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Stephanie Pellitt

, National Council for Behavioral Health

CMS Announces New Opportunities to Expand Mental Health Services

November 15, 2018 | Medicaid | Mental Health | Comments
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This week the Centers for Medicare and Medicaid Services (CMS) announced a new opportunity for states to expand Medicaid coverage for mental health services, including treatment delivered in inpatient facilities with more than 16 beds known as institutions for mental disease (IMDs). In a letter, CMS explains how states can use Section 1115 waivers to “support innovative service delivery systems” for adults with serious mental illness (SMI) and children with serious emotional disturbance (SED). CMS emphasized the need for states to bolster early identification services, better integrate mental health and primary care, increase access to crisis services and expand the use of Certified Community Behavioral Health Clinics (CCBHCs).


Recognizing the importance of early identification and engagement of youth with serious mental illness (SMI), particularly those experiencing psychosis, CMS offered recommendations on how state Medicaid programs could better address this need. This included making more early behavioral health screening available under the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit, development of referral networks to mental health providers, better data-sharing between non-specialized providers and mental health providers, and improved access to mental health services through schools, including screenings.

Further, integration of care is also critical to identifying mental illness early and addressing any co-occurring physical health conditions and substance use disorders (SUDs) that are common among individuals with SMI or SED. To increase integration, CMS suggested states explore screening for mental health disorders in primary care settings and supporting primary care providers (PCPs) and pediatricians to provide treatment and/or referrals for mental health services with the support of consultations with specialists and care coordinators. Finally, CMS cited the need to build up the availability of intensive outpatient and crisis stabilization programs as a way to prevent frequent emergency room visits for individuals with mental illness as well as any criminal justice involvement.


CMS highlighted Certified Community Behavioral Health Clinics (CCBHCs) as a model that states could use to address a wide variety of system improvements simultaneously. CCBHCs are required by law to provide a comprehensive array of community-based behavioral health care, including screening and assessment, 24-hour crisis care, integration of mental health, SUD and physical health care, utilization of evidence-based practices, care coordination, and more. According to CMS, “States may be able to adapt the CCBHC model of care using different authorities, depending on the services provided, beneficiaries served, and payment methodologies.”


States have long expressed interest in relaxing the IMD exclusion, which has prohibited Medicaid payment for residential mental health and substance use disorder (SUD) treatment in facilities with more than 16 beds since 1965. According to the letter, CMS will now allow states to waive the IMD exclusion for short-term stays (around 30 days) for mental health treatment in IMD settings. To date, Section 1115 waivers have been used to waive IMD restrictions for residential substance use disorder treatment, but this letter marks the first time CMS has encouraged their use for mental health treatment. In a press release, CMS said that 12 states have expressed interest in expanding in IMD coverage for the full continuum of mental health and substance use disorders.

Notably, CMS explains that these waiver demonstrations must provide a full continuum of care for individuals with mental illness. While residential treatment in IMDs may be included, states are also expected to improve community-based mental health care and must adhere to strict budget neutrality requirements, meaning that the demonstration cannot cost the federal government more than what it would have paid absent the demonstration.

The full guidance from CMS can be found here. Stay tuned to the Capitol Connector for more updates on the new IMD waiver process.