An excellent comprehensive report on Medicaid’s Institute for Mental Diseases (IMD) exclusion law.

This article was published on February 22nd, 2021, here is a link to the full article on their site.

Here is the executive summary, taken from their full report (Eide & Gorman, 2021):

Executive Summary

Inpatient psychiatric care forms a crucial part of America’s mental health system. Though most mental health services are provided on an outpatient basis, treating some serious mental illnesses requires a hospital setting. Inpatient treatment may be provided in a general hospital unit or a specialized psychiatric hospital. Within the context of Medicaid, specialized psychiatric hospitals are known as “Institutions for Mental Diseases,” or IMDs.

Federal law generally prohibits IMDs from billing Medicaid for care given to adults between the ages of 21 and 64 at a facility with more than 16 beds. This “IMD Exclusion” has been in place, in some fashion, since Medicaid was enacted in 1965. The intent was to prevent states from transferring their mental health costs to the federal government and to encourage investments in community services. The IMD Exclusion achieved its desired effect by contributing heavily to what’s popularly called “deinstitutionalization,” the transformation of public mental health care from an inpatient-oriented to an outpatient-oriented system.

This report argues that the IMD Exclusion has outlived its usefulness and should be repealed. It discourages states from investing in inpatient care, hampering access to a necessary form of treatment for some seriously mentally ill individuals. As a result, these individuals end up repeatedly in the emergency departments of general hospitals, “boarded” for lack of access to available beds, and overrepresented among the homeless and incarcerated populations. More broadly, the exclusion discriminates, through fiscal policy, against the seriously mentally ill.

Concerns that repealing the IMD Exclusion would lead to a mass re-institutionalization of the mentally ill are overblown. The population of public psychiatric hospitals today stands at about 5% of what it was before deinstitutionalization. Individuals in need of mental health care have access to a much greater diversity of programs and public services than existed before the 1960s, when institutional care was often the sole option. Strong legal regulations also now exist that did not exist when Medicaid was first passed—most notably, the “integration mandate” of the Supreme Court’s Olmstead ruling, which requires mentally ill individuals to be provided services in the community when those services are appropriate, are not of objection to patients, and can be reasonably
accommodated.

Interest in repealing the IMD Exclusion has increased recently in response to a concern over bed shortages for the seriously mentally ill and persistent challenges with mental illness-related homelessness and incarceration. There have also been signs of bipartisan interest in a full and clear repeal. Under the Biden administration, mental health-care reform, beginning with the repeal of the IMD Exclusion, may present an opportunity for substantive bipartisan policy reform.

Eide, S., & Gorman, C. D. (2021). (rep.). Medicaid’s IMD Exclusion: The Case for Repeal (pp. 4–10). New York, NY.

This article was published on February 22nd, 2021, here is a link to the full article on their site:

Click to access medicaids-imd-exclusion-case-repeal-SE.pdf