mental illness and/or serious emotional disturbance. DC’s waiver will also cover IMD services for substance use disorder.

In response to the opioid epidemic, in 2015, CMS encouraged states to apply for federal Medicaid funding using Section 1115 waiver authority for adult substance use treatment within IMDs. Last year, CMS announced it would consider IMD waivers for a broader range of adult mental health services. Many states have opted for the expanded substance use disorder services — DC’s is the 27th IMD waiver to be approved for that purpose — but this is the first waiver approved for expanded adult mental health IMD services. The new program will go into effect January 1, 2020.

This demonstration aims to further the district’s goals of:

  • Improving coordinated care between physical and behavioral health care for Medicaid beneficiaries, creating a more person-centered approach;
  • Strengthening Live.Long.DC., a program dedicated to assisting individuals with opioid use disorder and other substance use disorders; and
  • Providing a broader spectrum of behavioral health services to support individual with serious mental illness, substance use disorders, or other behavioral health needs.

The demonstrations should help state meet unmet behavioral health needs. About 36 percent of Medicaid adults under age 65 with a behavioral health condition — and 80 percent of those with a substance use disorder — report unmet treatment needs, according to a report recently copublished by the Kaiser Family Foundation and the Milbank Memorial Fund. Most Medicaid beneficiaries who do receive treatment obtain it in an outpatient setting, the report finds. While Medicaid provides a continuum of behavioral health services, including outpatient, inpatient, and long-term services and supports, federal law has generally prohibited states from using Medicaid funds for services provided to nonelderly adults in IMDs.

“States and mental health organizations have advocated for more flexibility to cover inpatient mental health services,” said Rachel Block, Milbank program officer. “DC’s innovations will be closely watched by other states seeking to replicate this model and monitored for its impact on cost, quality, and access.”

With thanks to Roxanne D. Bangalan for her reporting contributions to this article.

Update: In December, CMS approved a second waiver for federal funding of coverage of treatment in IMDs for adult Medicaid beneficiaries who have a diagnosis of serious mental illness and/or serious emotional disturbance. The Vermont Global Commitment to Health demonstration starts January 1, 2021.