WASHINGTON, D.C. - Today, Rep. Brad Finstad (MN-01), introduced the Restoring Inpatient Mental Health Access Act of 2025, which expands mental health care access to a larger group of beneficiaries.

Under current law, Title XIX of the Social Security Act, Medicaid generally cannot use federal funds to pay for care in a mental health institution if the facility has more than 16 beds and mainly treats people with mental illness.

This restriction, known as the “IMD exclusion,” has been in place for decades to encourage states to treat people in community settings rather than in large institutions. However, it has severely limited individuals’ access to proper mental health care.

The Restoring Inpatient Mental Health Access Act of 2025 removes the IMD exclusion meaning federal Medicaid dollars could help cover the cost of inpatient treatment for people in mental health hospitals or residential facilities.

Olmsted County Commissioner David Senjem gave his remarks on the issue: “Thank you Representative Finstad for advancing this extremely important legislative initiative aimed at helping individuals seriously afflicted with mental illness.   We know from decades of experience that outpatient, community-based, treatment is not sufficient for every individual in every circumstance leading too often to a life of hopelessness, despair, and homelessness. Lifting the IMD exclusion will give many individuals across Minnesota and America the necessary inpatient treatment needed for a new lease on life and brighter days ahead.”

Specifically, this legislation:

• Increases access to inpatient mental health care, especially for people in crisis who need hospitalization,
• Helps states and hospitals financially, since Medicaid could share the cost of these services, and
• Reduces strain on emergency rooms and jails, which often house people who can’t get inpatient mental health treatment under current Medicaid rules.

Background:

• The term 'institution for mental diseases' refers to a hospital, nursing facility, or other institution of more than sixteen beds, that is primarily engaged in providing diagnosis, treatment, or care of people with mental diseases, including medical attention, nursing care, and related services.
• Currently, the IMD exclusion prevents the federal government from providing federal Medicaid funds to states for any service delivered to individuals aged 21 through 64 in an IMD. However, states can receive federal Medicaid funding for inpatient behavioral health services for individuals aged 21 through 64 if the care is provided outside of an IMD, such as in facilities with sixteen or fewer beds and facilities that are not primarily engaged in providing care to individuals with mental diseases.