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Medicaid payment for opioid treatment embroiled in politics over loosening restrictions

In Cincinnati, wait times for opioid addicts seeking residential treatment have dropped as the city's providers are banding together to manage the barrage of cases across different settings.

In January, Mercy Health partnered with 10 outpatient treatment centers. The hospital offers short-term detox stays for patients, then the clinics take over and manage the long-term treatment, nearly on demand. After they have stabilized, patients can decide whether they want residential treatment or outpatient care.

This approach is key to managing the scope of opioid addiction cases, said Shawn Ryan, founder and chief medical officer of the outpatient treatment center BrightView, because it matches patient needs with what providers offer.

But there is a constraint on long-term treatment for mental illness and substance abuse that hinders creative use of hospitals, nursing homes and other facilities. The so-called institutions for mental disease, or IMD, exclusion, which since the 1970s has largely banned Medicaid funds from paying for stays IMDs, with more than 16 beds.

"In the Medicaid field, with reimbursement not robust, no one could make it really well without cobbling together grants and other funding," Ryan said. "The removal of IMD exclusion could really help."

The IMD exclusion is at the center of congressional debate this week as House lawmakers are back to work on a bill to loosen the IMD exclusion.

The legislation, part of the package being marked up Thursday by the House Energy and Commerce Committee, would allow states to adopt a state plan amendment to cover opioid addicts' residential treatment of up to 30 days under Medicaid. Many mental health advocates and people on the ground trying to beat back opioid overdoses and addiction rates agree that the longtime ban on Medicaid funding for institutes of mental disease (IMDs) is outdated. But Congress' attempt to change it has drawn sharp criticism from some who say lifting it for treating opioid addicts could skew states toward focusing on expensive residential treatment over the continuum of care approach.

Ryan also said that residential treatment needs to be looked at in terms of continuum. He wants the conversation to move away from the word "beds," and focus on the current capacities of hospitals and nursing homes and how they can meet current needs of patients.

The IMD exclusion is a hold-over of the days when people with mental illness were kept in institutions. The pendulum-swing away from institutions ended with Congress blocking federal funds from going to facilities with more than 16 beds. In the divided mental health advocacy community, some continue to worry that paring back the exclusion is a slippery slope back to institutionalizing the mentally ill.

Congress has tried and failed to open up the exclusion in the past, and the Obama administration took a regulatory step in 2016 to let Medicaid to pay for stays of up to 15 days, provided they were coordinated through a managed care plan.

The Trump administration has picked up where the Obama administration left off, expediting state's Medicaid 1115 waivers to fund IMD stays for opioid and substance abuse patients for 15 days each month. Eleven states have had waivers approved in total, six of which were approved under the Trump administration's flexible policy since October 2017.

As with all Medicaid waivers, states have to show the CMS that they're not spending or banking any more money than they would do without the waiver.

Now as Congress is poised to take another step on IMDs, reaction is mixed.

The mental health community is concerned that the focus on opioid addicts ignores the other half of the equation for some patients: underlying mental illness that data from the Substance Abuse and Mental Health Services Administration (SAMHSA) show often causes opioid addiction.

"You can't artificially separate the two [issues] when you're talking about serious mental illness," said Frankie Berger of the not-for-profit Treatment Advocacy Center. "If you have a psychiatric illness and have hospital care, you won't get residential SUD treatment."

Typically, patients go to the hospital for detox. Then they might head to an IMD, which will focus on substance abuse treatment rather than treatment of mental illness offered by psychiatric hospitals.

"It does create this artificial line, and it doesn't acknowledge the fact a lot of people who would use an IMD also need psychiatric help," Berger said. "It's a problem if you don't treat these issues the same way."

Under current law, Medicaid covers IMD stays for children and the elderly. The focus on opioid addicts makes sense politically, Berger said, because the opioid epidemic has the country awake to addicts' need for treatment.

Then there is another line of attack: cost.

Some critics say the waivers are enough and congressional action could motivate states to focus on expensive residential treatment at the expense of community behavioral health programs.

"People need an array of recovery options," said Hannah Katch of the liberal think tank Center on Budget and Policy Priorities. Katch listed peer support services and other community options as equally key for treatment.

Katch noted that residential facilities are costly and worries states would be encouraged to invest money in IMDs over community-based services. She prefers the administration's waivers, which require states to remain vested in community programs as well.

But even clarifying the actual cost is problematic.

Congress' previous attempt to allow Medicaid to pay for stays up to 30 days was deemed so expensive by the Congressional Budget Office that the effort fell apart. Apart from California, states didn't have data on how many IMDs they have, where they are located, or what they cost. The CMS also doesn't have that data, so the CBO projected a $40 billion to $60 billion price tag for that bill.

Now the CBO is working on a new score that hasn't been released, but a GOP committee aide said the agency has indicated the proposed repeal is in the "low single digit billions."

But Berger said until the government has data on IMDs, the score doesn't mean much. Another bill Energy & Commerce is considering with its opioid package would order the Medicaid and CHIP Payment and Access Commission (MACPAC) to run an exploratory study on IMDs.

Berger said this will open lawmakers' eyes to just how states are navigating around the laws currently in place to manage treatment of the growing number of mentally ill and addicted populations.

"They will figure out this exclusion has left states stuck between rock and hard place, and are skirting the exclusion all over the place," Berger said. "They will find that it's been to the benefit of their constituents."

Meanwhile states who have obtained 1115 waivers are working to implement them.

West Virginia is launching its new benefits July 1.

Allison Adler, communications director of the West Virginia Department of Health and Human Resources, said these will include a "continuum of care that ensures that members can enter SUD treatment at a level appropriate to their needs and step up or down to a different intensity of treatment levels."

Medicaid will pay for short term residential treatment for all levels of treatment, Adler said.

As debate continues to simmer, Berger said that as stakeholders and lawmakers get hung up on talking about facilities and how they should be used, what's lost is that fundamentally the issue boils down to payment structure.

"This is the only thing that isn't paid for by Medicaid based on where a facility is and what care it offers," Berger said.

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