Manatt on Health: Medicaid Edition

CMS Approves West Virginia’s Substance Use Disorder Waiver

By Patricia M. Boozang, Senior Managing Director, Manatt Health | Jocelyn A. Guyer, Managing Director, Manatt Health | Mindy Lipson, Senior Manager, Manatt Health | Adam D. Striar, Consultant, Manatt Health

On October 6, the Centers for Medicare & Medicaid Services (CMS) approved West Virginia’s “Creating a Continuum of Care for Medicaid Enrollees with Substance Use Disorders” Section 1115 demonstration. West Virginia’s waiver, the first substance use disorder (SUD) Section 1115 demonstration approved by the Trump administration, aims to leverage Medicaid coverage and benefits as tools to address the opioid crisis. West Virginia has been hard hit by the nationwide opioid epidemic: In 2015, almost 40 out of every 100,000 deaths in West Virginia were due to opioid overdose—by far the highest rate in the country—and the opioid-related death rate is rapidly increasing. West Virginia expanded Medicaid under the Affordable Care Act (ACA), and with more than one-third of its population covered by Medicaid, the demonstration provides a meaningful opportunity to impact the trajectory of the opioid epidemic in the state. As the Trump administration develops its response to the opioid crisis, the new West Virginia waiver is a strong indication of the administration’s intended direction with respect to Medicaid’s role in the epidemic.

Trump Administration’s Response to the National Opioid Epidemic

The opioid crisis is a visible priority for the Trump administration. In March, the administration issued an executive order creating the President’s Commission on Combating Drug Addiction and the Opioid Crisis. The commission released its interim report on July 31, which stated that its “first and most urgent recommendation” was for President Trump to declare the opioid crisis a national emergency. Shortly following the release of this report, President Trump announced his intention to follow this recommendation, and on October 26, the Trump administration formally declared a nationwide public health emergency.

The Department of Health & Human Services (HHS) also has taken up the opioid epidemic as a critical priority. In April, former HHS secretary Tom Price released the department’s strategy for fighting the opioid crisis, including increasing access to SUD treatment and recovery services and encouraging use of drugs that can reverse the effects of overdose, such as naloxone. During the first half of 2017, HHS implemented a listening tour in states that have been most acutely impacted by the opioid crisis, including West Virginia.

To date, the administration has released limited guidance on its vision for the role of Medicaid in addressing the opioid epidemic, although new guidance is expected in coming months. In a March letter to governors, the HHS secretary and CMS administrator Seema Verma promised to “provide states with more tools to address the opioid epidemic.” The letter notes that CMS will:

  • Advise states on potential strategies to address the opioid epidemic through their Medicaid State Plans and the Medicaid Innovation Accelerator Program;
  • Create a “more streamlined approach” to reviewing SUD-related waiver applications; and
  • Work with states to identify mechanisms to cover the full continuum of SUD services.

Furthermore, in April 2017, CMS released Medicaid Innovation Accelerator Program guidance on clinical guidelines for states pursuing SUD 1115 demonstrations. The guidance provides information to states on leveraging the American Society of Addiction Medicine (ASAM) criteria to expand their SUD benefit packages to provide the full continuum of care for SUDs and to improve the quality of SUD care.1

States are responding to the urgency of the opioid epidemic and leveraging their capacity to use Medicaid as part of their strategies to combat the crisis, including by pursuing Section 1115 waivers to advance SUD delivery system reforms. Under the Obama administration, four states obtained SUD-targeted waivers, including waivers of the institution for mental disease (IMD) exclusion.2 Currently, at least 11 states have behavioral health-related waiver requests under review at CMS. These applications include proposals to expand coverage to individuals with behavioral health needs who would not otherwise be eligible for Medicaid, develop initiatives to promote the integration of physical and behavioral healthcare, and expand SUD services. Seven states have pending applications that seek to waive the IMD exclusion in order to obtain federal matching funds for services provided at IMDs, in an effort to increase access to residential and inpatient SUD treatment.3 With the heightened intensity of the opioid epidemic nationally, more states can be expected to use the Section 1115 waiver process to advance their own approaches to strengthen and expand SUD coverage and services through Medicaid. CMS’s approval of West Virginia’s waiver offers insight into the Trump administration’s priorities for the use of Section 1115 waivers in addressing the epidemic.

West Virginia’s Demonstration

West Virginia submitted to CMS its application for the “Creating a Continuum of Care for Medicaid Enrollees with Substance Use Disorders” demonstration on December 1, 2016. The approved demonstration applies to all Medicaid beneficiaries receiving State Plan benefits, including those enrolled in managed care and fee-for-service.4 The goals of the demonstration are to:

  • "Improve quality of care and population health outcomes for Medicaid enrollees with SUD;
  • Increase enrollee access to and utilization of appropriate SUD treatment services based on the ASAM criteria;
  • Decrease medically inappropriate and avoidable utilization of high-cost emergency department and hospital services by enrollees with SUD; and
  • Improve care coordination and care transitions for Medicaid enrollees with SUD."

