For over half a century, one of the most significant barriers to accessing residential treatment for substance use disorder (SUD) in the United States has been the Medicaid Institution for Mental Diseases (IMD) exclusion. This policy, initially implemented in 1965, has long restricted Medicaid coverage for services provided in residential facilities with more than 16 beds. Although Medicaid was later allowed to cover some behavioral health services in smaller facilities, the IMD exclusion remained a formidable obstacle for many Americans struggling with addiction. The policy has faced consistent criticism from advocates who argue that it is discriminatory and outdated, preventing millions of people from accessing the care they need to recover.
Now, a new bill introduced in Congress promises to address this long-standing issue. The Recovery Act (H.R. 9422), filed by Democratic U.S. Rep. Brittany Pettersen on Aug. 27, 2023, seeks to remove some of the barriers created by the IMD exclusion, allowing for greater access to residential addiction treatment services for Medicaid recipients. If passed, the Recovery Act would expand substance use disorder Medicaid coverage in IMDs, offering vital support for those struggling with substance use disorder while also increasing federal funding to assist states in providing these services.
Understanding the IMD Exclusion
To fully grasp the significance of the Recovery Act, it’s important to understand the IMD exclusion and its impact. When Medicaid was first established in 1965, the federal government implemented the IMD exclusion to prohibit Medicaid funding from covering services provided in residential treatment facilities for behavioral health conditions with more than 16 beds. This policy was originally designed to prevent Medicaid from being used for long-term institutional care, such as psychiatric hospitals, which were often seen as providing more institutionalized care rather than therapeutic, community-based treatment.
Over time, however, this exclusion was seen as increasingly problematic, especially as it left individuals struggling with substance use disorder without adequate access to care. While Medicaid was later allowed to cover behavioral health services in smaller facilities—those with 16 or fewer beds—the IMD exclusion continued to apply to larger residential treatment centers that offer essential services for individuals with severe substance use disorders.
The exclusion also limited substance use disorder Medicaid coverage for individuals aged 65 and older, further restricting the availability of care for a vulnerable population. This has led many advocates to argue that the IMD exclusion was not only an institutional barrier to care but also a discriminatory policy that disproportionately impacted low-income and underserved populations who rely on Medicaid for health coverage.
The Recovery Act: A Step Toward More Comprehensive Treatment
The introduction of the Recovery Act marks a critical shift in the ongoing fight to eliminate the barriers created by the IMD exclusion. Rep. Pettersen’s bill aims to amend the existing law by allowing states to use Medicaid funding to cover addiction treatment services provided in IMDs. This change would apply to both Medicaid and the Children’s Health Insurance Program (CHIP), which provides health coverage for vulnerable children.
One of the key elements of the Recovery Act is its focus on increasing federal support for addiction treatment. Under the bill, the federal medical assistance percentage (FMAP)—the amount of federal funding that states receive for Medicaid services—would increase to 90% for addiction treatment services provided in IMDs. This higher level of federal funding would be available for five years, helping to offset the financial burden on states and ensuring that more individuals have access to residential care. By increasing FMAP, the bill acknowledges the substantial costs associated with addiction treatment and aims to make these services more affordable and accessible.
Rep. Pettersen introduced the bill on Sept. 4, 2023, at a recovery facility where her own mother had received addiction treatment. In a statement, Pettersen shared her personal connection to the issue: “My mom is an example of what’s possible when people struggling with substance use disorder have access to the resources and support they need, but I know she was one of the lucky ones. Far too many people are left without care because of the stigma associated with addiction and the lack of funding and priorities at every level of government.”
Pettersen’s personal experience highlights the urgent need for legislative change. Her mother’s successful recovery from substance use disorder was made possible through access to treatment services, but too many people remain without care because of financial and systemic barriers. The Recovery Act seeks to break down those barriers by expanding access to treatment and ensuring that more individuals can access the care they need, regardless of their age or financial situation.
