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Michael Petruzzelli

, National Council for Behavioral Health

Medicaid Managed Care Rule Pays for Residential SUD Treatment

May 19, 2016 | Medicaid | Comments
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Last month, the Centers for Medicare and Medicaid Services finalized changes to Medicaid and the Children’s Health Insurance Program managed care. Of particular importance, the final rule allows for federal Medicaid payments to be made to residential substance treatment facilities for short term stays (no more than 15 days) for patients enrolled in Medicaid Managed Care. This is a step, though small, in the right director for allowing full Medicaid reimbursement for residential treatment services.


Citing the high prevalence of mental health and substance use disorders among Medicaid beneficiaries, CMS will now permit managed care entities to receive a capitation payment from the state for certain services that might otherwise be subject to the Institutions for Mental Disease (IMD) payment exclusion. The rule allows MCOs to utilize IMD services for stays of up to 15 days in a month, if those services are medically necessary, cost effective and used “in lieu of” more costly services such as hospitalization.


The final rule goes into effect on July 5, 2016. However, most provisions will go into effect for MCO contracts negotiated after that date, meaning it could take up to a year to make all contracts compliant. The National Council is continuing to review the regulation and analyze its implications for mental health and addictions providers across the country. Stay tuned to Capitol Connector for more.