Q&A: How Massachusetts Uses Its Medicaid IMD Waiver to Improve Substance Use Disorder Treatment

Adam Stoler of MassHealth

In 2016, only 3.8 million of the 21 million Americans with substance use disorder (SUD) received treatment. As the opioid crisis persists, states have been working to identify new SUD treatment approaches, but the Medicaid Institutions for Mental Diseases (IMD) exclusion has historically put certain residential health care facilities out of reach for many Medicaid beneficiaries who need SUD treatment.

In July 2015, the Centers for Medicare & Medicaid Services allowed states to develop demonstration projects that provide a full continuum of care to patients with SUD, including the chance to waive the IMD exclusion. Massachusetts submitted a SUD waiver request and won approval in November 2016. As an early adopter, Massachusetts offers critical lessons about how to structure and implement expanded SUD treatment.

The National Academy for State Health Policy (NASHP), in partnership with the Association of State and Territorial Health Officials, has convened the Cross-Agency Leaders Roundtable —a group of 11 state leaders working to identify innovative, cross-agency state policies to improve SUD prevention, intervention, treatment, and recovery. NASHP sat down with roundtable member Adam Stoler, manager of Addiction Treatment Services at MassHealth (Massachusetts’ Medicaid program), to learn how his agency is using its 1115 SUD expansion authority, which includes an IMD exclusion waiver, to address treatment gaps.

What is the Medicaid Institutions for Mental Diseases (IMD) exclusion?

The exclusion defined in Section 1905(a)(B) of the Social Security Act prohibits state Medicaid agencies from using federal Medicaid funds to pay for care delivered to patients under age 65 in facilities classified as IMDs.

What is an IMD?

An IMD, as defined in Section 1905(i) of the Act, is any “hospital, nursing facility, or other institution of more than 16 beds, that is primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases, including medical attention, nursing care, and related services.”

How do IMDs fit into the continuum of SUD treatment in Massachusetts and why was obtaining an IMD exclusion waiver important?

Massachusetts is working to create a continuum of SUD treatment, aligned with the American Society for Addiction Medicine (ASAM) criteria, ranging from outpatient services to medically managed intensive inpatient services. We recognized that lower-intensity residential services, called residential rehabilitation services (RRS) in Massachusetts, are an important part of this continuum. RRS most closely correspond to ASAM Criteria 3.1 and include providing patients with residential counseling and support to help them transition back to their families and communities.

Prior to the waiver, MassHealth could not reimburse for these services because the majority of RRS facilities qualify as IMDs, creating a gap in the SUD treatment coverage continuum. RRS were available to people with SUD, but could only be supported by state dollars from the Department of Public Health (DPH), separate from the Medicaid benefit. Because MassHealth did not cover RRS, members often transitioned from more intensive inpatient services directly to outpatient services. This may not have been appropriate for all patients receiving treatment for SUD, particularly those with unstable housing or employment who benefit from having a longer-term, lower-intensity residential service to support their transition back to the community.

The waiver allows MassHealth to cover RRS for the first time. We are working with our accountable care organizations (ACOs), managed care organizations (MCOs), and our behavioral health managed care provider to develop relationships between RRS providers and the larger health care delivery system, which will be critical as MCOs and ACOs begin coverage of RRS services. Our behavioral health managed care provider began coverage of the RRS benefit on March 1, 2018, and the MCOs and ACOs will phase in coverage by Jan. 1, 2019.

How has implementation been for the behavioral health managed care provider that recently launched its RRS benefit?

MassHealth continues to work with plans and RRS providers to find the best ways to implement coverage. RRS providers are currently in the process of integrating into the larger health care system, including developing contracts and relationships with ACOs and MCOs. MassHealth is working with DPH to provide technical support to ACOs, MCOs and RRS providers during this transition on topics such as billing, contracting, relationship-building, and using ASAM criteria to identify the most appropriate level of care for members seeking SUD treatment.

Can you talk more about how Massachusetts is integrating SUD treatment, including RRS, into its broader health care delivery system?

We really wanted to develop solutions to increase access to SUD treatment from a systems-level perspective in order to ensure they were aligned with the priorities and structure of our ACO delivery system and other MassHealth reforms. For example, our MCOs and ACOs are required to establish networks of behavioral health providers to ensure Medicaid members have access to coordinated, comprehensive care. We see the addition of RRS within the Medicaid benefit as another tool in ACOs’ and MCOs’ toolboxes to improve health outcomes for MassHealth members.

We are also currently planning for an expansion of RRS that will add between 450 to 500 beds to the state’s 2,500 current beds. These additional beds will be targeted toward more complex patients with co-occurring mental health and SUD diagnoses. Facilities will have smaller patient-to-staff ratios and fewer beds. This enhanced RRS model will also require facilities to embed mental health services and develop partnerships with outpatient medication assisted treatment providers.

Acknowledging many state Medicaid programs are asked to do more with the same or fewer resources, what should they consider when implementing new Medicaid services, such as RRS?

States should start by identifying the value for RRS (or similar lower-intensity residential services) using data to better understand unmet need for these services and opportunities to drive cost savings in other parts of the health system. In Massachusetts, we found that patients with unmanaged or untreated SUD diagnoses often presented in acute settings where their addiction was not always identified and addressed.  We also found that these same individuals had disproportionately high annualized costs of care, as compared to other MassHealth members, largely driven by expenditures in acute settings. By creating a continuum of care, including RRS, we can now reduce avoidable utilization in acute settings and support appropriate placements in community settings, which are often more cost-effective and better equipped to support members’ long-term treatment and recovery.

Do you have any lessons learned to share with other states?

Comprehensively addressing the needs of people living with SUD is a top-level priority of the Baker-Polito Administration. Strong, aligned leadership is incredibly important to help drive coordinated state priorities and ensure the appropriate state agencies and stakeholders participate in developing and implementing solutions. We have also found that it is critical to engage a number of different agencies and multi-sector partners when developing policy changes. As part of this work, we have engaged with the Department of Public, the Department of Mental Health, accountable care organizations, health plans, residential treatment services providers, other treatment and recovery providers, and consumers. Through the SUD and IMD exclusion waiver, Massachusetts has had the opportunity to work across agencies to develop innovative, cost-effective solutions to improve treatment and recovery for people with SUD.

NASHP will continue to report insights and recommendations from the members of the Cross-Agency Leaders Roundtable in the months ahead.