TheMedicaidIMDExclusionandMentalIllnessDiscrimination
SUMMARYTheMedicaidInstitutionsforMentalDisease(IMD)exclusionisanoutdated,discriminatoryfederalrulethatcreatessignificantbarrierstotreatmentforadultswithseverementalillness.Underthisrule,Medicaidpaymentstostatesareprohibitedfornon-geriatricadultsreceivingpsychiatriccareinatreatmentfacilitywithmorethan16beds.EvenwithrecentadvancesinmentalhealthcareaffordedbytheAffordableCareActandfederalparitylegislation,theIMDexclusionremainstheonlysectionoffederalMedicaidlawthatprohibitsfederalpaymentformedicallynecessarycaresimplybecauseofthetypeofillnessbeingtreated.Thiscategoricallydiscriminatoryruleisaleadingcauseofournationalpsychiatrichospitalbedshortageanddirectlycontributestoahostofnegativeconsequencesforthosewiththemostseverementalillnesses.
________________BACKGROUNDEstablishedbySection1905(a)(B)oftheSocialSecurityAct,theIMDexclusionprohibits“paymentswithrespecttocareorservesforanyindividualwhohasnotattained65yearsofageandwhoisapatientinaninstitutionformentaldiseases.”Individualsovertheageof65havealwaysbeenexcludedfromthisrestriction,andaseparateprovisionenactedin1972excludespatientsunder21fromit.Aninstitutionformentaldiseasesisdefinedinthelawasany“hospital,nursingfacility,orotherinstitutionofmorethan16beds,thatisprimarilyengagedinprovidingdiagnosis,treatment,orcareofpersonswithmentaldiseases,includingmedicalattention,nursingcareandrelatedservices.”TheU.S.DepartmentofHealthandHumanServices(HHS)considersanyinstitutiontobean“IMD”that,byitsoverallcharacter,isestablishedandmaintainedprimarilyforcareofindividualswith“mentaldiseases.”CategorizationasanIMDisbaseduponfactorssuchaswhetherthefacilityislicensedasapsychiatricfacilityorspecializesinprovidingpsychiatriccare;whetheralargeproportionofstaffhasspecializedpsychiatrictraining;whetherthefacilityisunderthejurisdictionofastate’smentalhealthagency;andwhether50%ofalladmittedpatientsaretherebasedonaneedfor“institutionalizationasaresultofmentaldisease.”In2011,aspartoftheAffordableCareAct,thefederalgovernmentcreatedafive-yearMedicaidEmergencyPsychiatricDemonstrationin11statesandtheDistrictofColumbia.ThedemonstrationremovestherestrictionfromselectprivateIMDstoevaluatewhetherMedicaid,byreimbursingforacutepsychiatriccareservicesprovidedinanIMD,couldlowercostsandprovidebettercaretopeoplewithpsychiatricillnesses.
MEDICAIDAugust2016
2|P a g e Treatment Advocacy Center • www.TreatmentAdvocacyCenter.org
TheMedicaidIMDExclusionandMentalIllnessDiscrimination
In2016,basedoncommentsfromthepublicandpreliminarydatafromtheMedicaidEmergencyPsychiatricDemonstration,theCentersforMedicareandMedicaidfinalizedarulepermittingMedicaidmanagedcareorganizations(MCOs)toreceivereimbursementforacutecare(definedaslessthan15dayspermonth)providedinIMDstonon-geriatricadults.Morethan70%ofMedicaidbeneficiariesarecurrentlycoveredbyMCOs.WhywastheIMDexclusionpassedintolaw?
TheIMDexclusionwasincludedinthelawwhenMedicaidwasenactedin1965.Atthetime,therewashopethatlargeinpatientfacilitieswouldbequicklyrenderedobsoletebyadvancementsinnewantipsychoticmedicationsthatallowedsomepeoplewithseriousmentalillnesstolivesafelyinthecommunityforthefirsttime.ThereasoningbehindtheIMDexclusionprohibitingreimbursementwasthustwofold:disincentivizethetreatmentofthementallyillinlargeinstitutionsandshiftthecostsforpsychiatrictreatmentfromthefederalgovernmentontothestates.WhathasbeentheimpactoftheIMDexclusion?
TheIMDexclusion,whichprovidesdisincentivesforpsychiatriccarefacilitiestogrow,fuelsthenationwideshortageofpsychiatricbedsandhasproveddisastrousforpeoplewithseverementalillness.TheUnitedStateshasclosedalmost97%ofitsstatehospitalbedssincethemid-1950sandtodayhasfewerpsychiatricbedspercapitathanitdidin1850.Thetrend,knownas“deinstitutionalization,”acceleratedwithenactmentoftheIMDexclusion,whilethepromisedalternativeofcommunitybehavioralhealthcenterstoprovidecarewasneverrealized.Theresultsofnottreatingthoseinpsychiatriccrisisinanappropriatesettingforanappropriateamountoftimeareprofound:Insteadofprovidingadequatecare,thementalhealthsystemabandonsthosewithseverementalillnesstoarevolvingdoorofacutehospitalization,incarceration,homelessnessandvictimization.Manyacutelyillindividualswhodeterioratewithoutaccesstoappropriateinpatientcareendupininappropriatecaresettingsincludingemergencyroomsandjails.Theirfamiliesandcaregiversfrequentlysuffermedical,emotionalandfinancialimpactsastheystrugglewithlittlesupporttogettreatmentandsavetheirlovedones.TheeconomicimpactsoftheIMDexclusionhavealsobeentremendous.Whileitdoescostmoneytoprovideinpatienttreatmenttoindividualswithmentalillness,costsavingsfromrestrictinginpatientcareislargelyanillusion.Studiesshowthatshort-lengthhospitalizationsofindividualsinpsychiatriccrisesareassociatedwithhigherrehospitalizationrates.Infact,astudybythefederalAgencyforHealthResearchandQualitywithinHHSfoundthat,forMedicaidpatients,mentalillnessconditionsweretwoofthetopthreecausesof30-dayinpatientreadmissions.Alongwithdiabetes,thesethreeconditionsresultedinapproximately$839millioninhospitalcostsin2011alone.Alsocostlyaretheforensicbeds,jailandprisoncellsandhomelessnessservicesthatbecomethedefaultcaresitesforindividualsinneedwhenabedisnotavailable.
3|P a g e Treatment Advocacy Center • www.TreatmentAdvocacyCenter.org
TheMedicaidIMDExclusionandMentalIllnessDiscrimination
CONCLUSIONTheIMDexclusionisadiscriminatoryfederalrulethatprohibitsfederalMedicaidreimbursementtostatesforadultpatientsreceivingmentalhealthorsubstanceabusecareinapsychiatricorsubstanceabusetreatmentfacilitywithmorethan16beds.TheIMDexclusionistheonlysectionoffederalMedicaidlawthatprohibitsfederalpaymenttohelpstatescoverthecostofprovidingmedicallynecessarycaretoMedicaidbeneficiaries.TheIMDexclusionhasgreatlycontributedtothenation’spsychiatrichospitalbedshortage,whichresultsinnon-treatmentofacuteandchronicseriousmentalillnessandtheinnumerablebadoutcomesresultingfromnon-treatment.WhilesignificantstepsarebeingmadeatthefederalleveltoreformtheIMDexclusion,afullrepealthatextendstoallMedicaidbeneficiariesandwithoutarbitraryinpatient-daylimitations,willultimatelybenecessarytoaddresstheseissues.