Key Provisions of the Recovery Act
If passed, the Recovery Act would make several significant changes to the way addiction treatment is covered under Medicaid, specifically by amending Sections 1915 and 1905 of the Social Security Act. Some of the most important provisions of the bill include:
1. Expansion of Eligible Facilities
The bill expands the definition of facilities that can participate in Medicaid coverage. It allows for the inclusion of residential services for adolescents as well as intensive residential services for adults. This is crucial because many individuals, particularly young people, require specialized treatment in residential settings that can provide 24/7 care and support.
2. Coverage Determination Based on Evidence-Based Criteria
Under the Recovery Act, the Secretary of the U.S. Department of Health and Human Services (HHS) would be tasked with defining the number of days that would be covered for IMD treatment under Medicaid. This determination would be based on the most recent evidence-based criteria developed by reputable nonprofit medical organizations, such as the American Society of Addiction Medicine (ASAM), ensuring that treatment decisions are grounded in the best available medical evidence.
3. Eligibility Reviews
Eligibility for substance use disorder Medicaid coverage would be reassessed every 30 days or less, based on the Secretary’s recommendations. This provision is designed to ensure that individuals continue to meet the criteria for treatment while also providing flexibility in determining the length of coverage for individuals in recovery.
4. Training Grants
To ensure that states can successfully implement the expanded coverage, the Recovery Act would allocate $25 million in training grants for states to support the development of qualified treatment providers. These grants would help states build capacity in the addiction treatment workforce and ensure that facilities are equipped to provide the best care possible.
Impact on Providers and Patients
The Recovery Act would have a significant impact on both addiction treatment providers and patients. For providers, the expansion of substance use disorder Medicaid coverage to include addiction treatment in IMDs would allow for more resources to be dedicated to residential care. This would enable providers to serve more clients and help fill gaps in treatment capacity, particularly in underserved areas. Crystal Ahles, executive director of Sobriety House, a recovery facility, highlighted the importance of the bill’s provisions. “Without this coverage, state and federal funding is limited, and access to care is difficult for those needing help,” Ahles said. “The change in legislation will allow for expanded access, which is imperative.”
For patients, the bill would provide a much-needed avenue for accessing critical treatment services. Residential treatment for SUD can be an essential component of long-term recovery, especially for individuals with severe addictions who need around-the-clock care. The Recovery Act would help ensure that these individuals, who may otherwise be left without options, can access the care they need to rebuild their lives.
State-Level Action and the Road Ahead
While the Recovery Act seeks to address the issue at the federal level, some states have already taken action to expand coverage for addiction treatment. For example, New York applied for 1115 waivers from the federal government in January 2023, seeking to expand coverage for serious mental illnesses and addiction for both adults and children with serious emotional disturbances. However, such efforts are often complex and can be hindered by bureaucratic delays or limited funding.
The Recovery Act seeks to address these challenges by providing a streamlined, nationwide solution that gives states the flexibility to expand coverage while receiving robust federal funding to support addiction treatment services. The bill is a vital step in addressing the gaps in the behavioral health care system and ensuring that more people struggling with addiction can access the treatment they need.
Looking Forward
The Recovery Act represents a significant opportunity to improve access to addiction treatment for millions of Americans. If passed, the bill could provide a much-needed expansion of substance use disorder Medicaid coverage for residential treatment services, ensuring that individuals with substance use disorder are no longer excluded from receiving the care they need. With Rep. Pettersen’s leadership and continued advocacy, there is hope that this important legislation will move through Congress and help transform the landscape of addiction treatment in the United States.
As the debate over the Recovery Act continues, all eyes will be on lawmakers to see if they can push forward a solution that finally addresses the systemic barriers to addiction treatment. In the meantime, advocates for substance use disorder treatment remain hopeful that this bill can pave the way for a future where access to care is no longer dependent on the size of a treatment facility or the limitations of outdated policies.
