HHS lifting IMD exclusion for Medicaid payment for inpatient mental health treatment

The Centers for Medicare & Medicaid Services (CMS) in a letter sent to state Medicaid directors Nov. 13 said demonstration projects will be available under section 1115(a) of the Cures Act that will broaden inpatient mental health treatment for Medicaid beneficiaries, reversing a rule known as the “IMD exclusion.” Health & Human Services (HHS) Director Alex Azar also addressed the changes in a speech to the National Association of Medicaid Directors.

“IMD” stands for institutions for mental diseases, and until now the exclusion has prevented Medicaid from paying for treatment in mental health facilities with more than 16 beds. With this latest announcement, states will now be able to apply for waivers from that restriction as long as they are also maintaining robust community-based treatment programs.

In his speech to Medicaid directors, Azar said more than 25 percent of adults with serious mental illness are on Medicaid. He also said that more than 10 million American adults each year experience a serious mental illness and that mental illness cuts lifespans by about 10 years or more.