Medicaid payment for opioid treatment embroiled in politics over loosening restrictions

In Cincinnati, wait times for opioid addicts seeking residential treatment have dropped as the city’s providers are banding together to manage the barrage of cases across different settings.

In January, Mercy Health partnered with 10 outpatient treatment centers. The hospital offers short-term detox stays for patients, then the clinics take over and manage the long-term treatment, nearly on demand. After they have stabilized, patients can decide whether they want residential treatment or outpatient care.

This approach is key to managing the scope of opioid addiction cases, said Shawn Ryan, founder and chief medical officer of the outpatient treatment center BrightView, because it matches patient needs with what providers offer.

But there is a constraint on long-term treatment for mental illness and substance abuse that hinders creative use of hospitals, nursing homes and other facilities. The so-called institutions for mental disease, or IMD, exclusion, which since the 1970s has largely banned Medicaid funds from paying for stays IMDs, with more than 16 beds.

“In the Medicaid field, with reimbursement not robust, no one could make it really well without cobbling together grants and other funding,” Ryan said. “The removal of IMD exclusion could really help.”

The IMD exclusion is at the center of congressional debate this week as House lawmakers are back to work on a bill to loosen the IMD exclusion.

The legislation, part of the package being marked up Thursday by the House Energy and Commerce Committee, would allow states to adopt a state plan amendment to cover opioid addicts’ residential treatment of up to 30 days under Medicaid. Many mental health advocates and people on the ground trying to beat back opioid overdoses and addiction rates agree that the longtime ban on Medicaid funding for institutes of mental disease (IMDs) is outdated. But Congress’ attempt to change it has drawn sharp criticism from some who say lifting it for treating opioid addicts could skew states toward focusing on expensive residential treatment over the continuum of care approach.

Ryan also said that residential treatment needs to be looked at in terms of continuum. He wants the conversation to move away from the word “beds,” and focus on the current capacities of hospitals and nursing homes and how they can meet current needs of patients.

The IMD exclusion is a hold-over of the days when people with mental illness were kept in institutions. The pendulum-swing away from institutions ended with Congress blocking federal funds from going to facilities with more than 16 beds. In the divided mental health advocacy community, some continue to worry that paring back the exclusion is a slippery slope back to institutionalizing the mentally ill.

Congress has tried and failed to open up the exclusion in the past, and the Obama administration took a regulatory step in 2016 to let Medicaid to pay for stays of up to 15 days, provided they were coordinated through a managed care plan.

The Trump administration has picked up where the Obama administration left off, expediting state’s Medicaid 1115 waivers to fund IMD stays for opioid and substance abuse patients for 15 days each month. Eleven states have had waivers approved in total, six of…

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