NASMHPD Position Statement on Repeal of the Medicaid IMD Exclusion

The National Association of State Mental Health Program Directors (NASMHPD) believes that the current Medicaid exclusion for services provided in Institutions for Mental Disease (IMDs) is discriminatory and should be repealed.
NASMHPD members believe that recovery and participation in community living are and should remain the focus of the public mental health system. The U.S. Surgeon General’s Report on Mental Health provides clear scientific evidence that recovery is possible in the context of a comprehensive service delivery system that emphasizes community-based treatment, values consumer experiences and peer-delivered services, and ensures access to clinically appropriate inpatient services when necessary.

However, current Medicaid policy bars from coverage all services provided to adults ages 22 to 64 in IMDs, which includes psychiatric hospitals and may include community-based residential facilities. This policy isolates individuals with mental illnesses from all other Medicaid-eligible populations, contradicts the principles of equal treatment and insurance parity for treatment of mental illnesses, and undermines the ability of states to develop comprehensive systems of care. Specifically, the IMD exclusion has the following discriminatory effects:

(1) Individuals with mental illnesses who receive services in IMDs are singled out for inferior Medicaid coverage. In general, individuals requiring services in IMDs have the most severe and persistent mental illnesses and often face significant stigma associated with their illnesses. The IMD exclusion perpetuates the myths that mental illnesses are different than physical illnesses and that recovery for individuals with serious mental illnesses is not possible.

(2) By failing to reimburse for appropriate and medically necessary services provided to Medicaid-eligible individuals in IMDs, the federal government unfairly limits its support for mental health treatment. Fewer federal dollars means fewer resources throughout the mental health system, with resulting negative consequences not only for inpatient services but for community-based treatment and other services provided as part of a comprehensive continuum of care. In addition, the IMD exclusion creates an enormous barrier to the use of Home and Community Based waivers under Medicaid to serve individuals with mental illnesses and limits the ability of states to develop creative, stable financing mechanisms for the delivery of care.

There exists no sound rationale for the IMD exclusion. This policy is not based on concerns about individual Medicaid eligibility, the medical necessity of services provided, the appropriateness of the service setting, or the quality of care provided. Nor does the policy reflect system trends over the last four decades dramatically reducing the use of inpatient care and the length of inpatient stays. Instead, the policy dates back to the origins of the Medicaid program and appears to be premised on the outdated assumption that the federal government should not share responsibility for providing treatment to these individuals.

NASMHPD urges Congress to repeal the IMD exclusion and to support universal, non-discriminatory coverage under Medicaid for appropriate, effective treatment and services for individuals with mental illnesses.