SSA §1915(l) – STATE PLAN AUTHORITY OPTION FOR SUD TREATMENT IN AN IMD 

Over the past several years, options for Substance Use Disorder (SUD) treatment have expanded to meet the varied treatment needs of individuals. Treatment in an Institution for Mental Disease (IMD) has long been barred by federal statute under what is commonly known as the IMD exclusion. However, changes in federal statute and further guidance from the Centers for Medicare & Medicaid Services (CMS) have opened the door for states to use IMDs in limited circumstances for individuals in need of SUD treatment. This article explores a relatively new authority vehicle, the 1915(l) state plan option, that can be used to obtain SUD coverage in an IMD. 

Background 

Medicaid programs have multiple avenues available to provide SUD treatment options to their members, however, outpatient and medication assisted treatment options have been some of the most cost-effective, accessible and frequently used. For individuals requiring an inpatient facility, choices remain more limited in many areas. While IMDs exist, they have largely been unavailable for states to utilize due to the IMD exclusion. On November 2017, CMS gave states guidance on a Section 1115 Demonstration opportunity to improve access to and quality of SUD treatment delivered in residential and inpatient treatment facilities that qualify as IMDs. This option quickly became a popular option for states to pursue. As of the beginning of 2025, nearly 75 percent of states having an approved 1115 IMD payment exclusion waiver for SUD treatment. 

New 1915(l) State Plan Amendment 

In 2018, the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act, better known as the SUPPORT for Patients and Communities Act, was signed into law.  This Act created a new option for states to temporarily, through State Plan Amendment, authorize SUD treatment in an IMD. A new statute, SSA §1915(l), was established and allows the state to: 

• • Provide clinically appropriate withdrawal management or SUD treatment services in residential and inpatient treatment facilities that qualify as an IMD. 

• • Receive FFP for items and services under the state plan that are provided to eligible individuals residing in an eligible IMD.   

• • Receive FFP for covered Medicaid items and services provided to eligible individuals inside and outside the facility while residing in an eligible IMD. 

Services provided in an IMD under this SPA option are available for a maximum of 30 days per 12-month period to individuals between the ages of 21-64. Eligible IMDs must offer at least two forms of medication on-site as part of medication assisted treatment (MAT) for SUDs. Compliance with the statute also required a number of other activities including using evidence-based clinical screening, ensuring a comprehensive continuum of services and community care transitions, and adherence to maintenance of effort standards. 

The SPA was time limited and could only be in effect during calendar quarters beginning October 1, 2019, and ending September 30, 2023. 

In November 2019, CMS provided guidance to states in SMDL 19-0003. Despite this option allowing an easier approval path to obtain SUD treatment in IMDs compared to an 1115 Demonstration Waiver, few states took advantage in the following years. 

1915(l) Updates in CAA, 2024 

In March 2024, the Consolidated Appropriations Act, 2024 (CAA, 2024) saw some additional changes made to the requirements for 1915(l) SPAs. The effective date for each change varies and is noted below: 

• • The temporary effective period of this option was removed and is now permanent. 

• • Have in place evidence-based SUD specific individual placement criteria and utilization management approaches that ensure that the placement of eligible individuals is in an appropriate level of care. States with an existing SPA must comply with this new requirement effective October 1, 2025. 

• • Have in place a process to review the compliance of eligible IMDs using nationally recognized SUD-specific program standards and specified by the state. This process should also include a review of eligible IMDs for compliance with the requirements related to care transitions and medications for opioid use disorder (MOUD). States with an existing SPA must comply with this new requirement effective October 1, 2025. 

• • Assess the availability of SUD treatment for beneficiaries at the outpatient and inpatient/residential levels of care. This includes the availability of medication-assisted treatment with medically supervised withdrawal management services and how availability varies across regions of the state. States submitting a new SPA must begin the assessment within 12 months of SPA approval and complete it no later than 12 months after the start of the assessment.States with an existing SPA approved as of September 30, 2023, must begin the assessment no later than March 9, 2025 and be completed by March 9, 2026.
     

• • MOE requirements were updated to clarify that states must annually maintain or exceed the level of state and local funding, including the state share of Medicaid expenditures, on items and services described in section 1915(l)(3)(B) that are furnished to eligible individuals in outpatient, community-based settingsStates with an existing SPA in effect on September 30, 2023, will need to comply with this MOE change effective March 9, 2025.   

In November 2024, CMS provided guidance on these updates through SMD 24-004. 

States wishing to submit a 1915(l) SPA may contact CMS to obtain state plan amendment templates specifically for this option.