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Substance Use Disorder (SUD)/Serious Mental Illness (SMI) Treatment

According to the National Institute of Mental Health (NIMH), "a substance use disorder (SUD) is a mental disorder that affects a person's brain and behavior, leading to a person's inability to control their use of substances such as legal or illegal drugs, alcohol, or medications." In the National Institute on Drug Abuse (NIDA) report published September 2022, serious mental illness (SMI) among people ages 18 and older is defined as "a diagnosable mental, behavior, or emotional disorder that causes serious functional impairment that substantially interferes with or limits one or more major life activities." The report also says, "SMIs include major depression, schizophrenia, and bipolar disorder, and other mental disorders that cause serious impairment. Around one in four individuals with SMI also have an SUD." The state offers medical support to Hoosiers with SUD/SMI to reduce harmful effects of these illnesses.

In response to the opioid crisis, Governor Eric Holcomb has prioritized attacking the drug epidemic on all fronts: prevention, treatment and enforcement. The Indiana Family and Social Services Administration (FSSA) and Office of Medicaid Policy and Planning (OMPP) support this statewide priority and aim to ensure that all Hoosiers are provided the SUD/SMI treatment they need in the most accessible manner. More information about SUD/SMI efforts are available in the Behavioral Health Services provider reference module at

Effective February 2018, the Indiana FSSA received federal approval from the Centers of Medicare & Medicaid Services (CMS) to implement a Section 1115 Substance Use Disorder demonstration waiver. The Indiana Health Coverage Programs (IHCP) used this waiver to expand coverage for inpatient stays for opioid use disorder (OUD) and other SUD treatment to members 21 through 64 years of age in facilities that qualify as institutions for mental disease (IMDs), providing a continuum of services for members dealing with substance use addiction.

The waiver expands coverage for a full-range of SUD treatment services to IHCP members enrolled in Traditional Medicaid (full, fee-for-service coverage) or in any managed care program – including Healthy Indiana Plan (HIP), Hoosier Care Connect and Hoosier Healthwise. Changes under the new SUD waiver include the following:

  • Adding coverage for short-term residential SUD treatment
  • Establishing a new provider type and specialty for residential treatment

A facility will be recognized as a qualifying IMD under the SUD Waiver if it meets the following requirements:

  • Inpatient SUD
    • Enrolled as psychiatric hospital (provider type 01 and provider specialty 011) with more than 16 beds
    • Inpatient SUD admission must meet American Society of Addiction Medicine (ASAM) Patient Placement Criteria, Level 4

  • Residential SUD
    • Enrolled as SUD residential addiction treatment facility (provider type 11 – Behavioral Health Provider and provider specialty 836 – SUD Residential Addiction Treatment Facility)
    • Must receive Division of Mental Health and Addiction (DMHA) designation indicating approval to offer ASAM Level 3.1 or Level 3.5 residential services (Facilities that have designations to offer both ASAM Level 3.1 and Level 3.5 services within the facility must include proof of both with their enrollment application.)
    • Certified as a residential (sub-acute stabilization) for DMHA

Similarly in December 2019, the Indiana FSSA received federal approval from the CMS for a Section 1115 Serious Mental Illness demonstration waiver that gives Indiana Medicaid the authority to pay for acute inpatient stays in IMDs for individuals diagnosed with a SMI. A facility will be recognized as qualifying IMD under the SMI waiver if it meets the following requirements:

  • Enrolled as a psychiatric hospital (provider type 01 and provider specialty 011) with more than 16 beds
  • Certified by the DMHA as a private mental health institution (PMHI)

Both the SUD and SMI waivers were extended on Oct. 26, 2020, and remain in effect through Dec. 31, 2025.

Prior to these waivers, Medicaid law prevented or restricted funding from being used for inpatient and residential SUD/SMI treatment at hospitals, nursing facilities or other institutions with more than 16 beds. Under these waivers, patients receive longer, more appropriate inpatient stays aiding in achieving stabilization and more successful transitions back into their homes and communities. The change is expected to ultimately drive down the costs associated with overuse of emergency departments for mental health and SUD crises as well as other costs caused by lack of access to appropriate care settings.

Note : State-operated facilities (SOFs) are currently ineligible under the SUD and SMI waivers.

If you have any questions or concerns about SUD/SMI treatment and services, please contact the FSSA SUD Services inbox at

Strengthening the SUD/SMI Delivery System: The SUD/SMI Work Group

To oversee implementation of SUD/SMI waivers, the OMPP hosts a monthly combined SUD/SMI waiver work group in partnership with the DMHA. Priorities of the work group included improving continuity of care between providers/SUD levels and post-IMD discharge, exploring partnerships and initiatives to enhance access to SUD/SMI treatment, supporting telehealth initiatives, and restructuring opioid treatment program reimbursement rates/codes. Additionally, the OMPP and DMHA virtually hosted a SUD/SMI/MCE and Provider conference to provide education on practice standards and new policy initiatives, as well as serve as a forum for providers to ask questions to the OMPP and DMHA. For more information on this project or individual initiatives to improve SUD/SMI treatment and access, please see the following resources:

