Initiative 4: substance use disorder (SUD) IMD

In July 2018, Centers for Medicare & Medicaid Services (CMS) approved an amendment to our Section 1115 Medicaid demonstration waiver, called the Medicaid Transformation Project (MTP).

The amendment allows Washington State to make improvements and use federal funds participation (FFP) for Medicaid SUD treatment services in facilities that are “institutions for mental diseases” (IMDs). It relaxes restrictions on the use of federal funds to pay for people receiving SUD treatment in a mental health or SUD facility, for an average of 30 days.

IMDs are hospitals, nursing facilities, or other institutions of more than 16 beds that are primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases, which includes SUD.

Without this amendment, Medicaid rules prohibit use of FFP for services to individuals between 21-65 years of age when they are admitted to an IMD.


  • State dollars continue to be repurposed for treatment.
  • Reduced administrative burden for providers, plans, and Washington State.
  • Increased availability of medication for opioid use disorder (MOUD) treatment options. 
    • Managed care organization (MCO) contracts now require providers to provide or make referrals for persons in need of MOUD therapies.
    • Rules are changing to ensure that MOUD services and care coordination occur.
    • Emergency rules are in place to ensure MOUD access.


David Johnson
Federal programs manager​