National Alliance on Mental Illness
page printed from
(800) 950-NAMI;

Medicaid Emergency Psychiatric Demonstration Details

August 11, 2011


The Federal Center for Medicare and Medicaid Services (CMS) has announced the availability of funds through the Medicaid Emergency Psychiatric Demonstration. Through this Demonstration, participating states will be permitted to provide Medicaid payments to non-governmental psychiatric hospitals for inpatient emergency psychiatric care for individuals between the ages of 21 to 64 who have been determined to be dangerous to themselves or others.

Under federal law, federal matching Medicaid dollars cannot be used to pay for inpatient care (psychiatric or medical) in “institutions for mental diseases” or IMDs. IMDs are defined as a hospital, nursing facility, or other institution that is primarily engaged in providing diagnosis, treatment or care of persons living with mental illness.

The practical impact of the IMD exclusion is that public and private psychiatric hospitals have been ineligible for Medicaid reimbursement. NAMI has advocated for many years for the repeal of the IMD exclusion, arguing that it is discriminatory and poor public policy.

In 2010, Congress passed and President Obama signed the Affordable Care Act (ACA) into law. Section 2707 of the ACA authorized a three year Medicaid emergency psychiatric demonstration project that permits non-government psychiatric hospitals to receive Medicaid payment for providing emergency services to “Medicaid recipients aged 21 to 64 who have expressed suicidal or homicidal thoughts or gestures, and who are determined to be dangerous to themselves or others.” For these individuals, the requirements of the IMD exclusion prohibiting Medicaid reimbursement of care in IMDs would be waived.

How will this program work?

Although only non non-government (private) psychiatric hospitals will be eligible for Medicaid reimbursement through this demonstration program, states will be responsible for applying for and administrating funds available through the program. States selected for participation will be provided with quarterly payments from CMS to be used for services provided by private psychiatric hospitals providing inpatient treatment of adults between the ages of 21 and 64.

How many states will be eligible to participate?

The Request for Proposals (RFP) does not specify how many states will be awarded, but does specify that states will be limited in number to ensure that sufficient funds are available for each participating state. The ACA provides a total of $75 million to implement and evaluate the demonstration over a period of three years.

What factors will be considered in making awards to states?

The RFP specifies that states will be selected on a competitive basis, taking into consideration factors including:

  • The availability of various types and combinations of psychiatric beds in the state (e.g. general hospital psychiatric units, private psychiatric hospitals, and public (state and local) hospitals.);
  • The level and types of investments in community-based behavioral health services by the state (e.g. ACT program, mobile treatment teams, etc.); and
  • The design of the state’s Medicaid program.
Achieving an appropriate national balance in the geographic demonstration of the demonstration will also be a factor.

Why are these funds limited to non government inpatient psychiatric hospitals?

The demonstration is limited to the provision of emergency, acute inpatient psychiatric treatment. Although the roles of state hospitals vary from state to state, many do not provide short-term, emergency psychiatric care. These responsibilities frequently fall on private psychiatric hospitals or general community hospitals with psychiatric units. Thus, Congress decided to limit the Demonstration to these “non-government” hospitals.

The demonstration applies to individuals who require treatment to stabilize an “emergency medical condition.” What does this mean?

The legislation defines emergency medical condition as “an individual who expresses suicidal or homicidal thoughts or gestures, if determined dangerous to self or others.”

The underlying reason for this narrow definition is that the legislation is tied to another federal law, the “Emergency Medical Treatment and Labor Act” (EMTALA). EMTALA requires hospitals to provide treatment to individuals with emergency medical conditions to stabilize the condition or provide an emergency transfer to another facility. NAMI and other organizations who advocated for this demonstration argued that it was unfair to require hospitals to provide emergency medical treatment on the one hand but deprive them of Medicaid reimbursement on the other.