Institutions For Mental Diseases Medicaid Waivers: Impact On Payments For Substance Use Treatment Facilities

The Institutions for Mental Diseases (IMD) exclusion prohibits use of federal Medicaid funds to treat enrollees ages 21-64 in psychiatric residential treatment facilities that have more than sixteen beds. In 2015 the federal government created a streamlined application pathway for state waivers of this rule to allow Medicaid coverage for substance use disorder (SUD) treatment in residential facilities. Nine states received IMD waivers during the period 2015-18. Using data from the 2010-18 National Survey of Substance Abuse Treatment Services, we examined changes in residential and outpatient SUD treatment facilities' acceptance of Medicaid and other types of health coverage, as well as self-pay arrangements and provision of charity care, after states' adoption of IMD waivers. Acceptance of Medicaid increased 34 percent at residential treatment facilities and 9 percent at intensive outpatient facilities two years after waiver implementation. Delivery of medications for opioid use disorder did not increase in residential facilities post waiver but did increase to some extent in outpatient facilities. Our findings suggest that IMD waivers may be an important tool for advancing access to a full continuum of SUD treatment for Medicaid enrollees.