GenIC # 59 (New) - Medicaid Section 1115 Severe Mental Illness and Children with Serious Emotional Disturbance Demonstrations

DEPARTMENT OF HEALTH & HUMAN SERVICES
Centers for Medicare & Medicaid Services
7500 Security Boulevard, Mail Stop S2-26-12
Baltimore, Maryland 21244-1850

SMD # 18--011
RE: Opportunities to Design
Innovative Service Delivery
Systems for Adults with a
Serious Mental Illness or
Children with a Serious
Emotional Disturbance
November 13, 2018
Dear State Medicaid Director:
The purpose of this letter is to announce opportunities to design innovative service delivery systems,
including systems for providing community-based services, for adults with a serious mental illness
(SMI) or children with a serious emotional disturbance (SED) who are receiving medical assistance,
as mandated by section 12003 of the 21st Century Cures Act (Cures Act). i Section 12003 of the
Cures Act also mandated that this State Medicaid Director (SMD) letter include opportunities for
demonstration projects under section 1115(a) of the Social Security Act (the Act) to improve care for
adults with SMI or children with SED (referred to throughout this SMD letter as this “SMI/SED
demonstration opportunity”). Improving care for beneficiaries with SMI or SED is a top priority for
the Centers for Medicare & Medicaid Services (CMS). With this SMD letter, CMS hopes to enhance
our work with states to improve care for Medicaid beneficiaries with serious mental health
conditions. This SMD letter is comprised of the following two parts:
I.

Strategies under Existing Authorities to Support Innovative Service Delivery Systems
for Adults with SMI and Children with SED; and

II.

SMI/SED Demonstration Opportunity.

Background
The Substance Abuse and Mental Health Services Administration (SAMHSA) has defined “adults
with a serious mental illness” as persons, age 18 and over, who currently, or at any time during the
past year, have had a diagnosable mental, behavioral, or emotional disorder of sufficient duration to
meet diagnostic criteria, that has resulted in functional impairment which substantially interferes with
or limits one or more major life activities. ii Major life activities include activities of daily living (e.g.,
eating, bathing, dressing), instrumental activities of daily living (e.g., maintaining a household,
managing money, getting around the community, taking prescribed medication), and functioning in
social, family, and vocational/educational contexts. iii An estimated 10.4 million adults in the United
States had an SMI during the past year in 2016, but only 65 percent received mental health services in
that year (and this rate of treatment remained about the same between 2008 and 2015). iv

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SAMHSA has defined “children with a serious emotional disturbance” as persons from birth up to
age 18, who currently, or at any time during the past year, have had a diagnosable mental, behavioral,
or emotional disorder of sufficient duration to meet diagnostic criteria that resulted in functional
impairment which substantially interferes with or limits the child’s role or functioning in family,
school, or community activities. v “Functional impairment” is defined as difficulties that substantially
interfere with or limit a child or adolescent from achieving or maintaining one or more
developmentally-appropriate social, behavioral, cognitive, communicative, or adaptive skills. vi
Mental health disorders usually first arise in childhood, adolescence, or early adulthood with 50% of
people with mental health conditions having experienced those conditions by age 14 and 75% by age
24. vii Approximately 13%–20% of children and adolescents living in the United States experience a
mental disorder in a given year viii and nearly half of children under age 21 who qualify for Medicaid
based on a disability have a behavioral health condition. ix Rates of unmet need for treatment are high
among children and adolescents; only about half of all children with emotional or behavioral
difficulties receive mental health services, x and only 41 percent of the 3.1 million adolescents who
experienced depression over the past year in 2016 received treatment. xi
Serious mental health conditions can have detrimental impacts on the lives of individuals with SMI or
SED and their families and caregivers. Since these conditions often arise in adolescence or early
adulthood, individuals with SMI or SED are less likely to finish high school and attain higher
education, disrupting education and employment goals. xii Prior research has found a gap of ten years
or more between the first onset of symptoms and initiation of treatment. xiii Adults with SMI
comprise about half of the individuals under 65 who are dually eligible for both Medicare and
Medicaid, and those with SMI are the costliest subgroup among these younger dual eligibles. xiv
Furthermore, adults who are incarcerated and homeless have high rates of SMI. xv Individuals with
SMI often have co-morbid physical health conditions and substance use disorders (SUDs), xvi and they
die on average 8 years younger than the general population. xvii Suicide, which can be associated with
mental health disorders, xviii has been increasing in nearly every state, with increases of over 30% in
over half of the states since 1999. xix
I. Strategies under Existing Authorities to Support Innovative Service Delivery Systems for
Adults with SMI and Children with SED
Earlier Identification and Engagement in Treatment
Critical strategies for improving care for individuals with SMI or SED include earlier identification
of serious mental health conditions and focused efforts to engage individuals with these conditions in
treatment sooner, as highlighted in another recent CMS SMD letter.xx Some approaches discussed
below for encouraging earlier identification of and engagement in treatment for serious mental health
conditions include support for development of referral networks to mental health providers including
through improved connections and data-sharing capabilities linking non-specialized health care
settings and community organizations with mental health providers. Another approach to support
earlier identification and engagement in treatment is support for increased screening for mental health
conditions and improved access to mental health services through schools.

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One reason that earlier identification and engagement in treatment is critically important is that recent
research studies have found that adolescents and young adults with psychosis can have significantly
elevated risks of mortality in the first year after diagnosis. xxi One study pointed to a significantly
elevated risk of suicide in particular during the first year after a diagnosis of psychosis as well as
following a first recorded diagnosis of major depression. xxii Both studies concluded that these
findings point to the importance of assertive outreach and engagement as soon as possible after an
adolescent or young adult is first diagnosed with a serious mental health condition.
As highlighted in an informational bulletin jointly issued by CMS, SAMHSA, and the National
Institute of Mental Health, the Coordinated Specialty Care Model is an evidence-based model of care
designed to help identify and engage adolescents and adults with SMI, specifically psychosis, as soon
as possible in treatment with specialized mental health providers, e.g., community mental health
clinics. xxiii This model takes a multidisciplinary, team-based approach to providing comprehensive
services as soon as possible after a person first experiences psychosis. The package of services in
this model includes outreach by providers to cultivate referral networks and engage with patients,
families, and caregivers as early as possible, coordination of services among treatment team
members, clinical supervision, medication and medication management, psychotherapy, case
management, coordination with primary care, family/caregiver support and education, and supported
employment and supported education. The Joint Informational Bulletin referenced above describes
the component services that make up this model and how these components can be reimbursed. xxiv
There are also similar care models for children at clinically high risk for SED and adolescents and
young adults at high risk of SMI that incorporate comprehensive mental health care, family
education, medical care, and strong supports to keep children, adolescents, and adults engaged in
school and/or employment. xxv
Lack of coverage of the costs of outreach to engage beneficiaries in treatment and develop referral
networks has been identified by providers and advocates as an impediment to broader implementation
of these care models. However, states may be able to factor costs of some outreach activities,
including patient engagement related to delivering a Medicaid covered service, into provider payment
rates even though those activities are generally not separately reimbursable unless specified under a
service definition. Activities by providers to engage beneficiaries in treatment including by
developing relationships with hospitals to improve coordination and transitions out of inpatient care
may be more specifically coverable under the optional Health Home state plan benefit under section
1945 of the Act. This optional state plan benefit includes care coordination, transition care, or
individual and family support services and is discussed in more detail in Appendix A.
Individuals with SMI or SED are often first identified as needing treatment for SMI or SED in
settings other than specialized mental health care settings including schools, hospitals, primary care,
and criminal justice systems. Connecting these other settings with local mental health providers can
help improve access to treatment and rehabilitative services as soon as possible after a serious mental
health condition has been identified. Medicaid agency costs associated with developing or
maintaining a referral network between other systems and settings like those listed above with mental
health providers may be reimbursable as administrative costs. State Medicaid agencies should
contact CMS for additional information.

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Improving data-sharing capabilities between schools, hospitals, primary care, criminal justice, and
specialized mental health providers is an effective way to improve communications between these
types of entities and the healthcare system. States may be able to access enhanced federal Medicaid
matching funds for costs to state Medicaid agencies of implementing and operating technology to
improve data-sharing capabilities as part of the Medicaid Information Technology Architecture
(MITA). xxvi Many of the business processes described in MITA 3.0 regarding Care Management
focus specifically on systems supporting the collection of information about an individual’s health
status and needs. States could use this authority and enhanced match to develop connections between
mental health care providers and schools, hospitals, primary care, criminal justice, and faith
communities, consistent with the discussion of “Interoperability” contained in the final rule on this
topic. xxvii For example, enhanced federal financial participation (FFP) could be available to states for
the development by the state of data-sharing capabilities between hospitals and community-based
mental health providers such that when a beneficiary with SMI or SED is being discharged from a
hospital, that beneficiary’s records regarding treatment could more easily be transferred to a
community-based treatment provider or, if the beneficiary was being admitted to a hospital for acute
care, the community-based mental health provider could be notified more easily.
The U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) has
published comprehensive guidance for professionals xxviii and health care consumers xxix explaining the
circumstances in which health care providers covered by the Health Insurance Portability and
Accountability Act (HIPAA) can share information related to mental health. The HHS OCR
guidance, required by section 11003 of the 21st Century Cures Act, clarifies how the HIPAA Privacy
Rule permits covered health care providers and other mental health treatment professionals to
disclose information to a patient’s family members, caregivers, and others to facilitate treatment and
protect the health and safety of patients with SMI and SED and others.
Furthermore, improving the availability of behavioral health screenings and mental health and SUD
services in schools is a key strategy for identifying and engaging children with SED in care sooner.
Providing behavioral health services in school settings has been shown to improve access to care, xxx
increase early problem identification, xxxi and overcome reticence to access care by providing services
in a more mainstream and accessible setting. xxxii States interested in making school-based mental
health screening and behavioral health counseling more widely available could do so under the Early
and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit.
The EPSDT benefit provides a comprehensive array of prevention, diagnostic, and treatment services
for Medicaid-enrolled children under age 21 as specified in section 1905(r) of the Act. The EPSDT
benefit requires states to have a schedule for screening services both at established times and on an
as-needed basis. Covered screenings for children include medical, mental health, vision, hearing, and
dental. Incorporating an age appropriate, evidence-based screening tool designed to identify
behavioral health conditions into well-child examinations is an important step to identify mental
health and SUD conditions early. In addition, the EPSDT benefit requires that states provide all
medically necessary services covered under the benefits in section 1905(a) of the Act to correct or
ameliorate physical and mental illnesses or conditions. Behavioral health counseling could be
covered under the rehabilitative services benefit at section 1905(a)(13) of the Act, but states would
not need to amend their state plans to add EPSDT coverage for screening and behavioral health

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services. However, some states choose to do so in order to clarify the services covered in the school
setting.
All providers of Medicaid services in schools must be qualified and enrolled as Medicaid providers.
The Department of Health and Human Services and the Department of Education jointly issued a
toolkit outlining action steps and practices that states and local communities can take to improve
availability of school-based health services and supports that are critical for children with or at risk of
SED. xxxiii Other approaches to improving access to mental health services in schools include
developing partnerships with Federally Qualified Health Centers (FQHCs) and rural health
clinics. xxxiv In addition, states could also ensure that their managed care plans allow for
reimbursement of school-based providers.
Integration of Mental Health Care and Primary Care
Integration of mental health care into primary care settings can also help ensure that individuals with
SMI or SED are identified earlier and connected with appropriate treatment sooner. In addition,
integration is critical for improving access to treatment for comorbid physical health conditions and
SUDs that are common among individuals with SMI or SED. Some strategies for increasing
integration of mental health care into primary care that are discussed below include encouraging
screening for mental health disorders and supporting primary care providers (PCPs) and pediatricians
to provide treatment and/or referrals for mental health services with the support of consultations with
specialists and care coordinators.
Outpatient provider visits offer critical opportunities to screen for mental health issues and suicidal
ideation. Research has found that 64 percent of individuals had visited a health care provider within
a month prior to attempting suicide and 95 percent visited one within a year prior to attempting
suicide. xxxv The Patient Health Questionnaire (PHQ)-9 is a clinically validated assessment tool
focused on screening for depression and measuring depression severity which includes screening for
the presence of suicidal ideation. States may wish to encourage providers participating in their
Medicaid programs to screen for depression and suicidal ideation using the PHQ-9 during outpatient
office visits. xxxvi
One evidence-based approach to incorporating specialty mental health care into primary care settings,
the Collaborative Care Model, has been proven effective in over 80 randomized controlled trials. xxxvii
Although originally designed to treat depression, there is increasing evidence of its effectiveness for
treating other behavioral health conditions including anxiety, post-traumatic stress disorder, and
SUDs. This care model uses a team-based approach in which PCPs treat mental health and SUD
issues of their patients supported by a behavioral health care manager and a psychiatric
consultant. The behavioral health care manager is a social worker or psychologist who works with
the PCP and is trained to deliver care coordination and brief behavioral interventions. The
psychiatric consultant is a psychiatrist or physician assistant, nurse practitioner, or clinical nurse
specialist with psychiatric training who makes treatment recommendations to the PCP, including
medication and evidence-based therapy recommendations and medical management of any
complications associated with treatment. Key components of the Collaborative Care Model include
care coordination and care management by the care manager, regular patient monitoring using

