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In a landmark move, the Centers for Medicare & Medicaid Services (CMS) have finalized a series of new rules aimed at revolutionizing access to behavioral health services, particularly for tribal health organizations and those in rural areas. These rules, part of a broader initiative to improve healthcare equity and accessibility, seek to address long-standing barriers to care by introducing key exceptions to existing regulations and exploring new payment models.

As healthcare providers and policymakers grapple with the complexities of delivering quality care to underserved populations, these changes could mark a significant turning point in the landscape of behavioral health service provision.

The healthcare industry stands at a crossroads, with the need for innovative solutions to address disparities in access to care becoming increasingly urgent. How can we help ensure that all communities, regardless of their geographic location or cultural background, have equal access to vital behavioral health services? This question lies at the heart of CMS’s latest initiatives, which aim to dismantle barriers and create a more inclusive healthcare system.

Understanding the ‘four walls’ requirement

The “four walls” requirement has long been a cornerstone of Medicaid reimbursement policy for clinic services. This regulation, codified in 42 C.F.R. § 440.90, stipulates that Medicaid can only reimburse for clinic services provided within the physical confines of the clinic facility. In essence, it creates a geographical boundary for care delivery, limiting the flexibility of healthcare providers to reach patients where they are.

The origins of the requirement can be traced back to efforts to ensure accountability and quality control in healthcare delivery. By restricting reimbursable services to those provided within the clinic, policymakers aimed to maintain oversight and standardization of care.

However, as healthcare needs and delivery models have evolved, this requirement has increasingly been seen as a barrier to accessible care, particularly for populations facing transportation challenges or those in remote areas.

Challenges posed by the requirement

The rigid nature of the four walls requirement has presented significant challenges, especially in the context of behavioral health services and rural healthcare. These challenges include:

• Limited outreach capabilities for clinics serving dispersed populations.
• Reduced flexibility in providing home-based or community-centered care.
• Barriers to implementing telehealth services effectively.
• Difficulties in addressing the needs of patients with mobility issues or transportation constraints.

Temporary extensions and grace periods

Recognizing these challenges, CMS has previously implemented temporary extensions and grace periods, allowing certain facilities, particularly Indian Health Service (IHS) and tribal facilities, to claim Medicaid reimbursement for services provided outside the clinic’s physical boundaries. These temporary measures, especially prevalent during the COVID-19 public health emergency, highlighted the need for more permanent solutions to enhance care accessibility.

CMS’s new mandatory exception for IHS/tribal clinics

In a groundbreaking move, CMS has finalized a mandatory exception to the four walls requirement specifically for IHS and tribal clinics. This exception represents a significant shift in policy, acknowledging the unique healthcare needs and challenges faced by tribal communities.

The mandatory exception is comprehensive in its scope, designed to address the specific needs of IHS and tribal healthcare facilities. Key aspects of this exception include:

• Applicability to all states that cover the clinic services benefit.
• Inclusion of clinics owned and operated by IHS.
• Coverage for clinics owned by IHS and tribally operated under the Indian Self-Determination and Education Assistance Act of 1975 (ISDEAA).
• Extension to clinics operated by tribes and tribal organizations as authorized by the ISDEAA.

Beneficiaries and services covered

Under this exception, any Medicaid beneficiary receiving services from an IHS/tribal clinic will be eligible for coverage, regardless of where the service is provided. This broad coverage aims to ensure that tribal members can access necessary healthcare services without being constrained by geographical limitations.

Exclusions and limitations

It’s important to note that CMS has not included facilities operated by urban Indian organizations (UIOs) in this exception. This exclusion highlights the focused nature of the new rule on addressing the specific needs of IHS and tribal clinics while potentially leaving room for future considerations regarding UIOs.

Optional exceptions for behavioral health and rural clinics

Recognizing the diverse healthcare needs across different communities, CMS has also finalized optional exceptions to the four walls requirement for behavioral health clinics and those located in rural areas. These exceptions, to be codified at 42 CFR 440.90(d) and 42 CFR 440.90(e), offer states the flexibility to expand service delivery models in these critical areas.

