Treatment providers warn Medicaid rates and eligibility gaps threaten addiction recovery capacity

Leaders from Odyssey House Louisiana and O'Brien House told the committee that recent Medicaid reimbursement changes and pending clinical standard upgrades (ASAM 4) together threaten provider capacity for substance use disorder treatment.

Speakers said that removing room-and-board per diems from the Medicaid fee schedule reduced total reimbursement at the same time providers must hire additional clinical staff, expand documentation and improve data systems to meet ASAM 4 requirements. Dr. Emily Tilly, executive director of O'Brien House, said the change has narrowed operating margins, risking staff reductions and decreased bed capacity if reimbursement does not reflect higher costs.

Providers also described a breakdown in Medicaid conversion pathways for uninsured or partially insured people, which forces programs to cap admissions and create wait lists even while beds go unused. They urged LDH to reevaluate rates effective 01/01/2026 and to work with the legislature on longer-term fixes to sustain a recovery-oriented continuum of care, including stronger oversight of sober living environments.

Committee members asked about outcomes data and the length of stay in residential treatment; panelists said evidence supports longer residential stays and recommended higher per-diems for higher-acuity levels of care rather than expanding short 28-day programs without aftercare.