Oklahoma, Maine Granted IMD Medicaid Waivers for SUD Patients

The Centers for Medicare & Medicaid Services (CMS) has approved section 1115 Medicaid demonstration waivers for Oklahoma and Maine. 

As a result, both states may now bypass the IMD exclusion for substance use disorder (SUD) patients. Plus, Oklahoma can also bypass the rule for patients with serious mental illness (SMI) and/or serious emotional disturbance (SED).

The IMD exclusion typically prevents Medicaid from paying for inpatient stays at psychiatric treatment facilities — or “institutions for mental diseases” — that have more than 16 beds. The rule applies to patients with mental health conditions and SUDs.


While the rule is as old as Medicaid itself, it’s been widely criticized by industry leaders. They say the IMD exclusion is inappropriately restrictive and harmful for Medicaid beneficiaries with serious behavioral health needs.

In response, CMS began allowing states to apply for waivers to bypass the rule for inpatient SUD treatment back in 2015. Last year, it also started granting waivers for SMI and SED treatment.

The waiver approvals in Oklahoma and Maine bring the total number of states with SUD Medicaid waivers up to 31. Meanwhile, seven states — including Oklahoma — now have 1115 demonstration programs for both SUD and SMI/SED.


“Today’s announcement represents a powerful reminder of what can be achieved when states are given the flexibility they need to develop innovative programs to address local needs,” CMS Administrator Seema Verma said in a press release announcing the news. “These demonstrations will have a massive impact on increasing access to vitally needed treatment services for Oklahomans and Mainers.”

CMS has seen the impacts of 1115 waivers play out in other states. In Virginia, for example, the demonstration helped lead to an 104% increase in the number of Medicaid beneficiaries with SUD receiving treatment.