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clinical rating scales, the use of evidence-based approaches and stepped care that intensifies and/or
modifies the approach for complex or treatment resistant cases, and regular psychiatric caseload
reviews in person or through use of telemedicine with a psychiatric consultant.
A less intensive model for children with mental health conditions is the Child Psychiatry Access
Model supported by the National Network of Child Psychiatry Access Programs. xxxviii These
programs generally offer telephonic consultation with a psychiatrist or other licensed behavioral
health clinician, face-to-face psychiatric or behavioral health consultations for patients when needed,
with a written summary provided to the PCP, and assistance with referral to community-based
behavioral health services. For example, the Massachusetts Child Psychiatry Access Project Model,
established in 2004, offers statewide access to over 95 percent of pediatric primary care providers in
the state through six regional behavioral health consultation hubs. Each hub includes a full-time
child psychiatrist, licensed therapist, and a care coordinator. Each hub operates a dedicated hotline
and offers immediate clinical consultation over the telephone, expedited face-to-face psychiatric
consultation, care coordination for assistance with referrals to community behavioral health services,
and continuing professional education for primary care providers. Participating pediatricians have
reported a significant improvement in their ability to meet the mental health care needs of their
patients (although a considerable gap remains): the percent of participating pediatricians who
responded to an annual survey and said they could meet the needs of children with behavioral health
problems increased from eight percent in 2008 to 64 percent in 2012. xxxix
One issue that has been identified by a number of stakeholders as impeding broader implementation
of these models is a lack of reimbursement for consultation and care coordination outside the
presence of the patient. Although the presence of the patient is required for the service to be
covered, Medicaid may be able to reimburse for consultations between professionals regarding
treatment for a patient and for care coordination if these costs are incorporated into the rate a state
pays a provider for a covered service for a beneficiary. Under such circumstances, the resources that
go into that encounter (such as a consultation with a specialist regarding treatment options for that
beneficiary) can be accounted for in the rate for that service. The provider receiving the
reimbursement would then have to reimburse the specialty provider. Furthermore, Medicare covers
payments to practitioners for behavioral health integration services, including the Collaborative Care
Model, and has identified Current Procedural Technology (CPT) codes for these payments, which
may be useful for states interested in supporting this model of care. xl States are also encouraged to
eliminate restrictions on same-day billing for primary care and mental health services in order to
facilitate implementation of these types of models.
Use of telehealth technologies to support provision of the Collaborative Care model is another
important strategy for facilitating broader availability of integrated mental health care and primary
care. xli States may be able to access enhanced match under MITA 3.0 xlii for state development of
telehealth-enabling technology to be used by Medicaid providers to coordinate care for beneficiaries.
Some examples include development of virtual treatment centers or remote counseling options
integrated into care coordination technology consistent with the “Managing Care Information”
business process under MITA 3.0 which includes activities connecting providers to patients and
facilitating access to services. xliii For supporting state costs associated with implementing the
Collaborative Care model or other team-based approaches, states could also consider using the

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existing authority for Care Plan Exchange under MITA 3.0. xliv The treatment services themselves
that are provided via tele-health technology could be covered using state plan or other Medicaid
authorities.
Similarly, the Health Home benefit under section 1945 of the Act could also be used to support this
model of care. The Health Home benefit offers 90 percent FFP for eight quarters for specific services
including comprehensive care management, care coordination, comprehensive transition care,
individual and family support, and the use of health information technology to link services.
Improved Access to Services Across the Continuum of Care Including Crisis Stabilization Services
Adults with SMI and children with SED need access to a continuum of care since these conditions are
often episodic and the severity of symptoms can vary over time. xlv However, the only treatment
options in many regions are inpatient care for acute treatment needs and outpatient care for less
serious conditions and on-going maintenance therapy, with little availability of intermediate levels of
care.xlvi As a result, individuals with serious mental health conditions often go into inpatient
facilities or emergency departments when they could be better served in community-based settings.
Furthermore, without the supports needed to help transition from acute care back into their
communities, adults with SMI are at heightened risk for relapse and readmission. xlvii Mental health
disorders are often the primary cause of hospital readmissions among adult Medicaid
beneficiaries, xlviii indicating a need for more evidence-based community-based supports and services.
Strategies for ensuring individuals with SMI or SED are provided appropriate levels of care to meet
their needs include encouraging use of evidence-based assessment tools, e.g. the LOCUS and CASII
(or CALOCUS), that link clinical assessments with standardized "levels of care" using methods for
matching the two. xlix It is also important that the care provided to individuals with SMI or SED is
trauma-informed. l
Another strategy is to increase availability of intensive outpatient and crisis stabilization programs
designed to divert Medicaid beneficiaries from unnecessary stays in emergency departments (EDs)
and inpatient facilities as well as criminal justice involvement. li Core elements of crisis stabilization
programs include regional or statewide crisis call centers coordinating access to care in real time,
centrally deployed mobile crisis units available 24 hours a day and seven days a week, and shortterm, sub-acute residential crisis stabilization programs. lii
Depending on the circumstances, services provided to beneficiaries in residential settings may be
subject to the payment exclusion for institutions for mental diseases (IMDs). liii Section 1905(i) of the
Act defines an IMD as any “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.” liv There is some authority for states
to receive FFP for monthly capitation payments paid to Medicaid managed care plans for coverage of
Medicaid beneficiaries residing in IMDs; Medicaid managed care rules permit FFP for monthly
capitation payments to managed care plans for enrollees that are inpatients in a hospital providing
psychiatric or SUD inpatient care or in a sub-acute psychiatric or SUD crisis residential setting that

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may qualify as IMDs when the stay is for no more than 15 days during the period of the monthly
capitation payment and certain other conditions are met. lv
Furthermore, states may be able to access administrative match for crisis call centers as some states
have done for tobacco quit lines. lvi However, in order to access administrative match for crisis call
centers, a state would have to justify in a reasonable manner how many callers are Medicaid
beneficiaries in order to properly allocate costs to Medicaid. States can refer to guidance on tobacco
quit lines. lvii Enhanced administrative match may be available under MITA 3.0 to help states
establish crisis call centers to connect beneficiaries with mental health treatment as well as to develop
technologies to link mobile crisis units to beneficiaries coping with serious mental health conditions.
States may also coordinate access to outreach, referral, and assessment services for behavioral health
care through an established No Wrong Door System. lviii The No Wrong Door System is a
collaboration between CMS, the U.S. Administration for Community Living, and the Veterans Health
Administration to support states’ efforts to develop coordinated systems of access to make it easier
for consumers to learn about and access Long-Term Service and Supports.
The Certified Community Behavioral Health Clinic (CCBHC) demonstration lix offers a model for
providing comprehensive community-based behavioral health care. Certification criteria for
CCBHCs under the demonstration include the availability of 24-hour crisis care, utilization of
evidence-based practices, care coordination, and integration of mental health, SUD, and physical
health care. lx To promote improved quality of care, CCBHCs are required to report on a range of
quality measures. States may be able to adapt the CCBHC model of care using different authorities,
depending on the services provided, beneficiaries served, and payment methodologies. For example,
some CCBHC services may be authorized under the state plan and covered as clinic services with
payment made using an encounter rate that pays for a bundle of behavioral health and primary care
services. States may also elect to use incentive payments (as is being done in the CCBHC
demonstration) to encourage providers to implement the comprehensive model of care delineated for
the CCBHC demonstration. lxi
Another strategy for helping adults with SMI or children with SED access appropriate levels of care
is development of the capability to track which mental health providers are accepting Medicaid
beneficiaries at different levels of care throughout the state, including outpatient, intensive outpatient,
inpatient, and community-based crisis services. Development by the state of this capability to track
available mental health providers, such as through a type of registry reflecting qualified providers that
is frequently updated, could be reimbursed under MITA 3.0 at 90% of the development costs and
75% of the operational costs. lxii Furthermore, Medicaid managed care plans (managed care
organizations, prepaid inpatient health plans, prepaid ambulatory health plans, and, where applicable,
primary care case management plans) must identify as part of provider directories whether a network
provider is accepting new patients under 42 C.F.R. § 438.10(h)(1)(vi).
Additional opportunities to engage Medicaid beneficiaries in community-based treatment include
increasing availability of assertive community treatment (ACT) programs. lxiii ACT programs include
a multidisciplinary team of mental health professionals with low client to staff ratios allowing for
multiple contacts for clients needing intensive support and the capacity to respond 24 hours a day

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seven days a week. ACT programs include frequent team meetings and offer integration of services
instead of referring clients to other programs for other services. CMS has previously issued a State
Medicaid Director letter that included information about covering ACT programs in Medicaid. lxiv
Coverable services in ACT programs could include assessment, medication, medication management,
therapy/counseling, and case management.
Many Medicaid beneficiaries with SMI or SED need skilled, person-centered planning, services, and
supports that address their cultural needs and values and help them access services across a
continuum of care as needed. This type of planning identifies and addresses the person’s preferences
and interests and those paid and unpaid supports needed to achieve them. The planning and services
can be directed with the support of others whom the beneficiary selects. Those responsible for
person-centered practices should be engaged in a continuous learning and improvement process.
HHS policy on person-centered thinking, planning, and practice is articulated in statute, regulations,
guidance documents, prior grant and contract actions, and numerous HHS-sponsored presentations
(see e.g., CMS’ January 2014 HCBS final rule lxv and HHS Guidance for Implementing Standards for
Person Centered Planning and Self-Direction issued in June 2014 lxvi). These expectations apply to
1915(c) waivers, and the 1915(i) and 1915(k) state plan options. In addition, the 2014 Guidance
applies to all HHS programs serving people with disabilities and older adults including several
programs that serve people with SMI and SED, e.g., the Administration for Community Living No
Wrong Door program, the SAMHSA CCBHC program, and the SAMHSA Mental Health Block
Grant Program. The Medicaid Health Home state plan option also requires person-centered planning
and the Office of the National Coordinator (ONC) eLTSS data elements provide an electronic
mechanism to track key components of the person-centered service plan as part of a comprehensive
health IT strategy. Furthermore, psychiatric advance directives and individual participation in
treatment and recovery services planning are important components of person-centered planning for
people with SMI and SED.
There is a strong role for peers as natural allies in the facilitation of person-centered planning
processes, and self-direction for mental health is an emerging practice that is being developed in
several states and shows promising outcomes. lxvii Innovative models of community recovery support,
such as “clubhouse” programs and wrap-around recovery support services provided by community
health workers, emphasize the use of peer support specialists and others to provide skills training, and
assistance with educational and vocational needs. CMS has previously issued a State Medicaid
Director letter on covering peer support services in Medicaid, lxviii as well as additional clarification
that peer supports in some circumstances can include peer supports for the parents/legal guardians of
Medicaid eligible children. lxix
Better Care Coordination and Transitions to Community-based Care
Improving coordination of care between levels of care and particularly as individuals with SMI or
SED leave inpatient or residential treatment is a critical issue that states should address in order to
improve outcomes for beneficiaries with these conditions. The risk of suicide following discharge
from psychiatric hospitals or wards is greatest immediately following an inpatient stay, with the rate
of suicide during the first three months after discharge approximately 100 times higher than the

