As payers continue to recognize the growing demand for behavioral health care, coverage for these services is expanding at an unprecedented rate. This trend is especially pronounced within Medicaid, which presents unique opportunities for behavioral health care providers in the coming years, according to legal experts.
Medicaid’s Growing Role in Behavioral Health
Jennifer Evans, a shareholder at Polsinelli, a Kansas City, Missouri-based law firm, highlighted Medicaid’s potential during a recent Polsinelli webinar on behavioral health reimbursement.
“Medicaid is an incredible opportunity for us as regulatory professionals and clinicians to really expand coverage, payment, and treatment for behavioral health matters,” Evans said.
Medicaid expansion, introduced through the Affordable Care Act (ACA), has significantly increased access to coverage. It allows adults under 65 with incomes up to 138% of the federal poverty level to enroll in Medicaid. This expansion has provided coverage to nearly 10 million Americans, meaning approximately one in five people are now enrolled in Medicaid.
Traditionally, Medicaid programs operated under restrictive federal and state rules, often constrained by budget limitations. States must balance funding Medicaid services with other budget priorities, such as education, infrastructure, and corrections.
“When [states] have to come up with their portion of the equation to care for services under Medicaid, frequently they find themselves in a little bit of a budgetary controversy,” Evans explained. “There’s a lot of pressure on state budgets.”
As a result, states often opt out of covering optional benefits that are not federally mandated. This has historically included key behavioral health services such as medication-assisted treatment, therapy, telemedicine, intensive outpatient programs, and residential services. However, Medicaid expansion has helped change this landscape by guaranteeing a certain level of behavioral health coverage under the ACA’s 10 essential health benefits categories, which include mental health and substance use disorder services.
Opportunities for Behavioral Health Providers
The guaranteed behavioral health benefits under Medicaid expansion create significant opportunities for providers looking to serve this population. Evans emphasized that Medicaid’s alternative benefit program has the potential to boost provider capacity and ensure payment for behavioral health services.
“That alternative benefit program is really why we have such an opportunity in Medicaid to grow capacity for providers and get paid for behavioral health services,” she said.
However, whether Medicaid expansion is an exciting opportunity for a provider depends largely on their location. Currently, Medicaid expansion is optional at the state level, with only 36 states and Washington, D.C. choosing to participate.
“In many states, it became kind of a political question rather than a policy question: Did you like the Affordable Care Act? Did you like that Congress passed it?” Evans noted. “We saw some states that would maybe really benefit from Medicaid expansion not moving forward with it yet.”
Despite these political hurdles, change may be on the horizon. The Centers for Medicare & Medicaid Services (CMS) has expressed ongoing interest in expanding coverage and improving access. Beyond Medicaid expansion, CMS is exploring additional measures such as waiver programs, demonstration projects, and the relaxation of certain regulations to enhance behavioral health care accessibility.
Challenges for Providers Entering the Medicaid Space
While Medicaid expansion offers many benefits, behavioral health providers must navigate several challenges before entering this space. For those unfamiliar with federal health care programs, the complexities can be daunting.
“You’ve got to be careful,” Evans warned. “You’ve got to look at your provider agreements. You need counsel who can help you.”
Billing and copay requirements are critical areas that require careful evaluation. Evans also advised providers to review commercial and private payer contracts to ensure that participating in Medicaid is financially sustainable.
“Does your commercial contract say you’ll only bill commercial payers what you’re willing to take from the lowest-paying payer that you participate with?” Evans posed. “If Medicaid’s one of them, you’ve got to know that Medicaid reimbursement is low.”
Looking Ahead
The expansion of Medicaid represents both a promising opportunity and a challenging landscape for behavioral health providers. With Medicaid enrollment at an all-time high and policy changes on the horizon, providers must carefully assess their readiness to enter this space. Those willing to navigate the complexities of Medicaid may find significant growth potential in serving an expanding and underserved population.
As CMS continues its efforts to broaden health care access, behavioral health providers should stay informed and proactive in adapting to policy changes. With the right strategies, providers can successfully integrate Medicaid patients into their practices and contribute to improving behavioral health care access nationwide.