IHCP SUD/SMI Provider References

For details about IHCP coverage, billing and reimbursement requirements for SUD/SMI services, see the bulletins, banner pages, provider references modules and other materials posted in the provider references section of this website, including the following:

  • BT2023173IHCP covers mobile crisis intervention services retroactive to July 1, 2023 (Dec. 12, 2023)
  • BT2023109Adult Mental Health Habilitation State Plan to be renewed Oct. 1, 2023 (Aug. 31, 2023)
  • BT202365Atlas quality measurement system for addiction treatment facilities enrollment deadline is June 30 (June 15, 2023)
  • BT202364IHCP adding coverage for mobile crisis intervention services (June 15, 2023)
  • BT202297 – IHCP expands and clarifies telehealth coverage (Nov. 8, 2022)
  • BT202288 – Annual update of ICD-10 codes is effective Oct. 1, 2022 (Oct. 4, 2022)
  • BT202258 – OMPP clarifies care coordination policies with MCEs (July 21, 2022)
  • BT202243 – IHCP adds coverage for G2213 for opioid treatment in the emergency department (June 7, 2022)
  • BT202239IHCP announces final 2022 telehealth and virtual services code set (May 19, 2022)
  • BT202212 – Changes made to MRO services in response to HEA 1468 (Feb. 15, 2022)
  • BT202199 – IHCP clarifies billing requirements for enrolled behavioral health professionals supervising plans of treatment (Nov. 16, 2021)
  • BR202137 – IHCP clarifies that scope of occupational therapy practice may include behavioral health services (Sept. 14, 2021)
  • BT202183 – IHCP updates PA and billing requirements for urine drug testing, effective Oct. 15, 2021 (Sept. 14, 2021)
  • BT202179 – IHCP COVID-19 Response: IHCP reinstates inpatient SUD and psychiatric admission policy changes (Sept. 8, 2021)
  • BT202174 – IHCP temporarily reinstates revisions to PA process for acute care hospital non-elective inpatient admissions (Aug. 30, 2021)
  • BT202169 – IHCP announces additional providers may submit PA requests (Aug. 12, 2021)
  • BT202168 – Licensed addiction counselor associates able to provide counseling in an OTP, effective Sept. 5 (Aug. 5, 2021)
  • BR202128 – IHCP to host webinar on principles for ethical and compassionate opioid tapering (July 13, 2021)
  • BR202125 – IHCP updates billing guidance for tobacco dependence counseling, adds coverage of CPT 99406 and CDT D1320 (June 22, 2021)
  • BR202123 – IHCP clarifies coverage of IOT services rendered by licensed behavioral health professionals, accepts resubmitted claims (June 8, 2021)
  • BR202115 – IHCP to modify behavioral health enrollment applications (April 13, 2021)
  • BT202104 – IHCP clarifies coverage for substance use treatment (Jan. 21, 2021)
  • BT2020126 – IHCP clarifies enrollment and billing requirements for newly added behavioral health professionals (Dec. 15, 2020)
  • BT2020122 – IHCP announces procedure codes for newly enrolled behavioral health professionals (Dec. 1, 2020)
  • BR202039 – IHCP to revise provider enrollment types for mental health and addiction services (Sept. 29, 2020)
  • BT2020108 – IHCP to enroll licensed behavioral health professionals (Sept. 29, 2020)
  • BT202082IHCP revises direct service provider requirement for IOT of members with SUD diagnosis (June 30, 2020)
  • BT202003 – IHCP gains federal approval to reimburse for acute SMI stays in IMDs (Jan. 9, 2020)
  • BR201950IHCP will reimburse claims for NARCAN when billed on CMS-1500 or UB-04 claim form (Dec. 10, 2019)
  • BR201935IHCP clarifies coverage qualifications for partial hospitalization (Aug. 27, 2019)
  • BT201943More providers can supervise plan of treatment for outpatient mental health or SUD treatment (July 23, 2019)
  • BR201926Substance use disorder PA request attachments can be submitted on the Portal (June 25, 2019)
  • BR201925IHCP corrects published qualifications and supervision requirements for certain mental health providers (June 18, 2019)
  • BT201929IHCP to modify coverage of certain mental health services (May 30, 2019)
  • BR201908IHCP clarifies basic instructions for SUD billing of certain services (Feb. 19, 2019)
  • BT201906IHCP establishes PA request and assessment forms for residential and inpatient SUD treatment (Feb. 12, 2019)
  • BT201841IHCP corrects information published about residential SUD treatment benefits (Aug. 7, 2018)
  • BT201827 – IHCP corrects information published about residential SUD treatment PA criteria (June 12, 2018)
  • BT201821IHCP responds to provider FAQs about residential SUD treatment benefits (May 22, 2018)
  • BT201801IHCP enhances coverage for substance use (Jan. 4, 2018)
  • BT201755IHCP issues revised reimbursement policy and billing guidance for OTP-specific services (Aug. 17, 2017)

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