Outdated federal policies continue to limit access to behavioral healthcare, leaving patients to bear the consequences, Stuart Archer, CEO of Oceans Healthcare, wrote in a Feb. 9 LinkedIn post.
The Plano, Texas-based behavioral health provider operates psychiatric hospitals and outpatient programs across multiple states. He said one of the most significant barriers is Medicaid’s Institutions for Mental Diseases exclusion, which prevents the government from matching payments for care delivered to patients ages 21-64 in psychiatric or substance use disorder facilities with more than 16 beds. The policy dates to the Community Mental Health Act of 1963, which sought to reduce reliance on large, state psychiatric hospitals in favor of community-based outpatient centers.
However, the anticipated investment in community services never fully materialized, Mr. Archer told Becker’s.
“A lot of people certainly celebrate the deinstitutionalization of patients 56 years ago under the Kennedy administration. But what they forget is there was supposed to be a corresponding investment in community based services that actually never happened then got cut in the ’80s,” Mr. Archer said.
He said evidence suggests loosening IMD restrictions can meaningfully change care patterns. A Medicaid claims analysis published Dec. 17 in the American Journal of Managed Care found that states with IMD waivers saw lower utilization of high-acuity services among beneficiaries with serious mental illness. Psychiatric inpatient admissions were 14% lower in waiver states, while psychiatric emergency department visits declined by 26%. All-cause inpatient and emergency department use each fell by 9%, outpatient utilization rose by 19% and incarceration rates dropped by 11%.
According to Mr. Archer, allowing states to fund the full continuum of psychiatric care can ease pressure on emergency departments while supporting consistent outpatient engagement.
“In 202[6], Medicare has lifetime limits on your behavioral health resources. They certainly don’t say, ‘Hey, you can only have cancer 190 days,’” he said. “And they certainly don’t limit your access to other services. But when it comes to behavioral health, they have and they still do, so I think there’s a lot of work to do institutionally within these programs.”
Although IMD exclusion waivers have demonstrated benefits, Mr. Archer said broader federal reform is needed to reflect how behavioral healthcare is delivered today.
“It made a lot of sense when the states were largely state hospitals, and there was this fear that private hospitals were going to play a role and this was before managed Medicaid. This was from a whole other era,” he said. “But now, freestanding hospitals, private psych hospitals, are Medicaid providers, and they’re really the predominant go-to in most communities.”
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