Thirty-eight states and the District of Columbia have sought Section 1115 waivers to provide treatment for beneficiaries with substance use disorder (SUD) treatment in institutions for mental diseases (IMDs). The Centers for Medicare & Medicaid Services (CMS) approved requests from 34 states and the District of Columbia. Four states—Alabama, Arizona, Missouri, and New York—have new demonstration applications pending CMS approval.
Guidance issued by CMS in November 2017 outlines the parameters for states to obtain a Section 1115 demonstration to pay for short-term inpatient and residential SUD treatment IMDs. These criteria—meant to encourage development of a comprehensive approach to treating SUDs—are:
Provider capacity. Within 12 months of approval, states must complete an assessment of the availability of providers who are enrolled in Medicaid and accepting new patients at the following levels of care: medication-assisted treatment (MAT), outpatient, intensive outpatient, residential, inpatient, and medically supervised withdrawal management.
Phased-in provider requirements. Between 12 and 24 months following demonstration approval, states must ensure that residential providers meet the American Society of Addiction Medicine (ASAM) criteria or other nationally recognized, evidence-based, SUD-specific program standards, and that residential providers offer their patients access to MAT. During the initial implementation period, CMS will accept interim provider qualifications included in the demonstration’s special terms and conditions so states can receive federal financial participation (FFP) as they work toward implementing the national standard.
Patient placement criteria. Between 12 and 24 months following demonstration approval, states must require providers to use an evidenced-based, SUD-specific patient assessment tool. Within 24 months of demonstration approval, states must also ensure that there is an independent utilization management approach that ensures beneficiaries have access to services at the appropriate level of care, that interventions are appropriate for the diagnosis and level of care, and that there is an independent process for reviewing placement in residential settings.
Opioid prescribing, naloxone, and prescription drug monitoring. Throughout the course of the demonstration, states must implement opioid prescribing guidelines and other strategies to prevent opioid abuse. They must also expand coverage of and access to naloxone for overdose reversal. Strategies to increase the use of prescription drug monitoring programs and to improve their functionality are also required.
Care coordination strategies. Between 12 and 24 months following demonstration approval, states must implement policies to ensure that residential and inpatient facilities link beneficiaries, especially those with an opioid use disorder, with community-based services and supports following stays in these facilities.
Evaluation and reporting. Through their regular Section 1115 demonstration reports, states are required to include information on performance measures and milestones, including improved adherence to treatment, and reduced use of emergency department and inpatient hospital settings.
States must report on progress toward meeting six standardized milestones, some of which must be met within 12 and 24 months of demonstration approval, and some that may be met over the course of the demonstration. Consistent with Section 1115 demonstration requirements, states must conduct independent evaluations to assess whether the demonstration has achieved its intended goals. States must submit an evaluation design for CMS approval, and evaluation reports will be made publicly available on Medicaid.gov.
Demonstration approval and FFP. FFP for services in IMDs is contingent upon CMS approval of each state’s implementation plan detailing how it will meet the six milestones; it may be withheld if states do not make adequate progress toward meeting the milestones and goals. States also must be in full compliance with budget neutrality requirements at the end of the demonstration period or CMS will recover the difference from the state. CMS will take achievement of milestones and performance measure targets into consideration if a state requests an extension of its demonstration.
(Last updated November 20, 2023)