Medicaid: IMD Exclusion

The Issue:  Medicaid IMD Exclusion

Where We Stand:

NAMI believes that federal Medicaid law should be modified to allow for payment of mental health treatment delivered in inpatient settings known as IMDs, or “institutions of mental disease.” People with mental illness should have access to a full range of treatment options and inpatient psychiatric care is an essential component of some people’s treatment.

Why We Care:

Currently, the law prohibits states from using Medicaid to pay for care provided in an IMD. This discriminatory exclusion has been part of the Medicaid program since Medicaid’s enactment in 1965, and it has resulted in unequal coverage of mental health care.

People with mental health conditions—just like people with any medical condition—need a range of care options from outpatient services to hospital care. Updating the IMD exclusion to allow for short-term stays in psychiatric hospitals helps strengthen the mental health system and provides people who rely on Medicaid with more treatment options. 

How We Talk About It:

  • About 1 in 8 visits to hospital emergency rooms involves a mental health or substance use condition. However, emergency departments are often not equipped to help people experiencing a mental health crisis.
  • Unfortunately, emergency department staff often have no place to send a person in crisis because of the limited number of in-patient, psychiatric beds in the U.S., which have decreased significantly since the 1950s.
  • Because there are often no in-patient beds available, people in crisis are often released from emergency departments – left to deal with their illness on their own.
  • Sadly, we know what happens when people don’t get the treatment they need when they need it. They can end up in jail or on the streets – leading to worse outcomes for the person, greater pain for their families and a higher cost to the state and the federal government.
  • Federal Medicaid policy has contributed to our mental health system’s lack of a full range of treatment options, including in-patient care.
  • Medicaid cannot cover care provided in “institutions for mental disease” (IMDs), which are psychiatric hospitals or other residential treatment facilities that have more than 16 beds that mainly provide services to people with mental illness.
  • This policy, known as the “IMD exclusion,” is the only part of the Medicaid program that doesn’t pay for medically necessary care simply because of the type of illness being treated.
  • The IMD exclusion is discriminatory and has had a real-life impact on people’s ability to access needed treatment.
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  • Recently, states were given the option to cover short-term stays in psychiatric hospitals under Medicaid by applying for a waiver from the federal government.  
  • While this option shows progress, we need to permanently get rid of the IMD exclusion so that every person who relies on Medicaid has access to the full range of treatment options they need – bringing us one step closer towards full and equal treatment under the law.

What We’ve Done:

  • NAMI’s statement on new state flexibilities to waive IMD
  • NAMI’s letter to the Centers for Medicare & Medicaid Services, calling for Medicaid to cover care provided in IMDs