Medicaid is the largest single payer for behavioral health services, and managed care is the predominant delivery system for Medicaid enrollees. Medicaid financing facilitates access to behavioral health resources, including psychiatric care, counseling, prescription medications, inpatient treatment, case management and supportive housing; this access increased with mandates under the ACA and with Medicaid expansion in many states. However, states have the flexibility to decide if behavioral health providers and their services are reimbursable and subject to same-day billing restrictions.

Furthermore, there is a declining number of psychiatrists accepting Medicating enrollees in their practices, and as a result, there is an overall shortage and disparities in the number and type of behavioral health providers to care for those with mental illness and addictions remain a serious roadblock to care, even among those covered by this state-federal program.

The state-specific nature of the Medicaid program, overwhelming use of managed care organizations in Medicaid payment and service delivery, and the dominance among waiver programs of the behavioral health waivers dictates studies of state Medicaid Plans, Medicaid MCOs, and Section 1115 waivers to examine payment rates for behavioral health services providers. 

This project has two objectives: 

1) in states with Medicaid waivers for behavioral health, determine the variation in behavioral health provider reimbursement rates per unit of service under FFS and MCO, and 

2) in non-waiver states, determine if there are fewer behavioral health providers available in Medicaid FFS and MCO programs.


Of the 4 avenues available to states to receive federal Medicaid funds for IMD services, the Section 1115 waiver program dominates. The Section 1115 demonstration waiver program offers innovation and flexibility to states seeking federal financial participation in Medicaid BH expenditures in IMDs for specific populations, facilities, and services.