The exception for behavioral health clinics is designed to address the growing need for mental health and substance use disorder services. Key features of this exception include:

• Optional adoption by states covering the clinic services benefit.
• Applicability to clinics primarily organized for outpatient behavioral healthcare.
• Coverage for all services furnished outside the clinic’s physical location, including nonbehavioral health services.
• Inclusion of nationally recognized behavioral health clinic types, such as community mental health centers.

Rural clinic exception

Addressing the unique challenges faced by rural communities in accessing healthcare, the rural clinic exception aims to improve service delivery in less populated areas. While CMS has not adopted a specific definition of “rural” for this purpose, the exception offers significant flexibility:

• Optional implementation by states
• Applicability to clinics located in areas designated as rural by the state
• Potential to cover a wide range of services provided outside the clinic’s physical location

States choosing to adopt these optional exceptions would be required to describe the types of behavioral health or rural clinics to which the exceptions apply in their Medicaid state plans. This requirement ensures transparency and allows for tailored implementation based on each state’s specific needs and healthcare landscape.

Criteria for exceptions: Addressing unhoused populations

In developing these exceptions, CMS has paid particular attention to the needs of individuals experiencing homelessness or housing insecurity. The exceptions align with four key criteria that mirror the barriers faced by unhoused populations in accessing healthcare services:

1. High rates of behavioral health diagnoses: Unhoused individuals often experience disproportionately high rates of mental health and substance use disorders. The exceptions aim to improve access to behavioral health services for these vulnerable populations by allowing for more flexible service delivery models.
2. Transportation barriers: Lack of reliable transportation is a significant obstacle for many in accessing healthcare, particularly for those without stable housing. By allowing services to be provided outside of clinic walls, these exceptions address this critical barrier to care.
3. Historical mistrust of healthcare systems: Many unhoused individuals have experienced discrimination or negative interactions within healthcare settings, leading to mistrust and reluctance to seek care. The flexibility offered by these exceptions could enable providers to offer services in more comfortable, familiar settings for these patients.
4. Poor health outcomes and mortality rates: Unhoused populations often face higher rates of chronic illness and mortality. By improving access to care through these exceptions, CMS aims to address these disparities and improve overall health outcomes for vulnerable communities.

Impact on payment models and reimbursement

The exceptions to the four walls requirement have significant implications for payment models and reimbursement structures within the Medicaid system. These changes aim to create a more flexible and responsive payment framework that aligns with the evolving landscape of healthcare delivery.

Facility-based clinic services payment rates

Under these new exceptions, states will have the ability to pay for services at facility-based clinic services payment rates, even when those services are provided outside the physical confines of the clinic. This change represents a significant shift in reimbursement policy, potentially opening up new avenues for service delivery and financial sustainability for clinics.

Potential for expanded service offerings

With the ability to receive reimbursement for services provided beyond the clinic’s physical location, healthcare providers may be incentivized to expand their service offerings. This could lead to:

• Increased outreach programs.
• Enhanced mobile health services.
• Greater integration of telehealth solutions.
• Development of community-based care models.

As we move forward, it will be crucial to carefully monitor the implementation of these exceptions, gather data on their impact and remain open to further refinements and expansions. The healthcare landscape is constantly evolving, and policies must adapt to meet the changing needs of diverse communities.

Ultimately, the success of these initiatives will depend on collaborative efforts between federal agencies, state governments, healthcare providers and the communities they serve. By working together, they can create a healthcare system that truly meets people where they are, breaking down barriers to care and improving health outcomes for all.

How Wipfli can help

The journey toward equitable healthcare access is ongoing, and these new exceptions mark an important milestone in that journey. If your federally qualified health center or tribal government is interested in expanding its outreach, let our dedicated professionals guide your expansion. We understand the ins and outs of changing federal policy and can help you make the most of these potential new exceptions and models to make a real difference for the communities you serve. Contact an advisor today.