October 20, 2019

October 18, 2019

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CMS Announces Section 1115 Waiver Allowing Medicaid Payments for Inpatient Mental

In a letter to state Medicaid directors on Nov.13, 2018, the Secretary of the U.S. Department of Health and Human Services, Alexander Azar, announced a new demonstration opportunity that will allow states to provide improved care for adults with a serious mental illness (SMI) and children with serious emotional disturbance (SED).  Secretary Azar discussed the waiver in a speech to state Medicaid directors stating that the United States currently has “the worst of both worlds: limited access to inpatient treatment and limited access to other options.”

Since its creation in 1965, except in limited circumstances, Medicaid has not paid for care delivered in an institution for mental diseases (IMD),[1] which is defined as a “hospital, nursing facility, or other institution of more than 16 beds, that is primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases, including medical attention, nursing care, and related services.”[2]    In 2016, CMS promulgated regulations that clarified that Medicaid managed care organizations may reimburse for care in an IMD for up to 15 days as an “in lieu of” service.[3]  As announced in the letter, the SMI/SED Demonstration Opportunity permits states to submit a waiver pursuant to section 1115(a) of the Social Security Act so that individuals with a SMI/SED can be treated in an IMD for approximately 30 days.  However, the waiver may not be used to provide care in nursing homes. 

If granted a waiver, states are expected to expand community-based services and Secretary Azar’s letter also addresses how states can leverage techniques permitted under existing authorities to do so, including increased screening for mental illness in schools; integrating mental health care and primary care; improving access to crisis stabilization services and evidence based services that address social risk factors; and bettering care coordination and transitions to community based care.

IMDs and those that provide community based services should be aware of these changes as more Medicaid beneficiaries will be able to access their services.

[1] 42 U.S.C. § 1396d(a)(xvii)(29)(b).

[2] 42 USCS § 1396d(i).

[3] 42 C.F.R. § 438.6(e).

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About this Author

Daniel S. Zinsmaster, Dinsmore Law Firm, Health Care Lawyer

Dan provides trusted counsel and advocacy to health care clients on a variety of matters, such as corporate compliance, provider credentialing, administrative proceedings and litigation.  He also advises clients on practice formation and acquisition, as well as contract review and preparation.  In recent years, Dan has helped health care companies and providers navigate through fraud and abuse investigations, antitrust reviews, and other white collar criminal matters.  He is a frequent author and lecturer on telehealth and telemedicine issues.


(614) 628-6949

Maggie focuses her practice on health care law, including transactional, regulatory and compliance matters. She has a practical, working knowledge of the health care industry and counsels clients on a range of topics including fraud & abuse issues such as federal and state anti-kickback statutes and Stark law; the federal 340B drug discount program; data, technology and privacy matters such as telemedicine and HIPAA; administrative appeals with the Department of Health and Human Services including the Centers for Medicare and Medicaid Services; West Virginia’s Certificate of Need program; and medical staff privileging and credentialing issues. Her practice also focuses on the firm’s government relations work.

She understands health care is a growing industry and one of the region’s largest employers, which is why she works hard to support the area’s health care providers.  Maggie has experience counseling clients ranging from solo practitioners to large health care systems, long-term care facilities, pharmacies and durable medical equipment suppliers.

Prior to law school she received her Master of Public Health in Social and Behavioral Science and a graduate certificate in Women’s Health from West Virginia University’s School of Public Health. Additionally, during her last semester of law school, she worked for the Centers for Disease Control and Prevention’s (CDC) Public Health Law Program in Atlanta, Ga., completing work in the areas of rural health, privacy and legal epidemiology. She has been a Certified Health Education Specialist (CHES)® since 2014.

Originally from Martinsburg, West Virginia, Maggie received her J.D. from West Virginia University and was a member of the West Virginia Law Review. While in law school, she received a CALI Award for Excellence in Healthcare Fraud and Abuse.


  • West Virginia University College of Law  (J.D., 2017)
    • West Virginia Law Review
    • CALI Award for Excellence in Healthcare Fraud and Abuse
  • West Virginia University  (M.P.H., 2014)
    • Social and Behavioral Sciences
    • Graduate Certificate, Women’s Health
  • West Virginia University  (B.M.D.S., 2012)