Montana seeks Medicaid reimbursement for short stays in mental institutions — even Warm Springs

Officials say proposal could save money and improve treatment. But it may not be so simple

By: - September 1, 2021 7:31 pm

Rimrock Foundation, the state’s largest chemical dependency and rehabilitation service, is in downtown Billings (Photo by Darrell Ehrlick of the Daily Montanan).

Montana is seeking a Medcaid program waiver from the federal government to allow reimbursement for short-term in patient stays at larger mental health institutions, a practice generally banned under the Social Security Act that state health officials say could help boost bed capacity in treatment facilities and fill gaps in the continuum of care.

The feds have already approved waivers exempting 32 states from the exclusion, with several more under review, so Montana would be far from alone. And it could mean a positive step toward achieving equity in mental health treatment, one that could also save the state money and allow for reinvestment in other mental health programs. But it’s not as common sense a fix as it might sound, with some critics warning that the state might be prescribing the wrong solution to a real problem — a shortage of mental health and substance-use treatment capacity.

“From the information we have, we have no idea if this is going to help with waiting lists,” Beth Brenneman, an attorney with Disability Rights Montana, told the Daily Montanan in August. “In the meantime we have a crisis in staffing. And this isn’t doing a thing to address that.”

The prohibition against using Medicaid funds for short-term in-patient stays has been in the Social Security Act since its passage in 1965, an attempt to dissuade states from building federally-funded large mental institutions and encourage them to fund their own in-treatment programs. Specifically, it prevents states without a waiver from receiving Medicaid reimbursements to pay for non-elderly patient stays at facilities with more than 16 beds. But since 2015, roughly coinciding with the growing opioid abuse epidemic, more and more states have successfully sought waivers allowing them to receive Medicaid reimbursements for in-patient substance use disorder treatment, with a much smaller number of states receiving waivers for mental health treatment.

Most states aren’t expected to provide waiver evaluation results until 2024 or 2025, according to the Kaiser Family Foundation. However, preliminary reports found increased utilization of services and provider participation, in some cases accompanied by gains in access to residential treatment, fewer emergency room visits and even some investment of recovered state funds in community-based care, Kaiser found. 

Montana is seeking a waiver for both substance use disorder and mental health treatment, somewhat uncharted territory, and it’s asking to get reimbursed for stays of an average of 30 days  — generally, the maximum length that the Centers for Medicare and Medicaid Services has approved in the past. The state has identified the Rimrock Foundation in Billings and the state hospital in Warm Springs as the facilities that can receive Medicaid reimbursement under the waiver, according to DPHHS spokesman Jon Ebelt, though there “may be other residential facilities in Montana who do not currently serve Medicaid members who may choose to do so based upon the … waiver.”

Warm Springs is currently supported by the state general fund, meaning savings from the waiver, if approved, could be reinvested by the state, though exactly how much isn’t year clear. And the state posits that there’ll be a benefit to capacity and quality of treatment as well.

“There is a need for short-term stays in inpatient hospitals and inpatient substance use disorder treatment centers as people are on their way to recovery,” Zoe Barnard, an administrator with the Department of Public Health and Human Services, told a legislative interim panel in August. The state must present its Medicaid waivers for review to the Children, Families, Health, and Human Services Interim Committee.

The request is part of a package of what are called Section 1115 waivers that the state designed to implement the HEART Fund, a mental healthcare program backed by Gov. Greg Gianforte that was created under the state’s landmark recreational marijuana implementation bill, HB701. The fund will receive regular $6 million contributions from marijuana tax revenues, among other sources.


As part of the HEART program, Montana’s waiver submissions also include requests for Medicaid-funded programs to treat stimulant-use disorder, provide benefits to people incarcerated in the state prison up to 30 days prior to release and tenancy support services. As a whole, experts and advocates who spoke at the Children and Families interim committee meeting in August applauded the waiver proposals for their holistic treatment of mental health and substance use disorders and the efforts to improve the continuum of care.

It is impossible to separate substance use disorder and mental health, just as it is impossible to separate mental health from physical health,” said Mary Windecker, the executive director of Behavioral Health Alliance of Montana.

But the IMD exclusion proved more controversial, for a number of reasons. Brenneman, for example, questioned how well what amounts to a funding source switch will really address the need in the system. Some institutions in the state — Rimrock, for example — already operate Medicaid-eligible facilities with fewer than 16 beds. 

“It seems to me that the real plan is to use the capacity that’s already there to kick the can down the road,” she said in the August meeting, adding later that the state needed to provide more information to justify its claims. 

Ebelt said the state’s demand for in-patient and residential treatment beds exceeds capacity, “with the IMD exclusion exacerbating the access shortages.”

“While there are treatment facilities that do accept Medicaid patients, the 1115 demonstration waiver will provide additional resources for Medicaid members who may currently have to wait to receive services,” he said.

Other committee questions about the IMD exclusion waiver were more philosophical in nature, with lawmakers asking the Department to reconcile the state’s objective of getting more patients in home and community-based treatment with a proposed policy change that would seem to incentivize in-patient care in, among other facilities, Warm Springs, which is authorized to involuntarily treat some patients.

Using federal Medicaid dollars on involuntary commitments to the state mental hospital … doesn’t seem consistent with the waiver’s goal of moving Montanans to community-based behavioral health care,” said Rep. Danny Tenenbaum, D-Missoula.

He and others also questioned the potential implications of using a patient’s own Medicaid dollars to commit them involuntarily to a state institution. 

“Although the HEART Waiver has many many good parts to it, I do have to object to anything that would violate an individual’s civil rights,” said Joel Peden, executive director of the Montana Associations of Centers for Independent Living, citing the U.S. Supreme Court’s decision in Olmstead v. L.C., which held that individuals with mental disabilities have the right to be treated in the least restrictive manner possible. “Any move that increases the possibility of somebody being sent to the state mental hospital is not following by those rules. We can’t put a price tag on somebody’s civil rights.”

The state, for its part, said securing Medicaid reimbursement for short-term stays at Warm Springs is necessary, in part though not exclusively because it’s the only facility that can treat involuntary commitments.

“Sometimes, they are a necessary component of a person’s treatment trajectory,” said Barnard. “Over half of the individuals who come to Montana state hospital — that’s 800 admissions per year — over half return to a private residence. Having a way for individuals to be treated on a short-term basis for mental illness and indeed sometimes their substance use disorder — that might include involuntary medication, and the state hospital is only one that does involuntary — can be core on individual’s trajectory to recovery.”

The state will review public comment on the HEART Fund waivers through September and submit final documentation to the feds by the end of September; if approved, the changes would take effect in January of 2022.

“By receiving FFP for Medicaid members in the Montana State Hospital, DPHHS will be able to reinvest those savings to ensure good quality of care and to improve access to community-based services,” Ebelt said.

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Arren Kimbel-Sannit
Arren Kimbel-Sannit

Arren Kimbel-Sannit is an Arizona-bred journalist who has covered politics, policy and power building at every level of government. Before getting his dose of northern exposure, Arren worked as a reporter in all manner of Arizona newsrooms, for the Dallas Morning News and for POLITICO in Washington, D.C. He has a special interest in how land-use decisions affect working-class people, which he displayed through reporting on the epidemic of pedestrian deaths in the U.S. for the Los Angeles Times and PBS Newshour. He's also covered housing, agriculture, the Trump presidency and more.