Indiana University study finds Medicaid waivers increased Medicaid acceptance at residential treatment facilities

Substance use has been a public health issue in America for decades, costing millions of lives and billions of dollars each year. For many, seeking treatment can be an expensive challenge.

But what happens when Medicaid – a program aimed to help low-income families – allows a broader approval for substance use disorder treatment? According to a new study by Indiana University, Johns Hopkins, Temple and Harvard researchers, the number of residential facilities accepting Medicaid increases.

Since its creation in 1965, Medicaid has included the Institutions for Mental Diseases exclusion which prohibits use of federal Medicaid funds to treat enrollees ages 21–64 in psychiatric residential treatment facilities that have more than sixteen beds. However, in 2015, the federal government created a streamlined application pathway for state waivers of this rule to allow Medicaid coverage for substance use disorder treatment in residential facilities. Nine states received the waivers between 2015–18.

Researchers used data from the 2010–18 National Survey of Substance Abuse Treatment Services, to examine changes in residential and outpatient substance use disorder treatment facilities’ acceptance of Medicaid and other types of health coverage, as well as self-pay arrangements and provision of charity care, after states’ adoption of the Institutions for Mental Diseases waivers.

The study, published in Health Affairs Journal, found that acceptance of Medicaid increased 34 percent at residential treatment facilities and 9 percent at intensive outpatient facilities two years after waiver implementation. While delivery of medications for opioid use disorder did not increase in residential facilities following adoption of the waiver, it did increase to some extent in outpatient facilities.

“Our findings suggest that IMD waivers may be an important tool for advancing access to a full continuum of substance use disorder treatment for Medicaid enrollees,” said Kosali Simon, co-author of the study and a Herman B Wells Endowed Professor in the O’Neill School of Public and Environmental Affairs. “When states have been successful at ‘waiving’ this federal law, the facilities are more likely to accept Medicaid as a treatment payment.”

In addition to facilities increasingly accepting Medicaid, the study also found they are more likely to accept other forms of reimbursement such as private insurance. Researchers think this may be the result of an investment in hiring billing staff.  

The study also found some evidence that acceptance of Medicaid increased in outpatient settings likely due to requirements of the waivers that they maintain “a continuum of care,” meaning they have contracted providers for every setting along the American Society of Addiction Medicine continuum. This result, researchers say, may reflect states’ building a continuum of care that includes more outpatient providers under the waivers.

With more states expected to implement similar types of waivers in the future, researchers say these findings will help demonstrate their impact.

“The 2019 Substance Use–Disorder Prevention That Promotes Opioid Recovery and Treatment for Patients and Communities Act, is expected to result in more states implementing these types of Medicaid waivers, so it’s especially important to know what these laws can do,” Simon said.