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The Department of Health and Mental Hygiene is asking the federal government for new funding to cover residential drug treatment at small community facilities and private institutions, such as Sheppard Pratt in Towson. Medicaid now pays only for inpatient treatment at hospitals.

The state health department wants to offer more drug treatment options for people on Medicaid, the health insurance program for the poor.

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The Maryland Department of Health and Mental Hygiene is asking the federal government for new funding to cover residential drug treatment at small community facilities and private institutions such as Sheppard Pratt in Towson. Medicaid now pays only for inpatient treatment at hospitals.

Maryland officials are also asking the Centers for Medicare and Medicaid Services to limit Medicaid payments for observational stays in hospitals to 48 hours, to provide presumptive Medicaid eligibility to people getting out of jail or prison, and to expand dental coverage for former foster children, among other changes.

Federal funding for residential stays would enable more addicts to receive specialized treatment in their communities and open up a "reliable federal funding stream," said Shannon McMahon, deputy secretary for health care financing at the state health department.

The request comes as Gov. Larry Hogan has made it a priority to tackle the state's heroin epidemic.

Statistics released earlier this week showed that 383 people died of drug overdoses in the first three months of the year. There were 318 fatal overdoses in the first quarter of last year and 1,259 total last year, nearly double the number from 2010. The deaths have been attributed to the continued use of opioids, including heroin and prescription painkillers.

"I think it is great opportunity, given the opioid epidemic, for the state to leverage Medicaid payments," McMahon said.

Representatives of the Centers for Medicare and Medicaid Services could not be reached for comment.

An exclusion clause in the Medicaid program prohibits Medicaid reimbursement for treatment at "a hospital, nursing facility or other institution of more than 16 beds that is primarily engaged in providing diagnosis, treatment or care of persons with mental diseases — including medical attention, nursing care and treatment of individuals with mental diseases."

Maryland would become one of the first states to get a waiver from the exclusion, McMahon said. California is the only other state with a waiver.

At least one operator of a residential facility said the funding would be welcome.

Daniel Brannon, president and CEO of Right Turn Impact in Eldersburg, doesn't take government money or insurance to run his program, but said any money that would help open the door for more treatment would be helpful.

He said the treatment should be effective and comprehensive enough that its impact is long-lasting.

"I think that inpatient treatment can definitely can help people, but there also has to be some kind of accountability," he said. "It just can't be revolving door where people come in, come out. They have to make treatment available to people in need, but it is tricky."

Through a program called HealthChoice, the state contracts with managed-care organizations to administer the care of 1.1 million Medicaid patients. The health department must submit an application to the Centers for Medicare and Medicaid Services every three years to renew the agreement. Another 100,000 Medicaid clients are fee-for-service patients whose health care providers are paid for each service patients receive, such as a visit to a doctor's office or a lab test.

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States often use renewal periods to enhance and make changes to their Medicaid programs.

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