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Behavioral Health Services


Medicaid is the single largest payer for mental health services in the United States and is increasingly playing a larger role in the reimbursement of substance use disorder services. Individuals with a behavioral health disorder also utilize significant health care services—nearly 12 million visits made to U.S. hospital emergency departments in 2007 involved individuals with a mental disorder, substance abuse problem, or both.  Congress enacted several laws designed to improve access to mental health and substance use disorder services under health insurance or benefit plans that provide medical/surgical benefits.  The most recent law, the Mental Health Parity and Addiction Equity Act (MHPAEA), impacts the millions of Medicaid beneficiaries participating in Managed Care Organizations, State alternative benefit plans (as described in Section 1937 of the Social Security Act) and the Children’s Health Insurance Program.    

This new and revised section of the Medicaid.gov website that provides information to States, managed care organizations, providers, beneficiaries and others regarding mental health and substance use disorder—referred to as behavioral health services.   This site provides information regarding services and supports to meet the health, behavioral health and long term services and support needs of Medicaid individuals with mental health or substance use disorders.  This website has been organized around several key areas that the Centers for Medicaid and CHIP Services (CMCS) has identified as a priority for the next several years:

  • Effective benefit design for mental health services for children, youth and their families
  • Effective benefit design for substance use disorder services  
  • Mental Health Parity and Addiction Equity Act (MHPAEA) application to Medicaid programs

Each of these areas will contain documents and other reference materials that may be helpful to States and managed care organizations as they consider their behavioral health benefit design and delivery systems.  In addition, each area identifies the technical assistance resources regarding behavioral health that CMCS and our other federal partners will make available to States and CMS grantees.

Services for Children and Youth with Mental Health and Substance Use Conditions


The Medicaid program provides coverage to 27 million children under age 18 in the United States.   According to the U.S. Surgeon General, while 11 percent of youth have been diagnosed with a mental illness, two-thirds of youth who have a condition are not identified and do not receive mental health service.  Research by the National Institute on Mental Health found that half of all lifetime cases of mental illness or substance use begin by age 14.  Recent information regarding mental health and substance use disorder conditions among children indicates:   

  • The rate of current illicit drug use among all youth (Medicaid and non-Medicaid) aged 12 to 17 is 10.1 percent, 25% higher than individuals age 18 or older.
  • Suicide was one of the top 10 causes of death of students in the United States in 2009.   Almost 14 percent of these students have seriously considered suicide.  Six percent report having attempted suicide one or more times in the past 12 months.   The presence of major depression, bipolar disorder and alcohol and drug abuse are frequent risk factors for suicidal behaviors.
  • Children exposed to trauma, including maltreatment, family violence, and neglect, exhibit symptoms consistent with individuals diagnosed with post-traumatic stress disorder, attention deficit/hyper-activity disorder, depression, and conduct disorder/oppositional defiant disorder.

CMCS has developed the following resources to provide information regarding services and good practices for children and youth with a behavioral health disorder.  CMS is encouraged with the increased interest by states to develop effective strategies for developing benefit designs for this population.  Many states have included behavioral health services for these individuals in the State Plans and various Medicaid managed care Waivers.

  1. CMCS Informational Bulletin:  Prevention and Early Identification of Mental Health and Substance Use Conditions
  2. Joint CMCS & SAMHSA Informational Bulletin:   Coverage of Behavioral Health Services for Children, Youth, and Young Adults with Significant Mental Health Conditions
  3. CMCS Informational Bulletin:   Collaborative Efforts and Technical Assistance Resources to Strengthen the Management of Psychotropic Medications for Vulnerable Populations
  4. State Medicaid Director Letter:  Use of Psychotropic Medications Among Children in Foster Care
  5. State Medicaid Director Letter:  Tri-Agency Letter on Trauma-Informed Treatment

