Historical Framing: Cost Control and Deinstitutionalization
The Institution for Mental Disease exclusion was written into the original Medicaid statute in 1965. Federal policymakers at that time were concerned that the federal government would end up paying for large state psychiatric hospitals if Medicaid reimbursement were broadly allowed. To prevent this cost shift, Medicaid reimbursement was restricted for most adults receiving treatment in mental health facilities with more than sixteen beds. The policy was framed as a fiscal safeguard and as support for deinstitutionalization.
Behavioral health care delivery has changed substantially since that period. Modern treatment models focus on short term stabilization, integrated services, and community based recovery. Tribal behavioral health programs and regional treatment centers are designed around these modern approaches, yet they are still affected by reimbursement limits that were created for a very different institutional landscape. This creates a disconnect between the original policy purpose and current treatment realities.
Current Framing: Access, Capacity, and Equity
Today the issue is more often framed as a behavioral health access and equity problem. Native American communities experience disproportionately high rates of substance use disorders, psychological distress, and suicide, while also facing shortages in culturally responsive treatment services (American Addiction Centers, 2025; Mental Health America, 2022). In North Dakota, some regions have been described as behavioral health care deserts due to limited service availability (SHIFT Nursing, 2022).
Recent state level reporting describes Medicaid facility reimbursement limits as a regulatory barrier that prevents tribes from expanding treatment capacity even when need and community support are present. The policy conversation has shifted away from institutional cost control and toward treatment capacity, infrastructure, and equity.
Key Public Sector Policy Actors
Several public sector agencies influence how these policies function. At the federal level, the Centers for Medicare and Medicaid Services administer Medicaid reimbursement rules and approve waiver requests that can allow states to modify certain restrictions. Federal law also authorizes Medicaid reimbursement for qualifying services delivered through tribal and Indian Health Service facilities.
At the state level, North Dakota Health and Human Services administers Medicaid policy, tribal consultation processes, and provider billing guidance. The agency maintains formal coordination structures with Tribal Nations and publishes specific guidance for tribal and Indian Health Service providers. North Dakota also supports a Tribal Medicaid Liaison role that helps tribes and providers navigate claims processes, enrollment rules, and policy interpretation. This liaison structure shows that policy implementation depends not only on written rules but also on relationship based coordination (North Dakota Health and Human Services, 2026).
Tribal Governments as Policy Actors
Tribal governments are sovereign entities and active policy actors, not simply stakeholders. North Dakota’s five Tribal Nations operate under different health system models that include Indian Health Service facilities and tribally operated programs under federal contracting authority. Because these systems vary in structure and capacity, uniform reimbursement and facility rules can produce uneven effects across communities. Tribal governments influence policy through formal consultation, intergovernmental agreements, and operational control of their health programs.
Private Sector and Managed Care Influence
Private sector organizations also play an important role. North Dakota’s Medicaid expansion program operates through a managed care model administered by a private insurer. Managed care organizations influence reimbursement processes, provider network participation, and billing requirements. These factors directly affect whether tribal behavioral health programs can form sustainable partnerships with outside providers.
State Medicaid guidance also allows certain services delivered through tribal facilities to receive enhanced federal matching funds when provided under approved care coordination agreements. These agreements require defined referral pathways and documentation control. While this structure supports tribal funding, it also adds administrative requirements that can slow program growth (North Dakota Health and Human Services, 2026).
References
American Addiction Centers. (2025). Native American addiction statistics and demographics.
https://americanaddictioncenters.org/rehab-guide/addiction-statistics-demographics/native-americans
Mental Health America. (2022). Native and Indigenous communities and mental health.
https://mhanational.org/position-statements/native-and-indigenous-communities-and-mental-health/
North Dakota Health and Human Services. (2026). Tribal health and Indian Health Services end user agreement.
https://www.hhs.nd.gov/healthcare/medicaid/provider/end-user-agreement/tribal-health-and-indian-health-services
SHIFT Nursing. (2022). A mental health care desert: Disparities in North Dakota’s mental health resources.
https://www.shiftnursing.com/articles/mental-health/
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Thank you for sharing your thoughtful analysis of this important issue. A policy created in 1965 to prevent the federal government from assuming the cost of large state-run psychiatric institutions has evolved into a systemic barrier to behavioral health access in today’s access to care. Modern behavioral health delivery models emphasize integrated care, community-based treatment, and short-term stabilization services, which are significantly different from the institutional structures the IMD exclusion was originally designed to regulate. Native American communities experience high rates of substance use disorders, psychological distress, and suicide compared to national averages (Centers for Disease Control and Prevention, 2024). These disparities are coupled with geographic isolation, workforce shortages, and limited transportation access, which further augments the barriers to receiving adequate healthcare. When local treatment options are unavailable, individuals are often forced to travel long distances to receive care. For many, delayed or inaccessible treatment increases the risk of crisis events and worsening mental health outcomes (Smithey & Ribitsch, 2025). The IMD reimbursement limit restricts funding for tribally operated treatment centers and short-term stabilization units. As a result, this outdated reimbursement structure can inadvertently suppress tribal building efforts and continue to increase inequities in access to behavioral health services.
Reframing this issue through an equity perspective helps demonstrate the structural nature of the barrier and emphasizes the need for policy transformation and reformation (Browne et al., 2018). Rather than viewing access limitations as isolated funding gaps, this perspective highlights how federal reimbursement policy contributes to persistent disparities. When high behavioral health needs are well documented in Native communities, maintaining restrictive reimbursement structures raises broader questions about equity, modernization, and federal responsibility. From my research, one potential pathway for reform is the Section 1115 Demonstration Waiver, which allows the state to request flexibility from certain Medicaid provisions to support short-term behavioral health treatment (Medical Services Division, 2022). Under this waiver, coverage for inpatient psychiatric stays is typically limited to 15 days per year per patient. While tribes cannot apply for a Section 1115 waiver independently, they can collaborate with the state to ensure that tribal facilities are included, thus allowing their communities to access Medicaid funding for short-term behavioral health services.
References:
Browne, J., Coffey, B., Cook, K., Meiklejohn, S., & Palermo, C. (2018). A guide to policy analysis as a research method. Health Promotion International, 34, 1032-1044. https://doi.org/10.1093/heapro/day052
Centers for Disease Control and Prevention. (2024, August 28). Tribal suicide prevention. https://www.cdc.gov/suicide/programs/tribal.html
Medical Services Division. (2022, July). Institutions for mental diseases (IMDs) – 1115 waiver information. North Dakota Human Services. https://www.nd.gov/dhs/info/testimony/2021-2022-interim/acute-psych/2022-7-28-medicaid-state-plan-waivers.pdf
Smithey, A., & Ribitsch, G. (2025, January 8). Strengthening Medicaid and tribal relationships to better support native populations. Center for Health Care Strategies. https://www.chcs.org/strengthening-medicaid-and-tribal-relationships-to-better-support-native-populations/