Medicaid Coverage for Mental Health / by AzHHA

Debbie Johnston, Senior Vice President of Policy Development

The Center for Medicaid & CHIP Services issued a letter this week to State Medicaid Directors granting additional flexibility for states to cover mental health treatment for patients with serious mental illnesses. Specifically, states can seek new demonstration waivers that will allow them to use federal funding to pay for services furnished to Medicaid beneficiaries during short term stays for acute care in psychiatric hospitals or residential treatment settings that qualify as institutions of mental disease (IMDs), if those states are also taking action to ensure good quality of care in IMDs and to improve access to community-based services. This waiver opportunity is comparable to the recent Section 1115 demonstration option to improve treatment for substance use disorders, including opioid use disorder.

AzHHA applauds CMS for moving forward with this demonstration opportunity. Arizona previously had in-lieu of authority to utilize IMD services for the Medicaid patients with SMI, but this authority was pulled back under rules adopted by the previous Administration.