INDIANAPOLIS – In a move the state hopes will curb the use of hospital emergency rooms for mental health problems and psychiatric crises and drive down costs, Indiana obtained a Medicaid waiver from the federal government.

Indiana Medicaid will be able to pay for acute inpatient stays in mental health institutions for persons with serious mental illness.

Current Medicaid law prevented payment to facilities with more than 16 beds. Only about half of Indiana’s traditional Medicaid members receiving inpatient psychiatric services accessed those services through an institution for mental disease. Approval of the waiver amendment will mitigate these barriers to access and will shift services from less appropriate settings to facilities like hospitals and larger mental health treatment facilities.

Only Vermont and the District of Columbia receive waivers for serious mental illness prior to Indiana.

The change goes into effect January 1st.