Medicaid 101: What it is and its Role in Behavioral Health

Behavioral health Medicaid refers to the coverage provided by Medicaid, the United States’ public health insurance program, specifically for mental health and substance use disorder services. Medicaid plays a crucial role in ensuring that millions of low-income Americans have access to behavioral health care, including therapy, medication, and treatment – both inpatient and outpatient. Understanding behavioral health Medicaid requires exploring its origins, how it has evolved over time, the services it covers, and the impact it has today.

A Brief History of Medicaid

Medicaid was established in 1965 under Title XIX of the Social Security Act as a joint federal and state program designed to provide health coverage to low-income individuals and families. The program is funded by both the federal government and the states, with states administering their own Medicaid programs within federal guidelines. This structure allows for some flexibility in how states implement Medicaid, leading to variations in coverage and eligibility across the country.

Initially, Medicaid primarily focused on providing health care services to pregnant women, children, and the elderly. However, as the understanding of health care expanded to include mental health and substance use disorders, Medicaid’s scope broadened. In the early years, behavioral health services were not a major focus of Medicaid, but this began to change in the 1980s and 1990s as awareness of mental health issues grew and the deinstitutionalization movement led to a shift from inpatient care to community-based services.

Medicaid’s Role in Behavioral Health

Behavioral health care encompasses a range of services, including treatment for mental health disorders, substance use disorders, and other psychological or emotional challenges. For Medicaid beneficiaries, behavioral health care can include services like individual and group therapy, psychiatric care, medication management, crisis intervention, and inpatient or residential treatment for more severe cases.

Over time, Medicaid has become the single largest payer for behavioral health services in the United States. This evolution was driven in part by policy changes and the growing recognition of the importance of mental health care. For example, the Mental Health Parity and Addiction Equity Act of 2008 required health insurers, including Medicaid managed care plans, to offer mental health and substance use disorder benefits that are no more restrictive than medical and surgical benefits. This legislation was a significant step toward integrating behavioral health into the broader health care system.

The Affordable Care Act (ACA) of 2010 further expanded Medicaid’s role in behavioral health by allowing states to expand Medicaid eligibility to more low-income adults. This expansion led to millions of additional individuals gaining access to Medicaid, many of whom needed behavioral health services. The ACA also mandated that mental health and substance use disorder services be included as essential health benefits in Medicaid, ensuring broader access to these crucial services.

Evolution and Current Function of Behavioral Health Medicaid

Today, Medicaid plays a vital role in the behavioral health care system, covering a substantial portion of the population in need of mental health and substance use disorder services. According to the Substance Abuse and Mental Health Services Administration (SAMHSA), Medicaid covers nearly 30% of all adults with serious mental illness and about 21% of adults with substance use disorders in the United States.

One of the key features of behavioral health Medicaid is its flexibility, allowing states to tailor their programs to meet the specific needs of their populations. States can apply for waivers, such as the Section 1115 waiver, to test new approaches in Medicaid that can include innovative behavioral health services. For example, some states have used waivers to integrate physical and behavioral health care, create more community-based services, or provide targeted services for specific populations, such as individuals experiencing homelessness or those involved in the criminal justice system.

Despite this flexibility, there are challenges and variations in how behavioral health Medicaid is implemented across states. For instance, some states may have more comprehensive coverage for behavioral health services, while others might have more limited benefits or face issues related to provider availability. These variations can lead to disparities in access to care depending on where an individual lives.

Another challenge is the ongoing struggle to ensure adequate reimbursement rates for behavioral health providers. Medicaid reimbursement rates are typically lower than those of private insurance or Medicare, which can make it difficult for providers to participate in Medicaid. This can lead to shortages of behavioral health providers willing to accept Medicaid patients, particularly in rural or underserved areas.

Services Covered by Behavioral Health Medicaid

Medicaid covers a wide range of behavioral health services, but the specific services available can vary by state. Commonly covered services include:

• Outpatient Services: Individual and group therapy, counseling, and medication management provided in an outpatient setting.
• Inpatient Services: Hospitalization for individuals experiencing severe mental health crises or needing intensive treatment.
• Residential Treatment: Long-term treatment in a residential setting for individuals with severe mental health or substance use disorders.
• Crisis Intervention: Services provided during a mental health or substance use crisis, including mobile crisis teams and crisis stabilization units.
• Case Management: Assistance with coordinating care and connecting individuals to necessary services, including housing, employment, and social support.
• Medication-Assisted Treatment (MAT): A combination of medication and counseling for the treatment of substance use disorders, particularly opioid addiction.
• Peer Support Services: Support provided by individuals with lived experience of mental health or substance use disorders to help others in their recovery journey.

While these services are commonly covered, the availability and extent of coverage can vary significantly by state. Some states may offer additional services, such as supportive housing or employment services, while others might have more limited options.

Federal vs. State

The federal-state partnership structure of Medicaid means that while the federal government sets minimum requirements for coverage and eligibility, states have significant leeway in designing and administering their programs. This flexibility leads to variations in behavioral health services, eligibility criteria, and reimbursement rates from state to state.

For example, some states have expanded Medicaid under the ACA, providing coverage to a broader range of low-income adults, while others have not. This creates disparities in access to behavioral health care based on geographic location. Additionally, states can choose whether to provide certain optional services, such as peer support or MAT, which can affect the availability of these services for Medicaid beneficiaries.

The federal government also incentivizes states to innovate and improve behavioral health care through waivers and grants. For instance, the Certified Community Behavioral Health Clinic (CCBHC) initiative, funded by Medicaid, aims to expand access to comprehensive behavioral health services and integrate physical and behavioral health care.

Impact of Behavioral Health Medicaid Today

Medicaid is a lifeline for millions of Americans with behavioral health needs. According to the Centers for Medicare & Medicaid Services (CMS), as of April 2024, Medicaid covered approximately 74 million people in the United States, including a significant portion of those with behavioral health conditions. This coverage is particularly important for vulnerable populations, such as low-income individuals, children, and people with disabilities, who are more likely to experience mental health or substance use disorders.

Statistics from SAMHSA indicate that Medicaid is responsible for covering a substantial portion of behavioral health care in the U.S. For instance, nearly half of all children receiving mental health treatment are covered by Medicaid, and the program covers about 39% of adults receiving substance use treatment.

All this to say, behavioral health Medicaid is a critical component of the U.S. health care system, providing access to essential services for millions of Americans. Its evolution from a program focused on basic health care to one that plays a central role in behavioral health highlights the growing recognition of the importance of mental health and substance use disorder treatment. As Medicaid continues to evolve, it will remain a crucial source of coverage for individuals with behavioral health needs, helping to ensure that they receive the care and support necessary for their well-being.

 

Up Next… Article #3 in our Medicaid blog series: What are MCOs and How do they Work in Behavioral Health