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global suicide rate according to a 2017 systematic review and meta-analysis. lxx This study highlights
how important it is for individuals with SMI or SED to receive timely follow-up care after leaving
residential or inpatient treatment.
Unfortunately, many Medicaid beneficiaries do not receive timely follow-up care within the
timeframes of 7 or 30 days that are used to measure timely follow-up care in the widely used measure
“Follow-up After Hospitalization for Mental Illness” (NQF #0576). This measure is included in both
the core set of health care quality measures for adults enrolled in Medicaid (Adult Core Set) and the
core set of children’s health care quality measures for Medicaid and the Children’s Health Insurance
Program (CHIP) (Child Core Set). According to Medicaid data submitted by the thirty-six states that
reported the follow-up after hospitalization measure in fiscal year (FY) 2016 (the latest data
available), a median of only 38 percent of adult beneficiaries (ages 21 and older) who were
hospitalized for mental illness had a follow-up visit within 7 days of discharge and only 60 percent
had a follow-up visit within 30 days of discharge. lxxi A median of 45 percent of children (ages 6 to
20) who were hospitalized for mental illness had a follow-up visit within 7 days of discharge and
only 68 percent had a follow-up visit within 30 days of discharge for FY 2016 for the forty-one states
who reported. lxxii
One approach to improve care coordination following hospitalization is to implement accountability
measures and payment incentives for plans and providers. A model for this approach is the Medicare
Hospital Readmission Reduction Program, which financially penalizes hospitals with relatively high
rates of Medicare readmissions for specific conditions. lxxiii Medicaid managed care plans can also be
held accountable for performance on the widely used measures assessing follow-up after
hospitalization (discussed above) and follow-up after emergency room care for mental illness (both of
which are included in both the Adult lxxiv and Child Core Sets lxxv). States can add these requirements
to their contracts with managed care plans either through inclusion in a plan’s quality assessment and
performance improvement (QAPI) program or through a plan or provider incentive arrangement.
Ensuring that hospitals and residential treatment settings contact discharged individuals with SMI or
SED within a few days of leaving inpatient or residential care can help improve outcomes as can
connecting those individuals with community-based care. One recent study found that follow-up via
mailed postcards, follow-up via telephone outreach, and suicide-focused cognitive behavioral therapy
could each be highly effective, relative to usual care alone, at reducing suicides and attempted
suicides for which there is a heightened risk following inpatient care. lxxvi These interventions were
also expected to be relatively cost-effective as compared to the usual cost of care. lxxvii There is not a
Medicaid benefit category that specifically authorizes coverage of contacts by hospital/residential
treatment program staff via mail or phone calls following inpatient care or emergency room visits;
however, the cost of providing these kinds of follow-up contacts to Medicaid beneficiaries could be
included in the rates that states set for inpatient and emergency room services. Cognitive behavioral
therapy can be covered using the rehabilitative services benefit.
Peer support providers can help make connections between inpatient facilities and emergency
departments and outpatient treatment providers. lxxviii In addition, peer navigators, one-to-one support
in group homes, and providing staff to accompany an adult with SMI when they attend medical and
social services can also help prevent hospitalization of adults with SMI.

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The optional Health Home benefit can also support improved care coordination following an
inpatient stay. As discussed above, Health Home services include comprehensive transitional care
from inpatient to other settings including appropriate follow-up care. Currently, 18 out of 22 states
with approved Health Home programs have identified beneficiaries with a mental health condition as
a target population for the Health Home benefits
Increased Access to Evidence-based Services that Address Social Risk Factors
Supportive services designed to help individuals with SMI or SED maintain a job or stay in school
are often identified as crucial for keeping these individuals healthy and on the path to recovery.
These types of services can offer key incentives for individuals with serious mental health conditions,
particularly adolescents and young adults, to enter and remain engaged in treatment programs. lxxix In
addition, helping adults with SMI maintain stable housing has been identified as a critical foundation
for improving health outcomes. lxxx However, only 2 percent of adults and transition-age youth with
SMI received supported employment in 2016 (according to data from 43 states) and only three
percent received supportive housing in 2016 (according to data from 35 states). lxxxi
Improving access to these supportive services, including supported education, which is a variation on
supported employment, is a critical strategy for improving outcomes for Medicaid beneficiaries with
SMI or SED. States can use existing Medicaid authorities, including 1915(c) Home and CommunityBased Waivers and 1915(i) State Plan Amendments, to provide many of these supports. Where
Medicaid does not cover the supportive service itself, it generally covers services to connect
beneficiaries to the necessary supports.
States could also adopt, or expand eligibility for, Medicaid “buy in” programs to allow working
individuals with disabilities whose income and/or assets exceed limits for other eligibility pathways
to “buy-in” to Medicaid coverage. lxxxii Medicaid “buy-in” programs could help eligible individuals
with SMI or SED obtain and maintain employment by helping them avoid having to choose between
healthcare coverage and work. lxxxiii
A summary of the key components of the models of care and activities highlighted above along with
Medicaid authorities that states may be able to use to implement these strategies and additional
information on the specific Medicaid authorities are provided in Appendix A. However, which
services are coverable by Medicaid would depend on the Medicaid authority the states seek to use,
and states should work with CMS on specific proposals to ensure they are feasible within Medicaid
authority.
II. SMI/SED Demonstration Opportunity
As required by section 12003 of the Cures Act, CMS is announcing opportunities for demonstration
projects under section 1115(a) of the Act to improve care for adults with SMI and children with SED
(referred to as this “SMI/SED demonstration opportunity”). Under section 1115(a) of the Act, the
Secretary of HHS (“Secretary”) or CMS, operating under the Secretary’s delegated authority, may
authorize a state to conduct experimental, pilot, or demonstration projects that, in the judgment of the

Page 12 –State Medicaid Director
Secretary, are likely to assist in promoting the objectives of title XIX of the Act. This SMI/SED
demonstration opportunity will allow states, upon CMS approval of their demonstrations, to receive
FFP for services furnished to Medicaid beneficiaries during short term stays for acute care in
psychiatric hospitals or residential treatment settings that qualify as IMDs if those states are also
taking action, through these demonstrations, to ensure good quality of care in IMDs and to improve
access to community-based services as described below. This SMI/SED demonstration opportunity
is comparable to the recent section 1115(a) demonstration opportunity to improve treatment for
SUDs, including opioid use disorder (OUD). lxxxiv However, through these demonstrations, states will
focus on demonstrating improved care for individuals with serious mental health conditions in
inpatient or residential settings that qualify as IMDs as well as through improvements to communitybased mental health care.
The payment exclusion for services provided to most Medicaid beneficiaries while residing in IMDs
is often cited as a significant impediment to ensuring adequate access to acute care for beneficiaries
with SMI or SED. Some stakeholders assert that as a result of this payment exclusion, Medicaid
beneficiaries with these conditions often present in emergency rooms where they are unlikely to
receive adequate care and where they often must wait for hours and even days before space in an
inpatient psychiatric facility becomes available. Alternatively, beneficiaries may be admitted to a
general hospital, but usually only for a very short period of time before being discharged, sometimes
before being stabilized, and often without being connected to outpatient care. In addition, some
stakeholders assert that the lack of intensive community-based services and discharge planning
linking people with community-based supports results in individuals not transitioning out of acute
care facilities in a timely fashion, which further limits inpatient capacity to address the acute care
needs of individuals with SMI or SED. CMS is proposing to test these assertions. Furthermore, CMS
believes that increasing access to mental health care, including acute treatment as well as communitybased services, could help address increasing suicide rates lxxxv since mental health disorders are often
implicated in suicidal behavior. lxxxvi
Through this demonstration opportunity, FFP would be available for services for beneficiaries who
are short-term residents in IMDs primarily to receive mental health treatment. While residing in
those facilities primarily to receive mental health treatment, Medicaid beneficiaries should also be
screened for co-occurring SUDs as well as physical health conditions. States with approved
demonstrations could also receive FFP for Medicaid coverable services provided to otherwise eligible
beneficiaries to treat any co-occurring SUD and physical health conditions while those beneficiaries
are residing short term in IMDs primarily to receive mental health treatment.
States may participate in the SUD demonstration opportunity and this SMI/SED demonstration
opportunity at the same time. In the event that a state already has an approved SUD demonstration—
or is seeking concurrent approval of an SUD and SMI/SED demonstration—CMS will provide
technical assistance regarding how the two demonstration types may be operationalized. Consistent
with the SUD demonstration opportunity, states will be expected to achieve a statewide average
length of stay of 30 days for beneficiaries receiving care in IMDs pursuant to this SMI/SED
demonstration opportunity.

Page 13 –State Medicaid Director
Through this SMI/SED demonstration opportunity, states may receive federal matching funds for
Medicaid-coverable services provided to individuals residing in psychiatric hospitals and residential
treatment settings that are not ordinarily matchable because these facilities qualify as IMDs; however,
this SMI/SED demonstration opportunity does not allow for room and board payments in residential
treatment settings unless they qualify as inpatient facilities under section 1905(a) of the Act. This
limitation on covering room and board is a long-standing Medicaid policy based on statute and
regulations. lxxxvii Furthermore, FFP will not be available through these demonstrations for services
provided in nursing homes that qualify as IMDs as CMS understands that nursing homes do not
specialize in providing mental health treatment and may not have staff with appropriate credentials
and training to provide good quality treatment to individuals with SMI or SED. FFP also will not be
available through these SMI/SED demonstrations for services provided in treatment settings for
individuals 21 years of age or younger if those settings do not meet CMS requirements to qualify for
the Inpatient Psychiatric Services for Individuals under Age 21 benefit. lxxxviii In addition, FFP will
not be available through these demonstrations for services in a psychiatric hospital or residential
treatment facility for inmates who are involuntarily residing in the facility by operation of criminal
law. lxxxix States should contact CMS with any questions regarding these limitations.
CMS will not approve a demonstration project under section 1115(a) of the Act unless the project is
expected to be budget neutral to the federal government. xc A budget neutral demonstration project
does not result in Medicaid costs to the federal government that are greater than what the federal
government’s Medicaid costs would likely have been absent the demonstration. What the federal
government’s Medicaid costs would likely have been absent the demonstration may include coverage
of populations or services that the state could have otherwise provided through its Medicaid state plan
or other title XIX authority, such as a waiver under section 1915 of the Act. CMS considers these
expenditures to be “hypothetical;” that is, the expenditures would have been eligible to receive FFP
elsewhere in the Medicaid program. For these hypothetical expenditures, CMS currently adjusts the
budget neutrality test to effectively treat these expenditures as if they were approved Medicaid state
plan services. Hypothetical expenditures, therefore, do not necessitate savings to offset the otherwise
allowable costs. Nonetheless, with the approval of an SMI/SED demonstration, states will agree to
report all title XIX expenditures, except spending under certain managed care arrangements, during
SMI/SED-related IMD stays consistent with the Special Terms and Conditions (STCs) for the
demonstration.
States participating in the SMI/SED demonstration opportunity will also be expected to commit to
taking a number of actions to improve community-based mental health care, as section 12003 of the
Cures Act also directed CMS to address systems for providing community-based services for
beneficiaries with SMI or SED. These commitments to improving community-based care are to be
linked to a set of goals for the SMI/SED demonstration opportunity described below and should
include actions to ensure good quality of care in IMDs, to improve connections to community-based
care following stays in acute care settings, to ensure a continuum of care is available to address more
chronic, on-going mental health care needs of beneficiaries with SMI or SED, to provide a full array
of crisis stabilization services, and to engage beneficiaries with SMI or SED in treatment as soon as
possible. These state actions should build on the opportunities for innovative service delivery
reforms discussed in Part I of this letter to achieve the goals and milestones described below.