Coverage for Individuals with Substance Use Disorders


Substance Use Disorders (SUD) impact the lives of millions of Americans in the general population, including individuals that are enrolled in the Medicaid program.  Nearly 12 percent of Medicaid beneficiaries over 18 have a SUD, and CMCS is committed to helping States effectively serve individuals with SUDs.  On average, 105 people die every day as result of a drug overdose. Additionally, 6,748 individuals across the country seek treatment every day in the emergency department for misuse or abuse of drugs. In 2010, drug overdose was the leading cause of injury death and caused more deaths than motor vehicle accidents among individuals 25-64 years old. The monetary costs and associated collateral impact to society due to SUDs are very high.  In 2009, health insurance payers spent $24 billion for treating SUDs. Of the $24 billion, Medicaid accounted for 21 percent of the spending.  The evidence is strong that treatment in managing SUDs provides substantial cost savings. For instance:  

  • Persons with untreated alcohol use disorders use twice as much health care and cost twice as much as those with treated alcohol use disorders; and medications treating substance use disorder in pregnant women resulted in significantly shorter hospital stays than drug-addicted pregnant women not receiving MAT (10.0 days vs. 17.5 days).
  • For inpatients with alcohol dependence, MAT was associated with fewer inpatient admissions.  Total healthcare costs were 30 percent less for individuals receiving MAT than for individuals who not receiving MAT.
  • Medical costs decreased by 30 percent on average between the year prior to MAT and the third year following treatment, and these cost trends reflect a decline in expenditures in all types of health care settings including hospitals, emergency departments, and outpatient centers.
  • Methadone treatment has been found to generate $4 to $5 in returns on healthcare expenditures for every $1 invested.
  • Early intervention in the cycle of addiction for younger individuals with substance use disorders can bring costs down as they have lower pre-treatment costs than older adults with substance use disorders.

CMS is encouraged with the increased interest by states to develop effective strategies for developing benefit designs for this population.  Many states have included behavioral health services for individuals with SUD in the State Plans and various Medicaid managed care Waivers.

Mental Health Parity and Addiction Equity Act (MHPAEA)


Millions of Americans with mental health or substance use disorders, including individuals participating in the Medicaid program do not have adequate insurance protection against the costs of treatment for mental and substance use disorders. The Mental Health Parity and Addiction Equity Act (MHPAEA) makes it easier for those Americans to get the care they need by prohibiting certain discriminatory practices that limit insurance coverage for behavioral health treatment and services. MHPAEA requires many insurance plans that cover mental health or substance use disorders to offer coverage for those services that is no more restrictive than the coverage for medical/surgical conditions. This requirement applies to:

  • Copays, coinsurance, and out-of-pocket maximums
  • Limitations on services utilization, such as limits on the number of inpatient days or outpatient visits that are covered
  • The use of care management tools
  • Coverage for out-of-network providers
  • Criteria for medical necessity determinations

In 2013, HHS’ Centers for Medicare and Medicare Services (CMS), released a State Health Official (SHO)  Letter that provided guidance to States regarding the implementation of  requirements under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA, Pub.L. 110-343) to Medicaid non-managed care benchmark and benchmark-equivalent plans (referred to in this letter as ABPs) as described in section 1937 of the Social Security Act (the Act), the Children’s Health Insurance Programs (CHIP) under title XXI of the Act, and Medicaid managed care organizations (MCOs) as described in section 1903(m) of the Act. The Centers for Medicare & Medicaid Services (CMS) previously issued a SHO letter on November 4, 2009, concerning section 502 of the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA, Pub.L. 111-3).  Below are resources that may assist Medicaid Directors to understand MHPAEA’s application to the Medicaid program.

  1. Mental Health Parity Self-Assessment Tool  
  2. Strategies for State Oversight of Implementation of the Mental Health Parity and Addiction Equity Act in Alternative Benefit Plans
  3. Alternative Benefit Plans
  4. Interim final regulations for implementing the federal mental health parity law of 2008
  5. U.S. Department of Labor Fact Sheet on MHPAEA
  6. U.S. Department of Labor Federal Parity Law Frequently Asked Questions (FAQs)