Inpatient Psychiatric Hospitals

MedPAC’s description of inpatient psychiatric hospitals provides an accurate overview of the critical behavioral health role these institutions play in their communities, especially for seniors and disabled Americans:

“Medicare beneficiaries with serious mental illnesses or alcohol- and drug-related problems may be treated in specialty inpatient psychiatric facilities (IPFs). Beneficiaries who use IPFs are among the most vulnerable in Medicare. A majority are disabled and low income. They tend to be heavy users of health care services, in part because their mental illnesses may undermine their willingness or ability to comply with recommended care. Often, they have additional medical needs that may complicate their treatment. The services furnished by IPFs are intended to meet the urgent needs of patients experiencing an acute mental health crisis.”

The paramount challenge today for policymakers is to provide a regulatory and payment environment that ensures beneficiaries with mental illness have immediate access to the behavioral health care treatment that only inpatient psychiatric hospitals offer.  

Medicaid – Institution for Mental Disease (IMD)

Medicaid currently prohibits, in most instances, federal Medicaid funding to be used to reimburse for inpatient psychiatric care provided to adults in an IMD with more than sixteen beds. Under current Medicaid managed care rules, at state direction, federal funds can be used to reimburse for short-stays (15 days or less per month) by a Medicaid beneficiary in an IMD. Additionally, through its 1115 Medicaid waiver authority, CMS has allowed certain states greater flexibility in providing services to Medicaid beneficiaries in an IMD.

As the nation seeks solutions to the ongoing opioid crisis and responds to the mental health stresses attributable to the effects of the COVID-19 pandemic, the need for acute, inpatient psychiatric and substance use disorder services grows. IMDs can and should be part of addressing these crises, and FAH advocates that CMS review and update its dated IMD policy. By expanding the use of services provided in an IMD, we can help assure that the availability of the appropriate resources grow with the national need.