As a whole, the demonstration focuses on three strategies for addressing the opioid epidemic and other SUDs: (1) expanding the state’s SUD service array to include the full continuum of ASAM levels of care; (2) waiving the IMD exclusion; and (3) strengthening the accountability of the state, managed care organizations (MCOs) and providers for improving the quality of SUD care. Notably, the waiver largely aligns with CMS guidance provided under the Obama administration for SUD-targeted Section 1115 demonstrations. In a July 2015 letter to state Medicaid directors announcing the opportunity to pursue SUD demonstrations, CMS advised that these waivers would be available to states “developing comprehensive strategies to ensure a full continuum of services, focusing greater attention to integration efforts with primary care and mental health treatment, and working to deliver services that are considered promising practices or have fidelity to evidence-based models consistent with industry standards.” In addition, CMS noted that states should use the ASAM criteria as a guidepost for their SUD delivery system reforms, such as when designing the continuum of SUD services or establishing new SUD provider quality standards. Finally, the letter indicated that CMS would consider granting waivers of the IMD exclusion to states undertaking comprehensive SUD delivery system reform.

Key features of West Virginia’s waiver are described below.

Benefits. Through the demonstration, all Medicaid State Plan enrollees will have access to the full continuum of ASAM levels of care. New services available under this demonstration include peer recovery support services; clinically managed low-intensity residential services; clinically managed, population-specific high-intensity residential services; clinically managed high-intensity residential services; clinically managed residential withdrawal management services; and coverage of methadone. West Virginia is planning to cover new SUD services under the Section 1115 demonstration instead of adding them to its State Plan. Notably, CMS did not approve West Virginia’s request to use Medicaid funds for recovery housing.

Waiver of the IMD exclusion. Historically, states have not been able to claim federal matching funds for services delivered to adults ages 21-64 obtaining residential treatment services in IMDs with more than 16 beds. In recent years, states have had new opportunities to obtain Medicaid reimbursement for services delivered in IMDs, either through expenditure authority granted under a Section 1115 demonstration or by incorporating IMD stays of up to 15 days per month into their Medicaid managed care capitation rates.5

CMS granted West Virginia expenditure authority to obtain federal matching funds for services provided to individuals with SUDs during a short-term stay at an IMD. Under this authority, West Virginia will be able to claim federal match for a wide variety of services provided to these individuals, including withdrawal management, therapeutic treatment, naloxone administration, peer recovery supports and targeted case management. While the waiver special terms and conditions (STCs) do not impose a firm limit on the length of stay for which the state can obtain federal match, they require MCOs to use the ASAM criteria to identify the appropriate length of stay. The STCs also note that the average length of stay at IMDs in West Virginia is currently 30 days. The state can only claim federal matching funds for room and board at IMDs that also meet the federal definition of an inpatient facility.

SUD provider standards. The STCs set new standards for the state’s and MCOs’ oversight of SUD services. The state is required to establish standards of care for SUD services and must certify that all residential treatment providers, including IMDs, that are eligible to obtain Medicaid reimbursement under the demonstration are providing care consistent with the ASAM criteria. Furthermore, MCOs will be required to credential residential treatment providers according to the ASAM level of care they provide (e.g., clinically managed low-intensity residential services, clinically managed high-intensity residential services, etc.). MCOs and SUD providers will be required to implement ASAM standards for patient assessment and placement, and MCOs also will be accountable for ensuring that SUD providers in their networks have been trained in the ASAM criteria. Finally, the state must work with CMS to develop an SUD Monitoring Plan protocol to track SUD-related performance measures over the life of the demonstration.

Moving Forward

CMS’s prioritization of West Virginia’s SUD waiver approval indicates that Medicaid will continue to play a prominent role in addressing the opioid crisis under the Trump administration. With the administration’s promises to declare the opioid crisis a national emergency and streamline the waiver approval process, the pace of SUD waiver submissions and approvals can be expected to accelerate, particularly if CMS issues new guidance that further streamlines SUD waiver requirements.

1The ASAM criteria are a nationally recognized “set of guidelines for placement, continued stay and transfer/discharge of patients with addiction and co-occurring conditions.” As part of the criteria, ASAM identifies levels of care that are included in the full continuum of SUD services, ranging from early intervention to medically managed intensive inpatient services.
2Section 1905(a)(29) of the Social Security Act prohibits states from claiming federal matching funds for services delivered to adults ages 21-64 in IMDs with more than 16 beds.
3Arizona, Illinois, Indiana, Kentucky, Michigan, Utah and Wisconsin have pending applications requesting a waiver of the IMD exclusion.
4Approximately 80% of West Virginia Medicaid beneficiaries are enrolled in integrated Medicaid managed care plans that cover both physical and behavioral health services. Over the next several years, the state intends to phase the remaining 20% of beneficiaries into managed care. These beneficiaries include children in foster care, dual eligibles, individuals using long-term services and supports, and individuals receiving home- and community-based waiver services.
5The 2016 Medicaid and CHIP Managed Care Final Rule permits states to incorporate up to 15 days per month of services delivered at an IMD into their Medicaid managed care capitation rates, assuming that the treatment meets the definition of an “in lieu of” service. [42 C.F.R. 438.6(e)]