The Impact of Medicaid Institutions for Mental Disease Exclusion Waivers on the Availability of Substance Abuse Treatment Services and the Varying Effect by Ownership Type

Abstract

Policy Points

• The adoption of Medicaid institutions for mental disease (IMD) exclusion waivers increases the likelihood of substance abuse treatment facilities offering mental health and substance abuse treatment for co-occurring disorders, especially in residential facilities.
• There are differential responses to IMD waivers based on facility ownership. For-profit substance abuse treatment facilities are responsive to the adoption of IMD substance use disorder waivers, whereas private not-for-profit and public entities are not.
• The response of for-profit facilities suggests that integration of substance abuse and mental health treatment for individuals in residential facilities may be cost-effective.

Context

Access to integrated care for those with co-occurring mental health (MH) and substance use disorders (SUDs) has been limited because of an exclusion in Medicaid on paying for SUD care for those in institutions for mental disease (IMDs). Starting in 2015, the federal government encouraged states to pursue waivers of this exclusion, and by the end of 2020, 28 states had done so. It is unclear what impact these waivers have had on the availability of care for co-occurring disorders and the characteristics of any facilities that expanded care because of them.

Methods

Using data from the National Survey of Substance Abuse Treatment Services, we estimate a two-stage residual inclusion model including time- and state-fixed effects to examine the effect of state IMD SUD waivers on the percentage of facilities offering co-occurring MH and SUD treatment, overall and for residential facilities specifically. Separate analyses are conducted by facility ownership type.

Findings

Results show that the adoption of an IMD SUD waiver is associated with 1.068 greater odds of that state having facilities offering co-occurring MH and substance abuse (SA) treatment a year or more later. The adoption of a waiver increases the odds of a state’s residential treatment facility offering co-occurring MH and SA treatment by 1.129 a year or more later. Additionally, the results suggest 1.163 higher odds of offering co-occurring MH/SA treatment in private for-profit SA facilities in states that adopt an IMD SUD waiver while suggesting no significant impact on offered services by private not-for-profit or public facilities.

Conclusions

Our study findings suggest that Medicaid IMD waivers are at least somewhat effective at impacting the population targeted by the policy. Importantly, we find that there are differential responses to these IMD waivers based on facility ownership, providing new evidence for the literature on the role of ownership in the provision of health care.

The full study can be viewed at The Milbank Quarterly.

Ge, Y., Romley, J. A., & Pacula, R. L. (2024). The Impact of Medicaid Institutions for Mental Disease Exclusion Waivers on the Availability of Substance Abuse Treatment Services and the Varying Effect by Ownership Type. The Milbank Quarterly.