Changes in Medicaid reimbursement for residential addiction treatment over the past decade dramatically expanded the number of facilities providing medications for opioid use disorder (MOUD), considered the gold standard of care. But most of the increase came from new facilities.
In fact, nearly 90% of that increase was driven by new treatment facilities entering the market rather than existing facilities changing their practices, according to a new study published in Health Affairs, by Yale School of Public Health (YSPH) researchers.
“This was both an interesting and surprising result,” said Tamara Beetham, PhD ’25, who led the research as part of her PhD dissertation at YSPH. “The modernization driven by turnover, rather than changes within existing organizations, may also apply to other types of services where strong cultural beliefs may not be consistent with clinical guidelines.”
The findings provide important insight for policymakers looking to improve access to addiction treatment and the quality of care. They also emphasize the need for investment in workforce training and technology to help older facilities adopt state-of-the-art medication treatment and modern billing practices.
The study looked at data from more than 3,000 residential treatment facilities between 2012 and 2022. The researchers tracked how facilities responded to a new Medicaid waiver plan—passed in 2015—that began offering Medicaid reimbursement for addiction treatment as long as facilities provided medications such as buprenorphine and methadone for opioid use disorder, which has been proven to reduce overdose deaths. Historically, Medicaid would not pay for most care in residential facilities due to a 1965 rule excluding reimbursement for larger psychiatric and addiction centers.
Within four years of the policy change, facilities in six states that adopted the new waiver policy were 26 percent more likely to offer MOUD and accept Medicaid patients than facilities in 19 control states that did not offer the waivers. For patients seeking help with addiction, that meant fewer closed doors and more opportunities for proven treatment.
Further analysis revealed that 89 percent of this improvement in care was related to facility turnover. In states that adopted the waivers, facilities entering the market were more likely to offer medication treatment than entrants in states without the waiver, while existing facilities that were not previously offering medication were more likely to exit. Among continuously operating facilities, Medicaid participation improved, but MOUD availability did not.
The researchers said the findings underscore how Medicaid reimbursement can be a powerful lever in improving addiction treatment, provided it is paired with strong evidence-based standards.
“Supporting established facilities in adopting MOUD through education and training and incentivizing new providers already aligned with best practices to enter, could accelerate improvements in treatment quality,” the researchers wrote.
More research is needed to fully understand why turnover is so high among residential treatment facilities, said YSPH Susan Dwight Bliss Professor of Public Health Susan Busch, PhD, the study’s senior author. She hypothesized that stigma associated with MOUD, its cost, and other barriers to offering MOUD might have dissuaded existing providers from embracing the waiver policy.
The findings come as Congress is debating whether to make Medicaid coverage for residential addiction care permanent. Thirty-five states have adopted some form of the new reimbursement policy— formally known as Medicaid Section 1115 “Institutions for Mental Diseases” (IMD) waivers for substance use disorder — but these programs require periodic renewal. Although policymakers broadly support increasing treatment access, making the waivers permanent is controversial because of the potential cost. The Congressional Budget Office has estimated that making reimbursement official policy would increase federal Medicaid spending by $7.7 billion over the course of 10 years.
Regardless of how Congress acts, illegal drug use and overdose continue to threaten millions of American lives. Overdose fatalities in the United States have increased more than fivefold in recent decades, yet only 10 percent of people with substance use disorders receive treatment. Of those that do, studies have shown that nearly nine in 10 residential patients’ treatment plans don’t include MOUD.
Other authors contributing to the study were Dr. Chima Ndumele, PhD, MPH, professor of public health (health policy) at Yale; Dr. David Fiellin, MD, professor of medicine, emergency medicine and public health at Yale; and Dr. Helen Newton, PhD, MPH, a former Yale post-doctoral fellow and now assistant professor of family medicine at the University of North Carolina’s School of Medicine.