Page 14 –State Medicaid Director
CMS will consider a state’s commitment to on-going maintenance of effort on funding outpatient
community-based mental health services as demonstrated in their application when determining
whether to approve a state’s proposed demonstration project in order to ensure that resources are not
disproportionately drawn into increasing access to treatment in inpatient and residential settings at the
expense of community-based services. Furthermore, CMS strongly encourages states to include in
their application a thorough assessment of current availability of mental health services throughout
the state, particularly crisis stabilization services. xci
Similar to the SUD demonstration opportunity, this SMI/SED demonstration opportunity offers states
the flexibility to design section 1115(a) demonstrations aimed at making significant improvements on
a number of goals and milestones that are described below.
Goals:
•

Reduced utilization and lengths of stay in EDs among Medicaid beneficiaries with SMI or
SED while awaiting mental health treatment in specialized settings;

•

Reduced preventable readmissions to acute care hospitals and residential settings;

•

Improved availability of crisis stabilization services including services made available
through call centers and mobile crisis units, intensive outpatient services, as well as services
provided during acute short-term stays in residential crisis stabilization programs, psychiatric
hospitals, and residential treatment settings throughout the state;

•

Improved access to community-based services to address the chronic mental health care needs
of beneficiaries with SMI or SED including through increased integration of primary and
behavioral health care; and

•

Improved care coordination, especially continuity of care in the community following
episodes of acute care in hospitals and residential treatment facilities.

Milestones:
Ensuring Quality of Care in Psychiatric Hospitals and Residential Settings
•

Participating hospitals and residential settings are licensed or otherwise authorized by the
state to primarily provide treatment for mental illnesses and are accredited by a nationally
recognized accreditation entity including the Joint Commission or the Commission on
Accreditation of Rehabilitation Facilities (CARF) prior to receiving FFP for services provided
to beneficiaries;

•

Establishment of an oversight and auditing process that includes unannounced visits for
ensuring participating psychiatric hospitals and residential treatment settings meet state
licensure or certification requirements as well as a national accrediting entity’s accreditation
requirements;

Page 15 –State Medicaid Director
•

Use of a utilization review entity (e.g., a managed care organization or administrative service
organization) to ensure beneficiaries have access to the appropriate levels and types of care
and to provide oversight to ensure lengths of stay are limited to what is medically necessary
and only those who have a clinical need to receive treatment in psychiatric hospitals and
residential treatment settings are receiving treatment in those facilities;

•

Participating psychiatric hospitals and residential treatment settings meet federal program
integrity requirements, and the state has a process for conducting risk-based screening of all
newly enrolling providers, as well as revalidating existing providers (specifically, under
existing regulations, states must screen all newly enrolling providers and reevaluate existing
providers pursuant to the rules in 42 CFR Part 455 Subparts B and E, ensure treatment
providers have entered into Medicaid provider agreements pursuant to 42 CFR 431.107, and
establish rigorous program integrity protocols to safeguard against fraudulent billing and other
compliance issues);

•

Implementation of a state requirement that participating psychiatric hospitals and residential
treatment settings screen enrollees for co-morbid physical health conditions and SUDs and
demonstrate the capacity to address co-morbid physical health conditions during short-term
stays in these treatment settings (e.g., with on-site staff, telemedicine, and/or partnerships with
local physical health providers);

Improving Care Coordination and Transitions to Community-Based Care
•

Implementation of a process to ensure that psychiatric hospitals and residential treatment
settings provide intensive pre-discharge, care coordination services to help transition
beneficiaries out of these settings and into appropriate community-based outpatient services as well as requirements that community-based providers participate in these transition efforts
(e.g., by allowing initial services with a community-based provider while a beneficiary is still
residing in these settings and/or by hiring peer support specialists to help beneficiaries make
connections with available community-based providers, including, where applicable, plans for
employment);

•

Implementation of a process to assess the housing situation of individuals transitioning to the
community from psychiatric hospitals and residential treatment settings and connect those
who are homeless or have unsuitable or unstable housing with community providers that
coordinate housing services where available;

•

Implementation of a requirement that psychiatric hospitals and residential treatment settings
have protocols in place to ensure contact is made by the treatment setting with each
discharged beneficiary within 72 hours of discharge and to ensure follow-up care is accessed
by individuals after leaving those facilities by contacting the individuals directly and by
contacting the community-based provider the person was referred to;

Page 16 –State Medicaid Director
•

Implementation of strategies to prevent or decrease the lengths of stay in EDs among
beneficiaries with SMI or SED (e.g., through the use of peers xcii and psychiatric consultants in
EDs to help with discharge and referral to treatment providers);

•

Implementation of strategies to develop and enhance interoperability and data sharing
between physical, SUD, and mental health providers with the goal of enhancing care
coordination so that disparate providers may better share clinical information to improve
health outcomes for beneficiaries with SMI or SED;

Increasing Access to Continuum of Care Including Crisis Stabilization Services
•

Annual assessments of the availability of mental health services throughout the state,
particularly crisis stabilization services and updates on steps taken to increase availability;

•

Commitment to a financing plan approved by CMS to be implemented by the end of the
demonstration to increase availability of non-hospital, non-residential crisis stabilization
services, including services made available through crisis call centers, mobile crisis units,
coordinated community crisis response that involves law enforcement and other first
responders, and observation/assessment centers as well as on-going community-based
services, e.g., intensive outpatient services, assertive community treatment, xciii and services in
integrated care settings such as the Certified Community Behavioral Health Clinic model
described in Part I of this letter as well as consideration of a self-direction option for
beneficiaries;

•

Implementation of strategies to improve the state’s capacity to track the availability of
inpatient and crisis stabilization beds to help connect individuals in need with that level of
care as soon as possible;

•

Implementation of a requirement that providers, plans, and utilization review entities use an
evidence-based, publicly available patient assessment tool, preferably endorsed by a mental
health provider association, e.g., LOCUS or CASII, xciv to help determine appropriate level of
care and length of stay;

Earlier Identification and Engagement in Treatment Including Through Increased Integration
•

Implementation of strategies for identifying and engaging individuals, particularly adolescents
and young adults, with serious mental health conditions, in treatment sooner including
through supported employment and supported education programs; xcv

•

Increasing integration of behavioral health care in non-specialty care settings, including
schools and primary care practices, to improve identification of serious mental health
conditions sooner and improve awareness of and linkages to specialty treatment providers;
and

Page 17 –State Medicaid Director
•

Establishment of specialized settings and services, including crisis stabilization services,
focused on the needs of young people experiencing SMI or SED. xcvi

Demonstration Application
States wishing to participate in this initiative can submit a demonstration application to CMS
outlining the state’s strategy for achieving the goals of this demonstration opportunity, including a
commitment to meeting the milestones described above that are critical steps for achieving these
goals over the course of the demonstration. CMS strongly encourages states to articulate in their
demonstration applications how their proposals will apply evidence-based programs to meet the
needs of people with SMI or SED in their states. States’ applications should also describe the state’s
capacity for regular reporting on progress toward meeting these milestones as well as for collecting
and reporting data on performance measures. In addition, states’ applications should confirm their
commitment to assuring the necessary resources will be available to effectively support
implementation of a robust monitoring protocol and evaluation.
Implementation Plan
Participating states will also develop implementation plans describing the various timelines and
activities the states will undertake to achieve the milestones listed above. States will have the option
of submitting their implementation plans as part of their applications or as post approval protocols.
Authorization of FFP for services in inpatient hospitals or residential treatment settings that qualify as
IMDs will be contingent upon assurance by the state that all participating IMDs are licensed and
accredited, community-based alternatives are or will be available throughout the state under the
state’s financing plan described above, and CMS has approved the SMI/SED demonstration’s
implementation plan. The expectation is that states will meet the milestones by the end of the first
two years of the demonstration. However, regardless of whether the implementation plan is
submitted as part of a state’s application or as a post-approval protocol, FFP for services provided
during Medicaid beneficiary stays in IMDs will be prospective only and contingent upon CMS
approval of the state’s implementation plan.
As a state’s SMI/SED demonstration progresses, the state will be expected to include, in its section
1115(a) demonstration monitoring reports, information detailing the state’s progress toward meeting
the milestones and timeframes specified in the state’s implementation plan, as well as information
and data so that CMS can monitor budget neutrality.
States seeking approval of an SMI/SED demonstration also will be expected to submit a Health IT
Plan (“HIT Plan”) that describes the state’s ability to leverage health IT, advance health information
exchange(s), and ensure health IT interoperability in support of the demonstration’s goals. The HIT
Plan should address electronic care plan sharing, care coordination, and behavioral health-physical
health integration. CMS will provide additional guidance on these expectations.
Monitoring Protocol for Performance Measures Aligned with Initiative Goals

Page 18 –State Medicaid Director
As outlined above, states will include in their section 1115(a) demonstration reports, information
detailing milestones and performance measures representing key indicators of progress toward
meeting the goals for this initiative. Participating states will report on a common set of measures and
the states and CMS will agree to additional measures and measure concepts specific to a particular
state’s demonstration parameters. A list of potential measures is included in Appendix B. Reporting
templates are subject to OMB review and approval under the Paperwork Reduction Act.
CMS will provide guidance to participating states on development of monitoring protocols that will
identify expectations for quarterly and annual monitoring reports, including agreed upon performance
measures, measure concepts, and qualitative narrative summaries. For performance measures, CMS’
guidance will include recommendations for baselines and targets. Both quantitative and qualitative
information will align with the milestones outlined above. Any deviations from CMS’ guidance the
state wishes to make will be documented in the monitoring protocol. The monitoring protocol will be
developed after CMS approval of the demonstration in consultation with CMS, and a timeframe for
finalizing the monitoring protocol will be included in the STCs of each demonstration.
The data reported by the state will inform a mid-point assessment between years two and three of the
demonstration during which CMS will identify whether states are making sufficient progress toward
meeting the milestones and performance measure targets. The mid-point assessment will also include
an assessment of whether a state is on track to meet the budget neutrality requirements. States at risk
of not meeting these targets will submit modifications to their implementation plans, which will be
subject to CMS approval. CMS may require a state to provide a corrective action plan if it fails to
meet the required annual triggers indicating that waiver spending is diverging from the expected
trajectory under the budget neutrality requirements. Furthermore, FFP for services to individuals
residing in IMDs may be withheld if states are not making adequate progress on meeting the
milestones and goals as evidenced by reporting on the milestones and the required performance
measures in the monitoring protocol agreed upon by the state and CMS. Additionally, achievement
of the milestones and performance measure targets will be taken into consideration by CMS if a state
were to request an extension of its demonstration.
States will also be required to conduct independent and robust interim and final evaluations that will
draw on the data collected for the milestones and performance measures, as well as other data and
information needed to support the evaluation that will describe the effectiveness and impact of the
demonstration using quantitative and qualitative outcomes and a cost analysis. An evaluation design
will be developed by the state, with technical assistance from CMS, to be finalized within 180 days of
the demonstration approval. The evaluation design will include detailed analytic plans, data
development, collection, and reporting details and will be subject to CMS approval. States that fail to
submit an acceptable and timely evaluation design as well as any required monitoring, expenditure or
other evaluation reporting, are subject to a $5 million deferral per deliverable. The interim evaluation
will be required one year before expiration of the demonstration or when the state submits a proposal
to renew the demonstration. The final evaluations will be due eighteen months after the
demonstration period ends.
Public Availability of Data on State Progress toward Meeting Milestones and Performance
Measure Targets as well as Evaluation Reports

Page 19 –State Medicaid Director

CMS will regularly post information on the Medicaid.gov website regarding the states’ progress in
meeting the agreed upon milestones and performance measure targets. In addition, states’ regular
1115 reports, as well as their evaluation reports, will be posted, as required by section 1115
transparency rules.
Submission Process for Section 1115(a) Demonstration
States should follow the usual process for submitting section 1115(a) demonstration proposals as
outlined in the federal section 1115(a) demonstration project transparency regulations at 42 CFR
431.412 and 42 CFR 431.408. As explained in these regulations, states should submit an application
that includes the following information:
• A comprehensive description of the demonstration, including the state’s strategies for
addressing the goals and milestones discussed above for this demonstration initiative;
• A comprehensive plan to address the needs of beneficiaries with SMI or SED, including an
assessment of how this demonstration will complement and not supplant state activities called
for or supported by other federal authorities and funding streams;
• A description of the proposed health care delivery system, eligibility requirements, benefit
coverage and cost sharing (premiums, copayments, and deductibles) required of individuals
who will be impacted by the demonstration, to the extent such provisions would vary from the
State’s current program features and the requirements of the Social Security Act;
• A list of the waivers and expenditure authorities that the state believes to be necessary to
authorize the demonstration;
• An estimate of annual aggregate expenditures by population group impacted by the
demonstration, including development of baseline cost data for these populations.
Specifically, CMS requests that states’ fiscal analysis demonstrate how the proposed changes
will be budget neutral, i.e., will not increase federal Medicaid spending. CMS will work
closely with states to determine the feasibility of their budget neutrality models and suggest
changes as necessary;
• Enrollment data including historical mental health care coverage and projected coverage
over the life of the demonstration, of each category of beneficiary whose health care coverage
is impacted by the demonstration;
• Written documentation of the state’s compliance with the public notice requirements at 42
CFR 431.408, with a report of the issues raised by the public during the comment period and
how the state considered those comments when developing the final demonstration
application submitted to CMS;

