Medicaid Emergency Psychiatric Demonstration Frequently Asked Questions

What is the Medicaid Emergency Psychiatric Demonstration program?

The Medicaid Emergency Psychiatric Demonstration was created under Section 2707 of the Affordable Care Act. The demonstration provides States with federal Medicaid matching funds to reimburse private psychiatric hospitals for emergency inpatient psychiatric care provided to Medicaid recipients aged 21 to 64 who are experiencing a psychiatric emergency.

What is the Medicaid Emergency Psychiatric Demonstration program designed to test?

The demonstration will test whether partially eliminating the prohibition against payments to institutions for mental diseases (IMDs) for services rendered to Medicaid recipients aged 21 to 64 improves psychiatric care for people with mental illness and lowers State Medicaid program costs.

What is the Medicaid IMD exclusion?

The IMD exclusion prohibits Medicaid from making payments to IMDs for services rendered to Medicaid beneficiaries aged 21 to 64.

Why is this demonstration program necessary?

Because Medicaid beneficiaries aged 21 to 64 may not receive coverage for IMD services, many of them visit general hospitals when they experience a psychiatric episode that requires emergency care. This can place a strain on a general hospital, which may already be struggling with demand in its emergency department and is also frequently not equipped to treat patients with acute psychiatric needs. For the Medicaid beneficiary, this may result first in a delay in treatment, and then when treatment is provided, inadequate care. This demonstration is designed to test whether providing Medicaid reimbursement for IMDs results in faster, more appropriate care for Medicaid beneficiaries with psychiatric needs and provides relief to general hospitals.

Who was eligible to apply to participate in the demonstration?

Applications for the Medicaid Emergency Psychiatric Demonstration program were limited to State Medicaid programs and U.S. Territories. Solicitations to participate in the demonstration were sent directly to the Medicaid directors in those government entities.

Is this program a new Medicaid grant to States?

This is a research demonstration in which participating States can claim federal matching funds for Medicaid payments made for specific services that are otherwise prohibited under the Medicaid IMD exclusion. In return, States are required to participate in an evaluation of whether Medicaid reimbursement for IMDs improves psychiatric care for people with mental illness and lowers State Medicaid program costs. This evaluation will inform a report to Congress.

What specific services does the demonstration pay for?

Inpatient services necessary to stabilize a psychiatric emergency medical condition represent the scope of coverage under this demonstration. The specific services necessary will be determined by the beneficiary’s medical or psychiatric diagnosis and the physician's treatment orders.

How may psychiatric hospitals participate in the demonstration?

Each State selects which private psychiatric hospitals with 17 or more beds can participate in the demonstration. States will contact the hospitals they wish to include in the demonstration and make arrangements to provide Medicaid payment for emergency psychiatric admissions under the demonstration.

How many IMDs do you expect will see increased support as a result of this program?

Based on the States’ applications, we anticipate 26 IMDs among the 11 States and the District of Columbia to participate in the demonstration. The actual number may differ when the demonstration starts.

If selected for the Demonstration, how will participants be paid?

Each participating State will submit a quarterly statement to CMS enumerating all inpatients cared for under the demonstration. CMS will provide federal matching funds for Medicaid payments made by participating IMDs for the services they provided to beneficiaries aged 21 to 64.

How will CMS ensure payments are made correctly?

Participating States will submit claims data quarterly. CMS will review data for accuracy and completeness and  make the federal matching payment if data is correctly submitted and accurate.

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