The Institutes for Mental Disease Exclusion (IMD Exclusion) provision of Medicaid prohibits Medicaid from reimbursing states for the treatment of people with mental illness who are between 18 and 65 years old. This causes states to kick the seriously ill out of hospitals--lock the front door and open the back--in order to make residents Medicaid eligible and get a 50% match from the federal government to provide for their care. We wrote about the IMD Exclusion in the Washington Post.
One offset to this federally sanctioned discrimination against people with serious mental illness was the Medicaid Disproportionate Share Hospital (DSH) Payments. These are payments to state hospitals that have a disproportionate share of people living below poverty. Now, under ACA the DSH payments go away and the provisions against reimbursing states for long-term hospital care stay in place.
The following is a devastating (and unfortunately, well-informed) analysis by the National Association of State Mental Health Program Directors, who are responsible for state mental health programs. It details the combined impact of ACA and changes in Medicaid on the ability of people with serious mental illness to be hospitalized in future. The full report is available at http://nasmhpd.org/docs/publications/TheDSHInterplay04_26_13WebsiteFINAL.pdf
This bulletin has been prepared to inform State Mental Health Agencies (SMHAs) and other mental health stakeholders on the interplay between Medicaid disproportionate share hospital (DSH) payments, the Medicaid Institutions for Mental Disorders (IMD) exclusion, the new Medicaid expansion program embodied in the Affordable Care Act (ACA), and declining state mental health budgets – and the impact of this “perfect storm” of events on state public mental health systems and people with serious mental illness.