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State Medicaid Waivers for SUDs Present Opportunities for Stakeholder Engagement

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1115 Waivers approved by CMS allow state Medicaid programs to better address substance use disorders among beneficiaries.

Evolving Medicaid Landscape

The Centers for Medicare and Medicaid Services (CMS) estimates that roughly 12% of adult Medicaid beneficiaries experience a substance use disorder (SUD). SUDs reduce workforce productivity, diminish quality of life, and increase violence and suicide, taking a toll on individuals, families, and communities.

In 2017, as the opioid crisis escalated, the administration declared the opioid epidemic a public health emergency. In response, the CMS released guidance in November 2017 that expanded federal funding for Medicaid services addressing the continuum of care for SUDs, including services provided at institutions for mental disease (IMDs), through Section 1115 demonstration waivers. Under Section 1115 of the Social Security Act, the Secretary of Health and Human Services can approve federal funding for programs that are not ordinarily eligible by waiving Medicaid requirements to allow states to implement pilot programs or other experimental changes. These waivers must be budget neutral to the federal government, meaning the federal funding during the demonstration cannot exceed the amount that would have been provided in the absence of the waiver, and states are required to create and adhere to evaluation plans. While states were able to propose 1115 demonstrations involving SUDs beforehand, the 2017 guidance created a framework for states to better understand what would be approved.

Waiver demonstration projects vary considerably from state to state, as their purpose is to allow states to tailor efforts to their specific needs. Many states have applied for and been approved for SUD waiver demonstrations since CMS’s 2017 guidance (Figure 1).

Figure 1. States with Approved or Pending SUD 1115 Waivers as of May 2020
Figure 1. States with Approved or Pending SUD 1115 Waivers as of May 2020

While these demonstrations serve to strengthen state capacity to respond to the opioid crisis, some states have included components in their 1115 waivers to enhance state capacity to address serious mental illness (SMI) as well. In 2018, the CMS released guidance providing additional advice for states when applying for demonstrations addressing adults with SMI or children with serious emotional disturbance. Given the strong connection between SUD and SMI, state efforts to target one consideration will likely impact the other. Many waivers include provisions that would permanently integrate successful aspects of a given demonstration at the end of the 3- or 5-year period, increasing relevance to stakeholders in the SUD and SMI space.

1115 SUD Waiver Focus Areas

Expanding Breadth of and Access to Mental Health and SUD Services Across States

States aim to use increased federal funding to implement a wider set of SUD-oriented services across their respective states. Demonstrations seek to expand the types of services offered to patients being treated for SUDs, as well as increase the number of sites at which patients are able to access these services. For example, Idaho’s demonstration will expand crisis stabilization and response services and create a more robust treatment network in order to care for patients at all stages of SUD. The demonstration will make inpatient mental health and SUD services available for short-term, acute stays in IMDs. The demonstration will also offer high-intensity residential services and partial hospitalization services, which are inclusive of support therapy, medication monitoring, and skills building.  By increasing the suite of SMI- and SUD-related services offered, Idaho seeks to reach individuals across all stages, with particular focus on earlier identification and treatment.

Expanding Access to Medication-Assisted Treatment

Medication Assisted Treatment (MAT), the use of medications in combination with behavioral health counseling to provide a holistic approach to SUD treatment, has gained increasing recognition within the SUD space. MAT has demonstrated clinical efficacy in treating opioid use disorder (OUD) and other SUDs, as its adherence improves patient survival rates, increases probability that a patient will remain in treatment, and lowers individual risk of relapse. Additionally, while utilization of MAT drugs has increased since 2013, only 44% of Medicaid beneficiaries under 65 diagnosed with an OUD have received any SUD treatment (inclusive of MAT), indicating a need for increased access and uptake.

Many states seek to use 1115 waiver demonstrations to provide increased access to MAT within SUD treatment services. For example, Idaho’s recently approved demonstration would reimburse for methadone maintenance as a behavioral health service. In order to incentivize providers to begin prescribing MATs such as methadone and buprenorphine, Idaho’s waiver would require all IMDs receiving Medicaid payment to offer at least 2 forms of MAT. This requirement will encourage IMDs to begin thinking about forming novel relationships that would allow patients to continue treatment after discharge, such as telehealth offerings and partnerships with nearby primary care providers who are already offering these services. These innovative collaborations will continue to increase the breadth of service offerings for Idahoans living with SMI or SUDs. In addition, Kentucky’s demonstration established coverage of methadone in narcotic treatment programs and residential treatment facilities. The demonstration also implemented care coordination that would allow individuals in treatment to access MAT off-site if appropriate services were not available on-site.

Delivering Better Coordinated Care

In addition to increasing access to treatment, states look to strengthen care coordination to speed recovery and prevent relapse. As part of the 2017 guidance from the CMS, states are required to ensure that facilities link beneficiaries with community-based services to support the continuum of care. For example, West Virginia’s demonstration includes a peer recovery component. Post-treatment, individuals are connected with a peer recovery coach, certified by the West Virginia Department of Health, who provides counseling to prevent relapse. Other forms of support, such as housing assistance, can accelerate recovery post-discharge. For instance, Florida is piloting a demonstration providing housing assistance to beneficiaries with SMI or SUD.

Evaluation of Demonstrations

As part of the approval process, states submit 1115 demonstration evaluation designs. States test their formulated hypothesis throughout the implementation period to ensure demonstrations are meeting their established goals. This year, California will submit the final evaluation report for its 2016–2020 waiver period. To measure success, California evaluates the demonstration based on metrics informing access, quality, cost, and coordination of care. In 2019, California reported a significant uptick in prescribing rates for treatment of OUD and higher service delivery rates. The rise in treatment rates was also attributed to the MAT Expansion Project funded by the Substance Abuse and Mental Health Services Administration that aims to fill in the unmet treatment need in areas with limited access (e.g., rural areas, tribal communities). As such, evaluations must be comprehensive to assess external contributing factors.

Preparing for Shifting Expectations

Through Section 1115 waivers, states have begun and will continue to bolster their ability to provide comprehensive services for Medicaid beneficiaries with SUD and SMI. Stakeholders will want to pay close attention to the implementation, successes, and failures of these demonstrations, given their novel nature and potential long-term implications on state behavioral health offerings. Improving local SUD prevention and treatment capabilities may lead to reductions in SUD- and SMI-related emergency room admissions, potentially mitigating state Medicaid expenditures.

Stakeholders may find opportunities to engage in the implementation of these demonstrations:

  • Digital health companies and telemedicine vendors can collaborate with providers and state Medicaid agencies to support access to the continuum of care and reduce relapse rates.
  • Given that innovative care delivery and payment models are implemented and evaluated as part of 1115 waivers, payers can use lessons learned from 1115 waivers to inform benefit design for SUDs.
  • As states look to expand MAT programs, payers and manufacturers can consider entering innovative financing solutions and value-based contracts to support continued patient access to treatment.
  • Providers may want to play an active role in the implementation of these demonstrations, as their responsibility for SUD and SMI treatment and care coordination may expand significantly.

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