Oregon Congressman Cliff Bentz and New York Congressman Dan Goldman introduced legislation Oct. 1 that would give states another route to obtain federal Medicaid funding for psychiatric treatment in facilities with more than 16 beds, seeking to expand access to inpatient care for people with serious mental illness.
The IMD CARE Act would amend the Social Security Act to allow states to pursue that coverage through a state plan amendment. The proposal would address a federal financing restriction that affects how states pay for treatment in larger psychiatric facilities and would have implications for Oregon’s publicly funded mental health system.
Bentz, a Republican, and Goldman, a Democrat, are advancing the measure as a way to improve treatment access while addressing the consequences communities face when people with serious mental illness move repeatedly through emergency care, incarceration and homelessness. Their proposal focuses on reimbursement for psychiatric services, with the sponsors arguing that a more dependable funding structure could help providers make additional treatment beds available.
The federal restriction, commonly called the institutions for mental diseases exclusion, generally prevents federal Medicaid matching payments for services provided to adults ages 21 through 64 in qualifying institutions. Those institutions include facilities with more than 16 beds primarily devoted to diagnosing, treating or caring for people with mental illnesses. Separate coverage provisions apply to certain younger patients and adults age 65 and older.
The rule concerns eligibility for federal reimbursement rather than a prohibition on operating a psychiatric facility with more than 16 beds. Its practical effect is to restrict a major source of payment for treatment in those settings, leaving states and providers to navigate other financing arrangements or available federal exceptions.
Medicaid’s exclusion dates to the program’s establishment in 1965. Federal demonstration waivers now provide a mechanism for states to obtain approval for certain services that otherwise fall outside standard Medicaid coverage, including qualifying treatment in institutions subject to the restriction. Those approvals carry conditions and operate within specified authorization periods.
Under the IMD CARE Act, states would have a state plan amendment option for securing Medicaid reimbursement in facilities exceeding the 16-bed threshold. Bentz and Goldman contend that this approach would provide greater continuity than relying on temporary waivers and the negotiations required to extend them.
For Oregon, the proposed change would concern the financing of psychiatric care through the state’s Medicaid system. If enacted and implemented by the state, it could broaden reimbursement options for qualifying facilities serving eligible patients. The legislation would not itself establish a new hospital or guarantee an available bed in a particular community; any increase in treatment capacity would depend on state participation and providers’ ability to deliver care.
Bentz linked the proposal to the needs of people whose untreated or inadequately treated mental illnesses contribute to repeated contact with hospitals and the criminal justice system. He argued that greater access to existing mental health facilities could improve treatment while reducing demands on local emergency services and law enforcement.
“The circular progression of the mentally ill from the street to the hospital to the prison and back to the street must stop,” Bentz said.
His statement also identified people experiencing homelessness and people in custody as populations that include individuals with serious mental illness who could benefit from appropriate care. The anticipated reduction in community costs remains an argument advanced by the bill’s sponsors, rather than an established outcome of the legislation.
Goldman emphasized access for patients whose financial circumstances limit their treatment options. He described the measure as a way to give states more authority to expand mental health services and reach people cycling through hospitals, jail and homelessness.
“This legislation is a critical step towards ensuring that everyone, regardless of income, can get the help they need with dignity,” Goldman said.
The proposal also received support from Scott Dziengelski, president and chief executive officer of the National Association for Behavioral Healthcare. Dziengelski said Medicaid’s restrictions can prevent coverage of a psychiatric hospital bed when a beneficiary experiences a mental health crisis, and he characterized the legislation as a step toward removing that barrier.
The bill places federal psychiatric reimbursement policy before Congress while leaving implementation choices with participating states. For Oregon communities, its potential reach extends from patients and families seeking inpatient treatment to the providers and public agencies responsible for arranging and financing that care. Passage would create the proposed funding pathway; whether it produces additional staffed beds and more timely admissions would depend on the decisions that follow.