Addressing Psychiatric Bed Capacity: Evidence From Medicaid's Institutions for Mental Disease Waivers for Serious Mental Illness.

Objective: To assess whether the adoption of Section 1115 Serious Mental Illness and Serious Emotional Disturbance (SMI/SED) Medicaid waivers was associated with increased bed capacity among freestanding psychiatric hospitals.

Study setting and design: We used a difference-in-differences design to study changes in bed capacity in freestanding psychiatric hospitals across all 50 states and the District of Columbia, comparing states that adopted waivers to those that did not.

Data sources and analytic sample: We 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.

Principal findings: Freestanding hospitals were responsible for most of the growth of psychiatric inpatient bed capacity over the last 10 years. We found no correlation between the option to pursue an SMI/SED waiver and bed capacity or other measures of mental health needs, including state-based estimates of SMI prevalence or suicide rates. In our difference-in-differences analyses, we found no association between the adoption of SMI/SED waivers and bed capacity in freestanding psychiatric hospitals. For example, our estimate of the 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). Other specifications and outcome variables yielded similar results.

Conclusion: While SMI/SED waivers offer the potential to address psychiatric bed shortages, these waivers alone may not suffice to increase inpatient capacity. Given the low uptake and absence of significant change in bed capacity, SMI/SED waivers may need to be redesigned to meet the growing mental health needs of the Medicaid population.