The Michelle Alyssa Go Act: Why Reforming the IMD Exclusion Matters for County Behavioral Health

Key Takeaways

The County Behavioral Health Reality

• Two-thirds of the U.S. population relies on county-based behavioral health services
• More than 750 county-supported or operated behavioral health authorities across the nation
• In nearly every state, at least one mental health facility is operated by a county, local or municipal government
• Counties serve as first responders and operate crisis lines, public hospitals and detention centers
• Counties help finance and administer Medicaid services, the largest funding source for behavioral health services in the United States

The Problem: An Outdated Policy is Blocking Care

Enacted in 1965 an amendment to the Social Security Act (P.L.89-97), the Medicaid Institutions for Mental Diseases (IMD) exclusion was designed to prevent the federal government from financing large psychiatric institutions when states were shifting toward deinstitutionalization.  

What the IMD exclusion does:

• Prohibits Medicaid reimbursement for services provided to individuals ages 21–64 in residential mental health or substance use facilities with more than 16 beds where behavioral health treatment is the primary purpose

Why it made sense in 1965:

• States were actively moving away from large psychiatric institutions toward community-based are – the IMD exclusion was designed to prevent the financing of those large institutions during the transition

Why this policy no longer makes sense:

• Over the last year, 75 percent of counties report increased incidences of behavioral health conditions with 89 percent reporting an increase in the last five years
• While the behavioral health system has evolved toward short-term, recovery-oriented and clinically-appropriate inpatient and subacute care, the IMD exclusion has remained largely unchanged for decades

What it costs counties in practice:

• Counties cannot expand treatment beds or operate appropriately sized facilities without losing Medicaid reimbursement, the nation’s primary funding source for behavioral health services
• Due to this restriction, counties struggle to meet the needs of their communities, resulting in many residents in crisis being turned away due to the lack of beds or long wait times
• Overflow often lands on county-run systems not designed for behavioral health treatment: emergency departments or jails

The Solution: Michelle Alyssa Go Act

Reintroduced in the U.S. House of Representatives in September 2025, the bipartisan Michelle Alyssa Go Act (H.R. 5462) aims to modernize the IMD exclusion and expand access to care.  

What it does:

• Raises the federal limit from 16 to 36 beds in mental health facilities eligible for Medicaid reimbursement
• Maintains high-quality care standards by mandating that facilities receiving federal Medicaid funding meet nationally recognized, evidence-based standards for their programs

What it means for counties:

• The ability to serve more people in crisis before ending up in other facilities unfit to support address an individual's needs
• Reduced strain on emergency departments, county jails and others systems that are absorbing overflow
• A full continuum of care that empowers counties to deliver comprehensive, clinically appropriate behavioral health services

This Michelle Alyssa Go Act provides counties with the flexibility to expand treatment capacity in county-operated hospitals and behavioral health facilities without losing their funding base.

NACo fully endorses the Michelle Alyssa Go Act and are urging members of Congress to support as it would remove significant obstacles to providing a full continuum of care and empowers counties to deliver comprehensive, clinically appropriate behavioral health services.

Resources for counties  

• Bill Text for Michelle Alyssa Go Act (H.R. 5462)
• Sample Letter for Counties
• Policy Brief: Modernize the Medicaid Institutions for Mental Diseases (IMD) Exclusion
• NACo Letter of Support