Page 20 –State Medicaid Director
• The research hypotheses that are related to the demonstration’s proposed changes, goals, and
objectives, and a general plan for testing the hypotheses including, if feasible, the
identification of appropriate evaluation indicators; and
• An implementation Plan (if being submitted at the time of application).
CMS requests that these Section 1115(a) demonstration proposals describe, in as much detail as
possible, the state’s strategy for improving access to and quality of mental health care through the
proposed demonstration and how the state’s proposed demonstration will further the goals of the
initiative described above. The application should include a description of the activities the state
plans to undertake to address the milestones listed above and to report on progress toward meeting
the milestone and performance measures. If it is not feasible to include in the application a detailed
implementation plan specifying how and when the state proposes to meet the milestones, the state
should propose a date by which an implementation plan will be submitted by the state (generally
within at least 90 days of approval of the application), and this date will be included in the STCs. As
a reminder, FFP for services in IMDs will not be available through the demonstration until the
implementation plan/protocol is approved by CMS, at which time FFP will be available only
prospectively. In addition, the state should indicate what data sources and resources it proposes to
use for reporting on performance measures. CMS will work with states to develop a detailed
monitoring protocol for these data points and performance measures after the application is received
from the state.
After states develop 1115 demonstration proposals that include the information listed above, states
must follow the minimum 30-day public notice and comment procedures outlined in 42 CFR
431.408, to allow opportunity for public input on the application prior to submission to CMS. These
procedures include consultation with Indian tribes and Indian health providers (to the extent there are
Indian tribes and Indian health providers located within geographic boundaries of the state) to solicit
advice from the Indian health providers on ensuring access for American Indian and Alaska Native
(AI/AN) individuals to the services that are part of the demonstration and that these services meet the
unique and cultural needs of AI/AN individuals.
CMS is available to provide technical assistance to states on how to meet federal transparency
requirements as well as to preview states’ draft 1115(a) proposals and public notice documentation to
help ensure states successfully meet federal requirements.
Section 1115(a) demonstration applications may be submitted electronically to
[email protected] or by mail to:
Judith Cash
Director, State Demonstrations Group
Centers for Medicare & Medicaid Services
Center for Medicaid & CHIP Services
Mail Stop: S2-26-12
7500 Security Boulevard
Baltimore, MD 21244-1850

Page 21 –State Medicaid Director

As required by 42 CFR 431.416, when states submit section 1115 proposals, CMS will send written
notice within 15 days of receipt to the state on whether its application meets all federal transparency
requirements and is determined complete for purposes of initiating CMS' review and the federal 30day public notice and comment process.
CMS is committed to supporting states that wish to implement innovative service delivery models for
beneficiaries with SMI or SED including community-based services as mandated by section 12003 of
the Cures Act. Questions regarding this guidance may be directed to Kirsten Beronio, Senior
Behavioral Health Policy Advisor, Disabled and Elderly Health Programs Group, at
[email protected]. We look forward to continuing our work together on improving the
health and wellness of Medicaid beneficiaries with SMI or SED.

Sincerely,
/s/
Mary C. Mayhew
Deputy Administrator and Director

cc:
National Association of Medicaid Directors
National Academy for State Health Policy
National Governors Association
American Public Human Services Association
Association of State and Territorial Health Officials
Council of State Governments
National Conference of State Legislatures
Academy Health
National Association of State Mental Health Program Directors

Page 22 –State Medicaid Director
Appendix A
In the table below is a summary of some key services included in the models of care and activities
highlighted in Part I of the letter above and summarized in the left column below, entitled “Model,
Benefit, or Activity”. The middle column below, entitled “Potential Medicaid Authority”, lists
examples of Medicaid authorities that states may be able to use to cover the services and activities
summarized in the left column next to the corresponding number. In addition, the third column
below, entitled “Potential Payment Strategy” lists payment strategies that could be used by states to
support implementation of the model or activity summarized in the left column. The services that can
be eligible for FFP would depend on the specific authority that states seek to use, and states should
submit specific proposals to CMS.
Model, Benefit, or Activity

Coordinated Specialty Care Model and
Similar Programs for High Risk
Adolescents xcvii
1. Provider outreach and early
engagement and clinical
supervision/coordination of team
members;
2. Mental health services including
mental health assessment,
psychotherapy, medication
management, case management,
family supports, ACT programs,
and peer supports;
3. Care coordination among team
members and with primary care;
4. Supported Employment/Education

Improved data sharing between schools,
hospitals, primary care, criminal justice,
faith communities, and specialized
mental health providers
• Technology for screening &
assessment tools, analytics for
prevention and treatment, web or
application based tools for
prevention and treatment.
School-based behavioral health ci

Potential Medicaid Authority

Potential Payment
Strategy

1. Provider costs for outreach and
team supervision are not
directly coverable by Medicaid
state plan authorities, but
provider costs related to
delivery of covered services
may be incorporated into rates
for covered services; 1945
Health Home state plan option;
2. 1905(a) state plan benefits
including Rehabilitative
Services, Case Management,
Other Licensed Practitioner
Services, Clinic Services;
3. 1945 Health Home state plan
option;
4. 1915(i), 1915 (c), 1915(b)(3)

•

•

•

MITA Architecture xcix

•

•
•

Administrative match
may be available for
state referral network
development activities
that may be allocated to
Medicaid;
FFS payments for
covered Medicaid
service under
appropriate benefit
category;
Enhanced match under
the Health Home
benefit for 8 quarters;
Payments through
managed care
entities xcviii

Enhanced
administrative match
approved via an
advanced planning
document (APD) under
MITA c

Page 23 –State Medicaid Director
•

Screening and counseling and
referral to specialty care

•

1905(a) state plan benefits
such as EPSDT, Other
Licensed Practitioner Services

•

•

•
Collaborative Care Model
1. Referral network development and
team building;
2. Management of overall care by
primary care physician;
3. Screening for mental health
disorders and on-going monitoring
of treatment adherence,
effectiveness, side effects usually by
care manager;
4. Care coordination (including with
outside specialty care and social
services), patient engagement and
education, and brief
psychotherapeutic interventions by
care manager;
5. Psychiatric specialist consultations
regarding patient progress including
recommendations for treatment
strategies and adjustments;
6. Telehealth and other technology
support

Child Psychiatry Access Model
1. Referral network development and
infrastructure and technology
support;
2. Care coordination of behavioral
health treatment;
3. Consultation;
4. Mental health services

1. Provider costs for outreach and
team supervision are not
directly coverable by Medicaid
state plan authorities, but
provider costs related to
delivery of covered services
may be incorporated into rates
for covered services, 1945
Health Home state plan option;
2. 1905(a) state plan benefits
such as Physicians’ Services,
Clinic Services;
3. 1905(a) state plan benefits
such as Clinic Services, Other
Licensed Practitioner Services;
4. 1905(a) state plan benefits
such as Case Management
Services, Other Licensed
Practitioner Services, 1945
Health Home state plan option;
5. Provider costs, including
consultation with specialists,
may be able to be incorporated
into rates for underlying
covered services;
6. MITA Architecturec

•

1. Provider costs for outreach and
team supervision are not
directly coverable by Medicaid
state plan authorities, but
provider costs related to
delivery of covered services
may be incorporated into rates

•

•
•

•
•

Managed Care - Ensure
providers in school
settings are included in
Medicaid managed care
networks or set up
appropriate
coordination;
FFS payments for
covered Medicaid
service under
appropriate benefit
category;
Partnerships with
FQHCs
Administrative match
may be available for
state referral network
development activities
that may be allocated
to Medicaid;
Payments through
managed care
entities;xcix
FFS payments for
covered Medicaid
service under
appropriate benefit
category;
Enhanced match for
Health Homes services
for 8 quarters;
Enhanced
administrative match
approved via an APD
under MITAci

Administrative match
may be available for
state referral network
development activities
that may be allocated
to Medicaid;

Page 24 –State Medicaid Director
for covered services, MITA
Architecture;c
2. 1905(a) state plan benefits
such as Case Management
Services, 1945 Health Home
state plan option;
3. Provider costs, including
consultation with specialists,
may be able to be incorporated
into rates for underlying
covered services;
4. 1905(a) state plan benefits
such as Physicians’ Services,
Other Licensed Practitioner
Services
Telehealth infrastructure as a delivery
vehicle for services

Services provided via Telehealth

•

MITA Architecturec

•

State Plan

•

•
•

•

•

•
•

Crisis Stabilization and Comprehensive
Care Model (e.g., CCHBC cii)
• Crisis behavioral health services,
screening, assessment, and
diagnosis, mental health and SUD
services, targeted case management,
psychiatric rehabilitation services,
peer supports and family supports

•

•

Provider costs for outreach
•
and team supervision are not
directly coverable by
Medicaid state plan
authorities; but provider costs
related to delivery of covered •
services may be incorporated
into rates for covered services;
1905(a) state plan benefits
such as Clinic Services,
Diagnostic Services,
•
Rehabilitative Services,
Physicians’ Services, Other
Licensed Practitioner
Services;

Enhanced
administrative match
approved via an APD
under MITA;ci
Enhanced match for
Health Home services
for 8 quarters;
FFS payments for
covered Medicaid
service under
appropriate benefit
category;
Payments through
managed care entitiesxcix

Enhanced
administrative match
via APD under MITAci
Payments through
managed care
entities;xcix
FFS payments for
covered Medicaid
service under
appropriate benefit
category

FFS payment for
covered Medicaid
services under
appropriate benefit
category;
Administrative match
for state administrative
activities that may be
allocated to
Medicaid; ciii
Payments through
managed care
entitiesxcix

Page 25 –State Medicaid Director

Registry of Available Behavioral Health
Providers

•

1945 Health Home state plan
option, primary care case
management

•

MITA Architecturec

•

•

Supported Employment and Supportive
Housing
• Assistance finding a job or
•
home and supportive services to •
help maintain that job or home
•
•

•
1915 (i)
1915 (c)
1915(b)(3)
1115(a)(2)

•

Enhanced
administrative match
via APD under
MITA;ci
Administrative match
for state
administrative
activities that may be
allocated to
Medicaid. civ

FFS payments for
covered Medicaid
service under
appropriate benefit
category;
Payments through
managed care
entitiesxcix

Additional Information on Medicaid Authorities
Many of the services that are essential to the implementation of services for adults with a SMI and
children with a SED may be covered based on section 1905(a) of the Act. A number of Medicaid
service categories that are particularly relevant to covering the innovative service delivery strategies
and community-based services for adults with a SMI or children with a SED described above are
discussed below.
Section 1905(a) – State Plan Benefits:
Section 1905(a)(13) - Rehabilitative Services
Rehabilitative services, as set forth in 42 C.F.R § 440.130(d), are “any medical or remedial services
recommended by a physician or other licensed practitioner of the healing arts, within the scope of his
practice under state law, for maximum reduction of physical or mental disability and restoration of a
beneficiary to his best possible functional level.” Services such as individual and group therapy,
crisis stabilization, peer support, behavioral interventions, and care coordination of other behavioral
health services may be authorized under this benefit.

