When CMS proposed revising its Medicaid managed care regulations in November 2018, the new guidelines outlined an overall desire to streamline the managed care regulatory framework and relieve regulatory burdens on states. One specific item worth noting, however, is the update’s provision regarding institutions for mental diseases (IMD). In its 2016 update to its regulations, the first since 2002, CMS laid out policy to permit payments to MCOs for adult Medicaid enrollees receiving inpatient care from IMDs, so long as no stays in the IMDs exceeded 15 days in a single month. Referencing this policy in the proposed update, CMS has acknowledged that some states and stakeholders have requested federal payments for stays longer that 15 days, especially for Medicaid enrollees receiving substance use disorder (SUD) treatment. But CMS decided to stick to their 2016 policy, reiterating their findings and justifications.

What follows this reiteration, however, is additional language that encourages states to apply for section 1115(a) waivers that would, if approved, enable them to receive federal funding for Medicaid enrollees staying longer than 15 days in IMDs. They say they’ve identified no new data sources beyond what was used to guide the provisions in the 2016 rule, but they’ve requested public input on additional data that would better inform their policy. Plus, in keeping with their desire to ease regulations, CMS references the current 1115(a) SUD demonstration initiative developed in 2017, simplifying the application and approval process.

Since its inception in 1966, CMS has dealt cautiously with mental disease. In earlier days, policy maintained a stance that the cost of treating mental disease should be a state responsibility, but with the decades-long growth of managed care, stances have shifted in turn. And now with the shocking onset of the opioid crisis, attitudes toward behavioral and mental health are transforming, too. Many are looking for solutions, and treatment through IMDs is turning up as one of them. CMS’ specific language in this new update maintains some caution, but it’s coupled with flexibility and an explicit willingness to work with states on specific programs with feasible regulations.

By Joe Madsen and Jeff Harris

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