CEO Update 241
Manhattan Institute Publishes Report on Psychiatric Hospitals and the IMD Exclusion
The Manhattan Institute released a report yesterday assessing the current landscape of freestanding psychiatric hospitals amidst Medicaid’s Institution for Mental Diseases (IMD) exclusion and identifying opportunities for policy reform, including repeal of the exclusion.
NABH provided information to the author to inform the report’s content, and NABH publications were cited.
The report emphasizes that modifying the IMD exclusion is needed to ensure the financial sustainability of psychiatric hospitals and address the significant unmet need for care among Medicaid beneficiaries with serious mental illness. “Prohibiting reimbursement for treatment in psychiatric hospitals—without any clinical justification—exposes hospitals to financial losses from uncompensated care, a risk that becomes unavoidable as hospitals grow beyond 16 beds.”
District Court Issues Order Favorable to Beneficiaries in Wit vs. United Behavioral Health
On Aug. 5, a judge in the U.S. District Court for the Northern District of California issued an order favorable to the plaintiffs, health insurance beneficiaries who sued United Behaioral Health (UBH) alleging that the company improperly denied coverage for behavioral healthcare services.
In a landmark ruling in 2019, the District Court found that UBH violated its responsibilities to beneficiaries by imposing medical necessity criteria that misaligned with generally accepted standards to protect its own interests.
However, upon appeal by UBH, the U.S. Ninth Circuit Court of Appeals partially reversed the initial decision and sent the case back to the District Court for further consideration of whether plaintiffs’ breach of fiduciary duty claims are distinct from denial of benefits claims, the latter of which the Appeals Court ruled in favor of UBH.
The latest order affirms that they are distinct, specifically with respect to breaches of the fiduciary duties of loyalty and due care.
The case will now proceed to remedies and final judgment.
Sen. Grassley Introduces Bill to Disclose IPF Accreditation Survey Information
Sen. Chuck Grassley introduced the Psychiatric Hospital Inspection Transparency Act of 2025, which would require the U.S. Department of Health and Human Services (HHS) to make public information from psychiatric hospitals’ accreditation surveys that helps “health care consumers to make informed decisions regarding where to receive health care.”
The bill directs HHS to work with accreditation organizations and psychiatric hospitals to determine the type of information that is appropriate to disclose and how this information is presented to the public.
The bill also provides HHS the authority to publicly disclose full accreditation surveys of psychiatric hospitals.
NABH has conveyed significant concerns with disclosure of accreditation surveys to Sen. Grassley’s staff, underscoring the importance of confidentiality to facilitate quality improvement activities between facilities and accreditors, and the potential for this information to mislead consumers.
HHS Releases Report on Youth Psychiatric Medication Prescribing
HHS issued a report describing national trends in psychiatric medication dispensing to youth aged 3-17 between 2006 and 2023.
The largest change in proportion of youth receiving a medication was for selective serotonin reuptake inhibitors, which rose from 1.5% to 3.6%. Meanwhile, gradual reductions occurred for antipsychotics (1.3% to 1.1%) and mood stabilizers (1% to 0.8%), and there was a slight increase for stimulants (5% to 5.3%).
The trends for antipsychotics and mood stabilizers are opposite to adults, who experienced a steady increase during this period.
GAINS Center to Host Webinar Next Week on Supporting Service Members & Veterans in Criminal Justice Settings
The GAINS Center at the Substance Abuse and Mental Health Services Administration (SAMHSA) and SAMHSA’s Service Members, Veterans, and Their Families Technical Assistance Center will host a national webinar titled Supporting Justice-Involved Service Members and Veterans Through Early Interventions in Criminal Justice Settings on Tuesday, Aug. 19 from 1 p.m. to 2:30 p.m. ET.
The webinar will explore the Sequential Intercept Model, focusing on Intercepts 0 and 1, and its application to justice-involved service members, including active duty, Guard/Reserve, and retired military populations. Identifying and engaging individuals early at their intersection with behavioral health or criminal justice systems plays a critical role in achieving successful outcomes.
Click here to register.
Reminder: HHS Funding Opportunity for Behavioral Health Information Technology Pilot
HHS recently announced a funding opportunity to promote behavioral health data exchange and pilot the implementation of a specified set of behavioral health data elements.
HHS anticipates distributing $5 million across six to 10 participants, which will include a wide range of provider organizations that receive SAMHSA grant funds or partner with recipients. More information can be found in the Request for Application and Frequently Asked Questions document.
The deadline for the expression of interest was Wednesday, July 2. For those who expressed interest, full applications are due Wednesday, Aug. 27.
An HHS representative has offered to schedule a meeting between NABH members and the contractor administering the program to provide more detailed information and answer questions ahead of the application deadline.
Please contact Dan Schwartz if you are interested in attending such a meeting. NABH will schedule a meeting if there is sufficient interest.
Fact of the Week
The U.S. Food and Drug Administration (FDA) has asked the U.S. Justice Department to classify 7-OH, a compound from the kratom plant with opioid-like effects found in unregulated tablets, gummies, and drink mixes sold in gas stations and convenience stores, as an illicit substance.
For questions or comments about this CEO Update, please contact Jessica Zigmond.