Page 26 –State Medicaid Director
Section 1905(a)(6) - Other Licensed Practitioner Services
Other licensed practitioner services, as set forth in 42 C.F.R § 440.60(a), are “medical or remedial
care or services, other than physicians’ services, provided by licensed practitioners within the scope
of practice as defined under State law.” For example, this benefit could be used to cover counseling
services of a licensed clinical social worker.
Section 1905(a)(19) - Case Management Services
Case management services include services that assist eligible individuals to gain access to needed
medical, social, educational, and other services. 42 C.F.R § 440.169(a). Case management services
include all of the following components: comprehensive assessment and periodic assessment of an
eligible individual’s needs; development and periodic revision of a specific care plan; referrals to
services and related activities to help the eligible individual obtain needed services; and monitoring
and follow-up activities. 42 C.F.R. § 440.169(d). States may target case management services to a
specific group of beneficiaries, such as adults with SMI or children with SED, or to individuals who
reside in specified areas of the state (or both). 42 C.F.R § 440.169(b).
Section 1905(a)(9) - Clinic Services
Clinic services refer to “preventive, diagnostic, therapeutic, rehabilitative, or palliative services that
are furnished by a facility that is not part of a hospital but is organized and operated to provide
medical care to outpatients.” 42 C.F.R § 440.90. Clinic services include “services furnished at the
clinic by or under the direction of a physician or dentist” and “services furnished outside the clinic,
by clinic personnel under the direction of a physician, to an eligible individual who does not reside in
a permanent dwelling or does not have a fixed home or mailing address.” 42 C.F.R. § 440.90(a)-(b).
Section 1905(a)(5) - Physicians’ Services
Physicians’ services refer to services “whether furnished in the office, the beneficiary’s home, a
hospital, a skilled nursing facility, or elsewhere, means services furnished by a physician (1) within
the scope of practice of medicine or osteopathy as defined by State law; and (2) by or under the
personal supervision of an individual licensed under State law to practice medicine or osteopathy.” 42
C.F.R. § 440.50(a).
Section 1905(r) - Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) Benefit
Under the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit set forth in
section 1905(r) of the Act, states must make available any service listed in section 1905(a) of the Act
that is needed to correct or ameliorate defects and physical and mental conditions discovered by
EPSDT screening services, whether or not the service is covered under the state plan.
Section 1905(a)(1) and (2) - Hospital Services

Page 27 –State Medicaid Director
Hospital Services, defined at 1905(a)(1) and 1905(a)(2) and implemented at 42 C.F.R. § 440.10 and
42 C.F.R. § 440.20, includes both inpatient hospital and outpatient hospital services. For inpatient
hospital services, the term means services (1) that are ordinarily furnished in a hospital for the care
and treatment of inpatients, (2) are furnished under the direction of a physician or dentist; and (3) are
furnished in an institution that is maintained primarily for the care and treatment of patients with
disorders other than mental diseases and is licensed or approved as a hospital by an officially
designated authority for state standard setting. There must be in effect a utilization review plan,
applicable to all Medicaid patients that meets the requirements of 42 C.F.R. § 482.30, absent a waiver
from the Secretary. For outpatient hospital services, the term means preventive, diagnostic,
therapeutic, rehabilitative, or palliative services that (1) are furnished to outpatients and (2) are
furnished by or under the direction of a physician or dentist. The criteria listed for inpatient hospital
services regarding standard setting mean that meeting the requirements for Medicare participation
also apply. Outpatient hospital services may be limited by a Medicaid agency by excluding from the
definition those items and services that are not generally furnished by most hospitals in the state.
Section 1905(a)(16) - Inpatient Psychiatric Services for Individuals under Age 21
Under section 1905(a) of the Act, there is a general prohibition on Medicaid payment for any services
provided to any individual who is under age 65 and who is residing in an Institution for Mental
Diseases (IMD) unless the payment is for inpatient psychiatric hospital services for individuals under
age 21 pursuant to section 1905(a)(16) of the Act, as defined in section 1905(h) of the Act.
Implementing regulations at 42 C.F.R. § 440.160 and 441 Subpart D define these inpatient
psychiatric hospital services as services furnished by a psychiatric hospital, a general hospital with a
psychiatric program that meets the applicable conditions of participation, or an accredited psychiatric
facility that meets certain requirements. Section 12005 of the 21st Century Cures Act amends section
1905(a)(16) of the Act to require Medicaid reimbursement for EPSDT services to individuals under
age 21 receiving inpatient psychiatric services pursuant to section 1905(a)(16) of the Act. The
effective date of this amendment is January 1, 2019.
Section 1905(a)(14) - Inpatient Hospital Services and Nursing Facility Services for Individuals Age
65 or Older in Institutions for Mental Diseases
Services to individuals age 65 or older in these types of facilities may be reimbursed when the
individuals meet the requirements for admission to these facilities and the facilities meet applicable
federal requirements as set forth in 42 C.F.R § 440.140.
School-based Services
While there is no state plan benefit entitled “school-based services,” CMS allows reimbursement of
Medicaid-covered services to Medicaid-eligible children when delivered by Medicaid providers,
including in a school setting. Many states have already developed reimbursement mechanisms where
Medicaid pays for medical services, including mental health treatment services in school
settings. States can consider developing school-based health centers to enhance their capacity to
deliver mental health services, require managed care plans responsible for delivering mental health

Page 28 –State Medicaid Director
services to contract with school providers, or develop other arrangements between health facilities
and schools.
Sections 1903(m) and 1932 – Managed Care
Consistent with sections 1903(m) and 1932 of the Act, states may deliver Medicaid-covered services
through managed care plans by way of an amendment to the Medicaid state plan. States must
continue to assure adequate access to and the availability of the full set of covered state plan services,
including EPSDT and generally must provide beneficiaries with a choice of at least two managed
care plans. Managed care contracts are subject to CMS review and approval; managed care
capitation rates must be projected to provide for all reasonable, appropriate, and attainable costs that
are required under the terms of the contract and for the operation of the managed care plan for the
time period and the population covered under the terms of the contract and be reviewed and approved
by CMS as actuarially sound.
Section 1915(b) Authority – Freedom of Choice
Under section 1915(b) of the Act (1915(b) waiver), CMS may grant a waiver to permit states to
restrict beneficiary free choice of provider, to create defined provider networks, which could be part
of a managed care service delivery system. When using this authority, states may use the savings
accrued through the use of a managed care delivery system to provide additional services. Unless an
expenditure authority is provided as part of a section 1115 demonstration, managed care service
delivery systems that rely on contracts with managed care plans must also comply with section
1903(m). Under section 1915(a) of the Social Security Act, states can implement a voluntary
managed care program by executing a contract with organizations that the state has procured using a
competitive procurement process.
Section 1915(c) - Home and Community-based Services Waiver Authority
States may request a waiver to provide beneficiaries who would otherwise need to receive care in an
institution, certain long-term care services and supports in community settings. States can use this
authority to develop comprehensive benefit designs that include additional supportive services.
States may not restrict freedom of choice under this waiver but may request waivers of comparability
and state-wideness, enabling them to limit the services to subgroups of Medicaid beneficiaries and to
an area within the state. States may also limit participation to a specific number of beneficiaries.

Section 1915(i) – Home and Community-based Services State Plan Amendment
Section 1915(i) provides an opportunity for states to amend their state Medicaid plans to offer home
and community-based services (HCBS) including case management, respite, and other HCBS for
elderly and disabled individuals who meet needs-based eligibility criteria set by the state. Section
1915(i) State plan HCBS is a benefit that is very similar to Section 1915(c) HCBS waivers except
that unlike 1915(c), authority under 1915(i) delinks the provision of HCBS from the requirement that
participants must meet an institutional level of care. In order to target the initiative and limit costs,

Page 29 –State Medicaid Director
states may identify a specific population and can also establish additional needs-based criteria by
service. States may target the 1915(i) benefit to particular population groups such as adults or
adolescents with mental health disorders, but cannot waive the requirement to provide the HCBS
statewide, nor limit the number of participants in the state who may receive the HCBS if they meet
the population definition.
Section 1945 - Health Home Optional Benefit
Section 1945 of the Act provides an optional Medicaid state plan benefit available to states to design
Health Homes to coordinate care for individuals with Medicaid who have chronic conditions,
including a mental health condition or SUD. Health Homes must provide comprehensive care
management, care coordination, health promotion, comprehensive transitional care/follow-up,
beneficiary and family/caregiver support, and referral to community and social support services.

Page 30 –State Medicaid Director
Appendix B
Potential Standard Measures and Measure Concepts
Participating states will commit to reporting on a standard set of measures and data points to
demonstrate progress on the goals of the demonstration. Examples of measures and measure
concepts that could be included in a standard set measures include -•

Evidence of availability of community-based services and alternatives to inpatient and
residential services in each geographic region of the state (e.g., maps of provider availability
and provider agreements)

•

ED use among Medicaid beneficiaries with SMI or SED and their lengths of stay in the ED;

•

Readmissions to inpatient psychiatric or crisis residential settings;

•

Average lengths of stay in participating psychiatric hospitals and residential settings;

•

Medication reconciliation upon admission (Medicare Inpatient Psychiatric Facility (IPF)
Reporting Requirement);

•

SUD screening of beneficiaries admitted to psychiatric hospitals or residential treatment
settings (Medicare IPF Reporting Requirement);

•

Timely transmission of transition records (Medicare IPF Reporting Requirement);

•

Medication continuation following discharge (Medicare IPF Reporting Requirement);

•

Follow up after hospitalization for mental illness (NQF# 0576, Adult and Child Core Set);

•

Follow up after ED visit for mental illness or alcohol and other drug abuse or dependence
(NQF# 2605, Adult Core Set);

•

Use of first-line psychosocial care for children and adolescents on antipsychotics (NQF#2801,
Child Core Set);

•

Patient referral into treatment by specified care setting (school, community, criminal justice,
faith communities);

•

Diabetes care for patients with SMI: Hemoglobin A1c (HbA1c) Poor Control (>9.0%) (NQF
# 2607, Adult Core Set) cv;

•

Screening for Depression and Follow-Up Plan (NQF #0418/0418e, Adult Core Set);

Page 31 –State Medicaid Director
•

Rates of involuntary admissions to treatment settings;

•

Access to preventive/ambulatory health services for Medicaid beneficiaries with SMI or SED;
and

•

Suicide or overdose death within 15 days of discharge from an inpatient facility or residential
setting for treatment for an SMI or SED.

