Tribal & State Relations Interim Committee Meeting
Tribal and State Relations Committee - Interim Committee Meeting
Testimony
September 24, 2026
Representative Holle, Chair
Representative Holle and members of the Tribal and State Relations Committee. I am Carlotta McCleary, Executive Director of Mental Health America of North Dakota and Executive Director of the North Dakota Federation of Families for Children’s Mental Health. Today I speak on behalf of the Mental Health Advocacy Network (MHAN). MHAN advocates for a consumer/family driven mental health system of care that provides an array of service choices that are timely, responsive and effective. Our vision is for every North Dakotan to have access to the right service—whether it be preventative, treatment, or recovery; at the right time—when the service is needed; and at the right place—as near his or her home as possible.
MHAN opposes the waiver of the IMD exclusion through an IMD Exclusion waiver.
Support for Community Integration
The reason there is an IMD Exclusion is because of the history of institutionalizing those with mental illness without providing community-based services. As deinstitutionalization was beginning, the argument was that people with disabilities, including those with mental illness deserved to be given community services instead of continuing the reliance on larger facilities to provide care. To those who say that that was so long ago, and that we are beyond the dangers of the past, people with disabilities say the past is informative about what happens when incentives are stacked against providing community services. Evidence shows that if psychiatric beds are available, they are filled, taking resources from community-based services. The HSRI “ND Residential Treatment Facility Capacity” report states that there is not a shortage of beds, but rather inappropriate utilization, that is beds occupied by people who could be served in less-intensive settings. When beds are not available, other options meet individuals’ needs. Moreover, a large, three-year demonstration program allowing states to claim federal Medicaid reimbursement for services in IMDs found that doing so did not decrease psychiatric emergency room visits or the length of emergency room boarding and did not increase access to psychiatric hospital services. The only major finding was that allowing federal financial protection (FFP) to IMDs increased costs to the federal government.2 The IMD exclusion pushes states to focus on community-based services and to rebalance spending towards more integrative environments as opposed to institutional care.
Financial Considerations: IMD Exclusion Waiver vs. Community-Based Services
There are different types of IMD Exclusion Waivers states have applied for. There are Substance Use Disorder Treatment IMD Exclusion Waivers and there are Mental Health Treatment IMD Exclusion Waivers. We need to be clear about what the IMD Exclusion Waiver is and what it is not. It is a means to provide reimbursement for inpatient services in facilities with 16 or more beds. There is nothing else it does, and increasing the reliance on care provided in larger facilities is the opposite of what North Dakota-commissioned studies from the last decade said North Dakota needs to do to bring an end to this crisis and have a functioning mental health system. While larger facilities may seek out more financial reimbursement for care for persons on Medicaid, even upon approval of an IMD there are limitations on the number of days of reimbursement: 15 days per year for inpatient IMD, 30 days per year for residential IMD. The state does currently have contracts with hospitals for some in-patient psychiatric hospitalizations as an alternative means to meet the needs of persons who do require inpatient hospitalization and has a substance use voucher available for all levels of care. In addition, HB 1012, passed in 2025, provided $250,000 for the second year of the biennium to reimburse a licensed substance abuse treatment program for the incurred direct medical costs of an eligible individual who does not have resources to cover the medical costs. The former Director of the Medical Services Division, Caprice Knapp, testified in front of the legislature in 2021 that there is a high level of administrative costs, post implementation costs and staffing required for states that seek out this waiver that would remain an ongoing cost
requiring millions of dollars. Unless North Dakota has unlimited funds, repealing the IMD Exclusion would funnel resources away from community-based services into institutional care.
Alternatives to IMD Exclusion Waiver/Expansion of Community Based Services
Investment in community-based services such as permanent supportive housing, mobile crisis teams, assertive community treatment, employment supports, and peer support reduces the need for inpatient beds and allows for more individuals to be served. The 1915(i) State Plan Amendment is an asset North Dakota has and its design has some of the most robust services in the country, but it needs to have better implementation and be given the opportunity to thrive. We had the expectation that it could serve over 11,000 people, but we are nowhere near that total. The work to create community-based services remains a top priority for HSRI and DHHS. Consumers and family members are adamant that that work must continue. The pursuit of an IMD Exclusion Waiver jeopardizes that work.
1 Renee Schulte, MA,LMHC, Renee Schulte Consulting, L.L.C., Acute Psychiatric and Residential
Care Final Report (April 28, 2021)
2 Crystal Blyer et al, Mathematica Policy Research, Medicaid Emergency Psychiatric Services
Demonstration Evaluation, Final Report (Aug. 18, 2016),