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Mental health

Medicaid Waivers for Serious Mental Illness Do Not Increase Inpatient Capacity

Strategic Insights

— 1 min read

Research from Oregon Health & Science University found that the adoption of Section 1115 Serious Mental Illness and Serious Emotional Disturbance (SMI/SED) Medicaid waivers was not associated with increased bed capacity among freestanding psychiatric hospitals. The study used a difference-in-differences design to compare changes in bed capacity in freestanding psychiatric hospitals across all 50 states and the District of Columbia, finding that states that adopted waivers did not have a significant increase in bed capacity. The study's authors suggest that SMI/SED waivers may need to be redesigned to meet the growing mental health needs of the Medicaid population.

Key Takeaways:

  • The adoption of SMI/SED Medicaid waivers was not associated with an increase in bed capacity among freestanding psychiatric hospitals.
  • Freestanding hospitals were responsible for most of the growth of psychiatric inpatient bed capacity over the last 10 years.
  • The study found no correlation between the option to pursue an SMI/SED waiver and bed capacity or other measures of mental health needs.
  • The study's authors found no association between the adoption of SMI/SED waivers and bed capacity in freestanding psychiatric hospitals.
  • The estimated association of SMI/SED waivers with changes in beds in psychiatric hospitals that accepted Medicaid was -24 beds per 100,000 Medicaid-enrolled adults (95% CI: -115, 67).
  • The study suggests that SMI/SED waivers may need to be redesigned to meet the growing mental health needs of the Medicaid population.
  • The research has been peer-reviewed and published in Health Services Research.

Statistics:

  • Over the last 10 years, freestanding hospitals were responsible for most of the growth of psychiatric inpatient bed capacity.
  • The estimated association of SMI/SED waivers with changes in beds in psychiatric hospitals that accepted Medicaid was -24 beds per 100,000 Medicaid-enrolled adults.
  • The 50 states and the District of Columbia were included in the study's analysis.
  • The study used data from the National Mental Health Services Survey, Centers for Medicare and Medicaid Services Provider of Service files, and other state-level datasets from 2014 to 2023.

Sources:

  • Oregon Health & Science University (OHSU)
  • Health Services Research (Wiley, 2025)
  • National Institute of Mental Health
  • Centers for Medicare and Medicaid Services
  • National Mental Health Services Survey
  • Centers for Medicare and Medicaid Services Provider of Service files

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