Page 32 –State Medicaid Director

ENDNOTES
i

See Pub. L. 114-255. Available at https://www.gpo.gov/fdsys/pkg/PLAW-114publ255/pdf/PLAW-114publ255.pdf .
ii
See definition developed by the Substance Abuse and Mental Health Services Administration (SAMHSA) as mandated
by the Congress in the ADAMHA Reorganization Act (Public Law 102-321) at 58 Fed. Reg. 96, pp. 29422-29425 (May
20, 1993).
iii
Ibid.
iv
SAMHSA, NSDUH Data Review, “Receipt of Services for Substance Use and Mental Health Issues among Adults:
Results from the 2016 National Survey on Drug Use and Health” (Sept. 2017).
v
See definition developed by the Substance Abuse and Mental Health Services Administration (SAMHSA) as mandated
by the Congress in the ADAMHA Reorganization Act (Public Law 102-321) at 58 Fed. Reg. 96, 29422-29425 (May 20,
1993) (The definition included in the regulation references DSM-III, however the latest edition is DSM-V.).
vi
Ibid.
vii
Kessler RC, Chiu WT, Demier, O, et al. Prevalence, severity and comorbidity of twelve-month DSM-IV disorders in
the National Comorbidity Survey Replication (NCS-R). Archives of General Psychiatry 2005; 62: 617–627.
viii
National Research Council and Institute of Medicine, “Preventing Mental, Emotional, and Behavioral Disorders
Among Young People: Progress and Possibilities” (2009).
ix
Perou R, Bitsko RH, Blumberg SJ. Mental health surveillance among children--United States, 2005-2011. MMWR
Suppl. May 2013; 62(2):1-35.
x
Simon AE, Pastor PN, Reuben CA, et al. Use of mental health services by children ages six to 11 with emotional or
behavioral difficulties. Psych Services 2015; 66(9): 930–937.
xi
Substance Abuse and Mental Health Administration, “Key Substance Use and Mental Health Indicators in the United
States: Results from the 2016 National Survey on Drug Use and Health” (2017).
xii
Stagman S and Cooper JL, “Children’s Mental Health: What Every Policymaker Should Know”, National Center for
Children in Poverty, April 2010: http://www.nccp.org/publications/pdf/text_929.pdf; Wagner M and Newman L.
Longitudinal Transition Outcomes of Youth with Emotional Disturbances. Psych Rehab 2012; 35(3): 199-208.
xiii
Wang PS, Berglund PA, Olfson M, et al. Delays in initial treatment contact after first onset of a mental
disorder. Health Serv Res 2004; 39(2):393-415.
xiv
Frank RG and Epstein AM. Factors Associated with High Levels of Spending for Younger Dually Eligible
Beneficiaries with Mental Disorders. Health Affairs. 2014; 33(6): 1006-1013..
xv
Steadman HJ, Osher FC, Robbins PC, et al., Prevalence of Serious Mental Illness among Jail Inmates, Psych Services,
60 (6): 761-765 (2009); Point in time estimate based on applications to U.S. Department of Housing and Urban
Development for 2016 Continuum of Care Homeless Assistance Programs, Retrieved from
https://www.hudexchange.info/resource/reportmanagement/published/CoC_PopSub_NatlTerrDC_2016.pdf.
xvi
Interdepartmental Serious Mental Illness Coordinating Committee, Report to Congress, “The Way Forward: Federal
Action for a System That Works for All People Living With SMI and SED and Their Families and Caregivers” (Dec
2017): https://store.samhsa.gov/product/PEP17-ISMICC-RTC (citing Uniform Reporting System which can be found at
https://wwwdasis.samhsa.gov/dasis2/urs.htm) .
xvii
Druss GB, Zhao L, Von Esenwein S, et al. Understanding Excess Mortality in Persons with Mental Illness. Medical
Care 2011; 49(6).
xviii
Centers for Disease Control and Prevention, Morbidity and Mortality Weekly Report, “Surveillance for Violent
Deaths – National Violent Death Reporting System, 17 States, 2013” 2016; 65 (No. SS-10): 1-42; Brown NM, Green JC,
Desai MM, et al. Need and Unmet Need for Care Coordination Among Children With Mental Health Conditions,
Pediatrics. March 2014; 113(3): e530-537.
xix
Centers for Disease Control and Prevention, Vital Signs Report, “Suicide Rising Across the US” (June 2018):
https://www.cdc.gov/vitalsigns/pdf/vs-0618-suicide-H.pdf .
xx
CMCS Informational Bulletin, “Prevention and Early Identification of Mental Health and Substance Use Conditions”
(March 2013): https://www.medicaid.gov/federal-policy-guidance/downloads/CIB-03-27-2013.pdf .
xxi
Schoenbaum M, Sutherland JM, Chappel A, et al. Twelve-Month Health Care Use and Mortality in Commercially
Insured Young People with Incident Psychosis in the United States. Schizophr Bull. Oct 2017; 43(6): 1262-1272; Simon
GE, Stewart C, Yarborough BJ, et al. Mortality Rates After the First Diagnosis of Psychotic Disorder in Adolescents and
Young Adults. JAMA Psych. 2018; 75(3):254-260.

Page 33 –State Medicaid Director

xxii

Simon GE, Stewart C, Yarborough BJ, et al. Mortality Rates After the First Diagnosis of Psychotic Disorder in
Adolescents and Young Adults. JAMA Psych. 2018; 75(3):254-260.
xxiii
Dixon LB, Goldman HH, Bennett ME, et al. Implementing Coordinated Specialty Care for Early Psychosis: the
RAISE Connection Program. Psych Services. July 2017; 66 (7): 691-698.
xxiv
CMCS Informational Bulletin, “Coverage of Early Intervention Services for First Episode Psychosis” (Oct 2015)):
https://www.medicaid.gov/federal-policy-guidance/downloads/cib-10-16-2015.pdf
xxv
For example the Robert Wood Johnson Foundation initiative, The Early Detection and Intervention for Prevention of
Psychosis Program, with six sites nationwide resulted in some positive outcomes, for additional information see reports at
the following links: http://dev.nasmhpd.seiservices.com/content/about-edippp and
https://www.nasmhpd.org/sites/default/files/RWJF%20Findings%20Report%202014.pdf .
xxvi
See webpage on the Medicaid Information Technology architecture (MITA) 3.0:
https://www.medicaid.gov/medicaid/data-and-systems/mita/mita-30/index.html ; Under MITA 3.0, implementation of
new technologies may qualify for enhanced match of 90 percent federal match for establishing the technology and 75
percent match for operational support. CMS State Medicaid Director Letter # 18-006, “Leveraging Medicaid Technology
to Address the Opioid Crisis” (June 2018): https://www.medicaid.gov/federal-policy-guidance/downloads/smd18006.pdf .
xxvii
See CMS Final Rule: Mechanized Claims Processing and Information Retrieval Systems (90/10), 80 FR 75817.
xxviii
See https://www.hhs.gov/hipaa/for-professionals/special-topics/mental-health/index.html, Information Related to
Mental and Behavioral Health, including Opioid Overdose (fact sheets and materials written for professionals).
xxix
See https://www.hhs.gov/hipaa/for-individuals/mental-health/index.html, Information Related to Mental and
Behavioral Health, including Opioid Overdose (consumer facing materials and fact sheets)
xxx
Rones M, Hoagwood K, School-based mental health services: a research review. Clin Child Fam Psychol Rev. Dec.
2000; 3(4): 223-241.
xxxi
Weist MD, Myers CP, Hastings E, et al. Psychological functioning of youth receiving mental health services in the
schools versus community mental health centers. Community Ment Health J. Feb 1999; 35(1): 69-81.
xxxii
Nabors LA, Reynolds MW. Program evaluation activities: Outcomes related to treatment for adolescents receiving
school-based mental health services. Children’s Services: Social Policy, Research, and Practice. 2000; 3(3):175-189.
xxxiii
Department of Health and Human Services and Department of Education, “Healthy Students, Promising Futures:
State and Local Action Steps and Practices to Improve School-Based Health” (January 2016):
https://www2.ed.gov/admins/lead/safety/healthy-students/toolkit.pdf .
xxxiv
Price OA. School-centered approaches to improve community health: lessons from school-based health centers.
Economic Studies at Brookings July 2016; No. 5: https://www.brookings.edu/wp-content/uploads/2016/07/PriceLayout2-1.pdf .
xxxv
Ahmedani BK, Stewart C, Simon GE, et al. Racial/ethnic differences in healthcare visits made prior to suicide attempt
across the United States. Medical Care. May 2015; 53(5): 430-435.
xxxvi
For more information about the PHQ-9 and how to score, refer to http://www.cqaimh.org/pdf/tool_phq9.pdf
xxxvii
AIMS Center (Advancing Integrated Mental Health Solutions). Collaborative Care Evidence
Base: https://aims.uw.edu/collaborative-care/evidence-base ; Archer J, Bower P, Gilbody S, et al. Collaborative Care for
People with Depression and Anxiety. Cochrane Review. Oct. 2012:
http://www.cochrane.org/CD006525/DEPRESSN_collaborative-care-for-people-with-depression-and-anxiety;
Community Preventive Services Task Force, “Improving Mental Health and Addressing Mental Illness: Collaborative
Care for the Management of Depressive Disorders” (June 2010):
https://www.thecommunityguide.org/sites/default/files/assets/Mental-Health-Collaborative-Care.pdf.
xxxviii
A list of programs by state is on the network website: http://web.jhu.edu/pedmentalhealth/nncpap_members.html.
xxxix
Straus JH, Sarvet B. Behavioral Health Care for Children: The Massachusetts Child Psychiatry Access Project.
Health Affairs. 2014; 33 (12): 2153-2161.
xl
See Medicare fact sheet on Collaborative Care Model including CPT codes that can be used:
https://www.cms.gov/Outreach-and-Education/Medicare-Learning-NetworkMLN/MLNProducts/Downloads/BehavioralHealthIntegration.pdf .
xli
Raney L, Bergman D, Torous J, et al. Digitally driven integrated primary care and behavioral health: how technology
can expand access to effective treatment. Curr Psychiatry Rep. 2017; 19(11): 1-8.
xlii
Under MITA 3.0, implementation of new technologies may qualify for enhanced match of 90 percent federal match for
establishing the technology and 75 percent match for operational support. See CMS State Medicaid Director Letter # 18006, “Leveraging Medicaid Technology to Address the Opioid Crisis” (June 2018): https://www.medicaid.gov/federalpolicy-guidance/downloads/smd18006.pdf .

Page 34 –State Medicaid Director

xliii

CMS State Medicaid Director Letter # 18-006, “Leveraging Medicaid Technology to Address the Opioid Crisis” (June
2018): https://www.medicaid.gov/federal-policy-guidance/downloads/smd18006.pdf .
xliv
CMS State Medicaid Director Letter #16-003, “Availability of HITECH Administrative Matching Funds to Help
Professionals and Hospitals Eligible for Medicaid EHR Incentive Payments Connect to Other Medicaid Providers”, (Feb
2016): https://www.medicaid.gov/federal-policy-guidance/downloads/smd16003.pdf .
xlv
See CMCS Informational Bulletin, “Coverage of Behavioral Health Services for Children, Youth, and Young Adults
with Significant Mental Health Conditions” (May 2013): https://www.medicaid.gov/federal-policyguidance/downloads/CIB-05-07-2013.pdf.
xlvi
National Association of State Mental Health Program Directors, “Issue Brief: Crisis Services’ Role in Reducing
Avoidable Hospitalization” (Aug 2017).
xlvii
National Association of State Mental Health Program Directors, “Issue Brief: Care Transition Interventions to Reduce
Psychiatric Re-hospitalizations” (Sept 2015).
xlviii
Agency for Healthcare Research and Quality (AHRQ) Healthcare Cost and Utilization Project (HCUP) on hospital
readmissions involving psychiatric disorders, “AHRQ/HCUP Statistical Brief #189: Hospital Readmissions Involving
Psychiatric Disorders, 2012”,(May 2015): (http://www.hcup-us.ahrq.gov/reports/statbriefs/sb189-Hospital-ReadmissionsPsychiatric-Disorders-2012.pdf).
xlix
Additional information regarding the LOCUS tool is available at
https://sites.google.com/view/aacp123/resources/locus and for the CASII tool at
http://www.aacap.org/aacap/Member_Resources/Practice_Information/CASII.aspx .
l
See State Health Official Letter issued jointly by CMS, SAMHSA, and the Administration on Children and Families
regarding Trauma-informed Care (July 2013): https://www.medicaid.gov/Federal-Policy-Guidance/Downloads/SMD-1307-11.pdf .
li
National Association of State Mental Health Program Directors, “Issue Brief: Crisis Services’ Role in Reducing
Avoidable Hospitalization” (Aug 2017).
lii
National Action Alliance for Suicide Prevention, Crisis Services Task Force, “Crisis Now: Transforming Services Is
Within Our Reach” (2016):
https://actionallianceforsuicideprevention.org/sites/actionallianceforsuicideprevention.org/files/CrisisNow.pdf .
liii
Clause (B) following section 1905(a)(29) of the Act.
liv
Section 1905(i) of the Act.
lv
See Medicaid managed care rules at 42 CFR 438.6(e).
lvi
See Medicaid webpage on tobacco quitlines: https://www.medicaid.gov/medicaid/quality-of-care/improvementinitiatives/tobacco/quitlines/index.html .
lvii
Ibid.
lviii
Guidance for Administrative Claiming through the No Wrong Door System is available on the Medicaid website at
https://www.medicaid.gov/medicaid/finance/admin-claiming/no-wrong-door/index.html.
lix
Authorized by Section 223 of the Protecting Access to Medicare Act (Pub.L. 113-93).
lx
For additional information on the CCBHC Criteria see
https://www.samhsa.gov/sites/default/files/programs_campaigns/ccbhc-criteria.pdf
lxi
See CMS webpage on CCBHCs at https://www.medicaid.gov/medicaid/financing-and-reimbursement/223demonstration/index.html and Prospective Payment System Guidance at
https://www.samhsa.gov/sites/default/files/grants/pdf/sm-16-001.pdf#page=94 .
lxii
See CMS webpage on Medicaid Information Technology (MITA) 3.0: https://www.medicaid.gov/medicaid/data-andsystems/mita/mita-30/index.html;Under MITA 3.0, implementation of new technologies may qualify for enhanced match
of 90 percent federal match for establishing the technology and 75 percent match for operational support. CMS State
Medicaid Director Letter # 18-006, “Leveraging Medicaid Technology to Address the Opioid Crisis” (June 2018):
https://www.medicaid.gov/federal-policy-guidance/downloads/smd18006.pdf; See also CMS Guidance “Questions and
Answers: Administrative Claiming Related to Training and Registry Costs” (July 2015):
https://www.medicaid.gov/medicaid/financing-and-reimbursement/downloads/qa-training-registry-costs-071015.pdf
(regarding Medicaid support for development of registries of qualified providers of long term services and supports with
costs of its establishment and maintenance allocated between Medicaid and non-Medicaid funding streams).
lxiii
Bond GR, Drake RE. The critical ingredients of assertive community treatment. World Psychiatry. June 2015;14(2):
240-242.
lxiv
CMS State Medicaid Director Letter on Assertive Community Treatment (June 1999):
http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD060799b.pdf .

