The behavioral health system in the United States is undergoing rapid change, and Medicaid programs are at the center of that transformation. Medicaid Behavioral Health Benefits are expanding across the country, especially for high-risk populations who rely heavily on these services. While enrollment challenges loom with the end of the federal public health emergency (PHE), the current trend signals strong progress in improving access to care.
A recent survey conducted by the Kaiser Family Foundation (KFF) of state Medicaid leaders highlights how states are approaching behavioral health services in fiscal year 2023. The report shows widespread momentum toward strengthening benefits, with an emphasis on mental health and substance use disorder (SUD) treatment, crisis services, and integrated care models. Even more promising, no states reported plans to restrict Medicaid Behavioral Health Benefits during the fiscal year — a sign that this area remains a policy priority despite economic and political challenges.
Expanding Benefits for High-Needs Populations
Medicaid programs across the country are targeting behavioral health services for specific populations most at risk. These include individuals involved with the justice system, children and adolescents, pregnant and postpartum people, and those receiving long-term services and supports (LTSS). Each of these groups faces distinct challenges that require tailored interventions, and states are responding with expansions in Medicaid Behavioral Health Benefits designed to meet those needs.
For example, Massachusetts is rolling out a statewide network of community behavioral health centers, paired with a 24/7 help-and-crisis line. The initiative aims to provide earlier interventions, particularly for children, by making behavioral health screenings a standard part of care. Children under 21 who receive a positive screening will now have access to services regardless of a formal diagnosis. This proactive approach underscores how Medicaid Behavioral Health Benefits can help prevent worsening conditions before they become more severe.
Crisis Services and New Models of Care
One of the most notable trends highlighted in the KFF report is the growing investment in crisis services. At least 10 states are expanding Medicaid coverage for crisis-related care, which can include mobile crisis teams, crisis stabilization units, and 24/7 call lines. These services are crucial in diverting individuals from emergency departments and the criminal justice system, offering timely support during moments of acute need.
Many states are also enrolling in the federal Certified Community Behavioral Health Clinic (CCBHC) model. CCBHCs are designed to provide comprehensive, coordinated care that spans mental health, substance use treatment, and physical health needs. By adopting this model, states hope to create a “no wrong door” approach where individuals can access a broad spectrum of services in a single setting.
Similarly, states are increasingly adopting the collaborative care model for integrated care. Developed at the University of Washington, this model embeds behavioral health providers within primary care practices, ensuring that mental health concerns are addressed alongside physical health needs. The result is earlier identification, coordinated treatment, and stronger Medicaid Behavioral Health Benefits for enrollees.
Telehealth: A Silver Lining from the Pandemic
If there was a single innovation accelerated by the COVID-19 pandemic, it was the expansion of telehealth. Behavioral health emerged as one of the top specialties delivered virtually, offering a lifeline for millions during periods of social distancing and healthcare disruption.
According to the KFF survey, 79% of states reported behavioral health as one of the most highly utilized services for telehealth. Nearly half of the states identified mental health services as the single most used category. Research from KFF earlier in the year further reinforces this trend, showing that 39% of all telehealth visits from March to August 2021 were tied to mental health or SUD issues.
Telehealth’s role in expanding Medicaid Behavioral Health Benefits is particularly important for rural communities, where access to in-person providers has historically been limited. By breaking down geographic barriers, telehealth creates new pathways to care. However, state leaders remain cautious about long-term reliance on telehealth. Concerns about quality, particularly for services involving children, dental care, and maternity care, highlight the need for ongoing evaluation and standards to ensure consistent outcomes.
The Looming Challenge of Medicaid Enrollment Declines
While the expansion of benefits is encouraging, access to those benefits may be jeopardized by declining enrollment once the federal public health emergency (PHE) ends. During the pandemic, the Centers for Medicare & Medicaid Services (CMS) provided states with a higher federal match for Medicaid spending in exchange for suspending eligibility redeterminations. This policy made it easier for individuals to retain coverage, leading to a dramatic increase in Medicaid enrollment.
By June 2022, Medicaid enrollment for adults and children had grown to 89.4 million, representing a 26.5% increase from February 2020. This surge in enrollment ensured millions of individuals could access critical Medicaid Behavioral Health Benefits during a time of heightened need.
However, with the end of the PHE, states are required to resume redeterminations within 12 months. Millions of people could lose coverage either because they no longer qualify or because they face administrative hurdles despite remaining eligible. The U.S. Department of Health and Human Services estimates that about 15 million people — or 17.4% of Medicaid enrollees — may lose coverage.
Workforce and Community-Based Solutions
Expanding behavioral health benefits is only one piece of the puzzle. States are also grappling with workforce shortages that threaten the ability to deliver on these promises. To address this challenge, many states are turning to community health workers, peer support workers, and other non-clinical staff to extend the reach of providers.
Massachusetts provides a compelling example of this approach. As part of its primary care affordable care organization (ACO) program, the state is creating payment tiers that encourage integrated care and the use of peer support services. Providers are incentivized to implement team-based care models that include community health workers and peer support workers, ensuring that individuals receive not just clinical treatment but also the community-based support necessary for recovery.
These innovations demonstrate how Medicaid Behavioral Health Benefits are being strengthened not just through coverage expansions but also through workforce and delivery reforms that improve the quality of care.
Looking Ahead: Opportunities and Risks
The future of Medicaid’s role in behavioral health is shaped by both opportunities and risks. On one hand, benefit expansions, crisis service investments, integrated care models, and telehealth access signal meaningful progress toward closing gaps in care. On the other, the looming enrollment decline tied to the end of the PHE raises concerns about whether individuals will continue to access these critical services.
Ultimately, the key challenge will be maintaining and building upon the gains achieved during the pandemic while navigating shifting policy and funding landscapes. States must balance the push for innovation with the realities of workforce shortages and enrollment fluctuations. Medicaid Behavioral Health Benefits will remain central to that balancing act, serving as a cornerstone of the U.S. behavioral health system.
Conclusion
The story of Medicaid in fiscal year 2023 is one of both expansion and uncertainty. States are making significant strides in expanding behavioral health benefits, targeting high-needs populations, investing in crisis services, embracing telehealth, and reimagining workforce models. Yet, millions of individuals remain at risk of losing coverage as the federal public health emergency winds down.
For Medicaid to continue serving as a lifeline for individuals with mental health and substance use challenges, states must commit not only to benefit expansion but also to ensuring continuity of care through enrollment stability and workforce investment. The progress made thus far provides a strong foundation, but the work ahead will determine whether these advances in Medicaid Behavioral Health Benefits are sustained in the years to come.
