Under the Affordable Care Act, states can expand Medicaid coverage, meaning more low-income people would have access to substance abuse treatment. However, a federal rule enacted nearly 50 years ago only permits Medicaid to cover residential treatment in facilities with 16 or fewer beds.
The rule, called the Institutions for Mental Disease exclusion, will prevent many low-income individuals from receiving residential addiction treatment because the vast majority of programs have greater capacity than 16 beds. Medicaid enrollees are able to obtain outpatient services under the law; however, that level of treatment is believed to be insufficient for many—particularly given the recent increase in heroin addiction.
Some states, such as California, have requested a waiver that would allow Medicaid clients to get residential treatment in programs with more than 16 beds. The law can only change through an act of Congress.