Page 35 –State Medicaid Director

lxv

Final Rule entitled “Medicaid Program; State Plan Home and Community-Based Services, 5-Year Period for Waivers,
Provider Payment Reassignment, and Home and Community-Based Setting Requirements for Community First Choice
and Home and Community-Based Services (HCBS) Waivers” (issued 01/16/2014): https://www.gpo.gov/fdsys/pkg/FR2014-01-16/pdf/2014-00487.pdf .
lxvi
HHS Guidance for Implementing Standards for Person Centered Planning and Self-Direction issued in June 2014:
https://www.acl.gov/sites/default/files/programs/2017-03/2402-a-Guidance.pdf .
lxvii
Croft B, Isvan N, Parish S, et al. Housing and Employment Outcomes for Mental Health Self-Direction Participants.
Psych Services. July 2018; 69(7):819-825.
lxviii
CMS State Medicaid Director Letter on peer supports (Aug 2007): https://www.medicaid.gov/Federal-PolicyGuidance/downloads/SMD081507A.pdf.
lxix
CMS Guidance, “Clarifying Guidance on Peer Support Services Policy” (May 2013):
https://www.medicaid.gov/medicaid/benefits/downloads/clarifying-guidance-support-policy.pdf .
lxx
Chung DT, Ryan CJ, Hadzi-Pavlovic D, et al. Suicide rates after discharge from psychiatric facilities: a systematic
review and meta-analysis. JAMA Psychiatry. 2017; 74(7): 694-702.
lxxi
CMS, Medicaid/CHIP Health Care Quality Measures Technical Assistance and Analytic Support Program, “Quality of
Care for Adults in Medicaid: Findings from the 2016 Adult Core Set: Chart Pack” (Dec. 2017) :
https://www.medicaid.gov/medicaid/quality-of-care/downloads/performance-measurement/2017-adult-chart-pack.pdf.
lxxii
CMS, Medicaid/CHIP Health Care Quality Measures Technical Assistance and Analytic Support Program, “Quality
of Care for Children in Medicaid and CHIP: Findings from the 2016 Child Core Set: Chart Pack” (Dec. 2017)
https://www.medicaid.gov/medicaid/quality-of-care/downloads/performance-measurement/2017-child-chart-pack.pdf .
lxxiii
See the CMS webpage on the Medicare Hospital Readmissions Reduction Program:
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-BasedPrograms/HRRP/Hospital-Readmission-Reduction-Program.html .
lxxiv
CMS webpage, “2018 Core Set of Adult Health Care Quality Measures (Adult Care Set)”:
https://www.medicaid.gov/medicaid/quality-of-care/downloads/performance-measurement/2018-adult-core-set.pdf
lxxv
CMS webpage, “2018 Core Set of Children’s Health Care Quality Measures for Medicaid and CHIP (Child Core
Set)”: https://www.medicaid.gov/medicaid/quality-of-care/downloads/performance-measurement/2018-child-core-set.pdf.
lxxvi
Denchev P, Pearson JL, Allen MH, et al. Modeling the cost-effectiveness of interventions to reduce suicide risk
among hospital emergency department patients. Psych Services. Jan 2018; 69 (1): 23-31.
lxxvii
Denchev P, Pearson JL, Allen MH, et al. Modeling the cost-effectiveness of interventions to reduce suicide risk
among hospital emergency department patients. Psych Services. Jan 2018; 69 (1): 23-31 (assuming for the telephone and
CBT interventions a societal willingness to pay to reduce mortality of $50,000 per life-year).
lxxviii
National Association of State Mental Health Program Directors, “Issue Brief: Care Transition Interventions to
Reduce Psychiatric Re-hospitalizations” (Sept 2015).
lxxix
Lucksted A, Essock SM, Stevenson J, et al. Client views of engagement in the RAISE Connection Program for early
psychosis recovery. Psych Services July 2015; 66(7): 699-704.
lxxx
National Association of State Mental Health Program Directors, “Issue Brief: The Role of Permanent Supportive
Housing in Determining Psychiatric Inpatient Bed Capacity” (August 2017).
lxxxi
Interdepartmental Serious Mental Illness Coordinating Committee, Report to Congress, “The Way Forward: Federal
Action for a System That Works for All People Living With SMI and SED and Their Families and Caregivers” (Dec
2017): https://store.samhsa.gov/product/PEP17-ISMICC-RTC (citing Uniform Reporting System which can be found at
https://wwwdasis.samhsa.gov/dasis2/urs.htm).
lxxxii
The optional eligibility groups that serve people who have disabilities and are earning income are described at
sections 1902(a)(10)(A)(ii)(XIII), (XV), and (XVI) of the Act. These eligibility groups generally have higher income and
resource standards than other mandatory and optional eligibility groups that serve people who have disabilities, and states
have the flexibility to increase these standards beyond the statutory minimums. Nearly all states cover at least one of these
groups, and most have exercised their flexibility relating to financial eligibility.
lxxxiii
The Medicaid Buy-in program is authorized at section 1902(a)(10)(A)(ii)(XV) of the Act. It establishes an optional
state Medicaid benefit group for workers with disabilities who have earnings in excess of traditional Medicaid rules.
Individuals with disabilities who would be ineligible for Medicaid because of earnings can work and access the services
and supports they need. For more information got to the CMS webpage at
https://www.medicaid.gov/medicaid/ltss/employmment/ticket-to-work/index.html .
lxxxiv
CMS State Medicaid Director Letter #17-003, “Strategies to Address the Opioid Epidemic” (Nov 2017):
https://www.medicaid.gov/federal-policy-guidance/downloads/smd17003.pdf .

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lxxxv

Centers for Disease Control and Prevention, National Center for Health Statistics Data Brief No. 293 “Mortality in
the United States, 2016” (Dec. 2017): https://www.cdc.gov/nchs/data/databriefs/db293.pdf .
lxxxvi
Centers for Disease Control and Prevention, Morbidity and Mortality Weekly Report, “Surveillance for Violent
Deaths – National Violent Death Reporting System, 17 States, 2013” 2016; 65 (No. SS-10): 1-42; Cho SE, Na KS, Cho
SJ, et al. Geographical and temporal variations in the prevalence of mental disorders in suicide: systematic review and
meta-analysis. J Affect Disord 2016; 190:704-713.
lxxxvii
See sec. 1905(a) of the Act (does not include room and board as a separate, coverable benefit); 42 CFR § 440.2
(room and board costs are included in the definition of inpatient); 42 CFR § 440.140 (regarding services for individuals
age 65 and older in an IMD).
lxxxviii
See sec. 1905(a)(16) of the Act authorizing the Inpatient Psychiatric Services for Individuals under Age 21 benefit
and CMS implementing regulations defining the types of settings that can provide this benefit at 42 C.F.R. § 440.160 and
441 Subpart D.
lxxxix
CMS State Health Official Letter #16-007, “To Facilitate Successful Re-entry for Individuals Transitioning from
Incarceration to Their Communities” see Question 8: https://www.medicaid.gov/federal-policyguidance/downloads/sho16007.pdf.
xc
CMS recently issued a State Medicaid Director Letter on “Budget Neutrality Policies for Section 1115(a) Medicaid
Demonstration Projects (August 2018): https://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD18009.pdf
xci
For guidance on comprehensive crisis stabilization systems and an assessment template, see the National Action
Alliance for Suicide Prevention: Crisis Services Task Force, “Crisis now: Transforming services is within our reach
(2016): http://actionallianceforsuicideprevention.org/sites/actionallianceforsuicideprevention.org/files/CrisisNow.pdf ; an
example of a crisis stabilization system assessment tool is at https://www.slideshare.net/davidwcovington/crisis-nowassessment-framework
xcii
CMS has also previously issued a State Medicaid Director Letter on covering peer support services in Medicaid,
https://www.medicaid.gov/Federal-Policy-Guidance/downloads/SMD081507A.pdf , as well as additional clarification
that peer supports in some circumstances can include peer supports for the parents/legal guardians of Medicaid eligible
children, https://www.medicaid.gov/medicaid/benefits/downloads/clarifying-guidance-support-policy.pdf .
xciii
Bond GR, Drake RE. The critical ingredients of assertive community treatment. World Psychiatry. June 2015; 14(2):
240-242.
xciv
Additional information regarding the LOCUS tool is available at
https://sites.google.com/view/aacp123/resources/locus and for the CASII tool at
http://www.aacap.org/aacap/Member_Resources/Practice_Information/CASII.aspx .
xcv
For example, the Robert Wood Johnson Foundation’s initiative on the Early Detection and Intervention for the
Prevention of Psychosis Program with six sites nationwide resulted in some positive outcomes:
http://dev.nasmhpd.seiservices.com/content/about-edippp ; and
https://www.nasmhpd.org/sites/default/files/RWJF%20Findings%20Report%202014.pdf.
xcvi
See CMCS Informational Bulletin, “Coverage of Behavioral Health Services for Children, Youth, and Young Adults
with Significant Mental Health Conditions” (May 2013): https://www.medicaid.gov/federal-policyguidance/downloads/CIB-05-07-2013.pdf .
xcvii

See CMCS Informational Bulletin (CIB) on “Coverage of Early Intervention Services for First Episode Psychosis” (10/16/2015):
https://www.medicaid.gov/federal-policy-guidance/downloads/cib-10-16-2015.pdf

xcviii
Please note that if the state is directing the expenditures a managed care plan is making to its providers, it must
comply with the requirements in 42 CFR 438.6(c); this includes obtaining prior approval for such directed payments. For
more information, please see the following CIB published on November 2, 2017: https://www.medicaid.gov/federalpolicy-guidance/downloads/cib11022017.pdf. Also published as part of this CIB are -an appendix that provides some examples of approvable directed payments:
https://www.medicaid.gov/medicaid/managed-care/downloads/guidance/appendix-a.pdf; and
the preprint that states would need to submit to obtain prior approval of such directed payments:
https://www.medicaid.gov/medicaid/managed-care/downloads/guidance/438-preprint.pdf.
xcix
See CMS guidance on MITA 3.0 at https://www.medicaid.gov/medicaid/data-and-systems/mita/mita-30/index.html.
c
See SMDL # 18-006, “Leveraging Medicaid Technology to Address the Opioid Crisis” June 11, 2018.
ci
See Department of Health and Human Services and Education toolkit on improving availability of school-based
services: https://www2.ed.gov/admins/lead/safety/healthy-students/toolkit.pdf .
cii

See CMS information on CCBHCs: https://www.medicaid.gov/medicaid/financing-and-reimbursement/223demonstration/index.html and Prospective Payment System Guidance: https://www.samhsa.gov/sites/default/files/grants/pdf/sm-16001.pdf#page=94

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ciii

See CMS guidance on tobacco quitlines: https://www.medicaid.gov/medicaid/quality-of-care/improvementinitiatives/tobacco/quitlines/index.html
civ
See CMS guidance on Administrative Claiming Related to Training and Registry Costs:
https://www.medicaid.gov/medicaid/financing-and-reimbursement/downloads/qa-training-registry-costs-071015.pdf.
cv

Additional information on endorsed measures is available by using the National Quality Forum’s QPS tool:
http://www.qualityforum.org/Measures_Reports_Tools.aspx .