IMD Waivers Improve Access to Inpatient — and Outpatient — SUD Treatment

Substance use disorder (SUD) treatment providers in certain states serve Medicaid beneficiaries better than others. It all depends on whether they operate in a state with a waiver allowing them to bypass the Institutions for Mental Diseases (IMD) exclusion, according to new research published in the February issue of Health Affairs. Not only do providers in waivered states offer a wider range of inpatient services to Medicaid beneficiaries, but they offer more outpatient services, too.

A rule as old as Medicaid itself, the IMD exclusion effectively prevents Medicaid beneficiaries between the ages of 21 and 64 from being able to receive treatment in inpatient behavioral health facilities with more than 16 beds. Specifically, the rule prohibits the use of federal Medicaid dollars to pay for such treatment.

However, there’s a way around that rule: States can apply for IMD waivers. The waivers allow Medicaid to pay for beneficiaries to receive behavioral health care in residential facilities. And since the federal government created the waivers in 2015, the availability of SUD treatment options in waivered states has increased, according to the Health Affairs study.


Two years after becoming waivered, states saw a 34% increase in the number of residential SUD treatment facilities accepting Medicaid. Outpatient services in those states expanded, too, with states seeing a 9% increase in the number of IOP facilities accepting Medicaid. Plus, those states also saw a slight uptick in the delivery of medications for opioid use disorder at outpatient facilities.

To reach those findings, researchers reviewed data from the National Survey of Substance Abuse Treatment Services. Specifically, they looked at data from between 2010 to 2018 for treatment facilities in the nine states that received IMD waivers between 2015 and 2018.

“Our findings suggest that IMD waivers may be an important tool for advancing access to a full continuum of SUD treatment for Medicaid enrollees,” the authors of the study wrote.


The study mirrors what behavioral health advocates have been saying for years: The IMD exclusion hinders Medicaid beneficiaries’ ability to access certain necessary SUD services.

Overall, 31 states have SUD Medicaid waivers, and as a result more people in those states have been able to receive appropriate SUD care. Take Virginia, for example. After becoming waivered, the state saw a 104% increase in the number of Medicaid beneficiaries receiving SUD treatment, according to CMS.

While waivers that increase accessibility are great, many behavioral health stakeholders would like to see the rule eliminated altogether.

“With the Medicaid IMD exclusion, the government is flat out saying they won’t cover any benefits for anybody within the ages of 21 and 65,” National Association for Behavioral Healthcare President and CEO previously told BHB. “That’s a blatant parity violation.”