Medicaid Presents Growing Opportunity for Behavioral Health Providers

As payers continue to recognize the importance of and the demand for behavioral health care, coverage for those services is expanding like never before.

While that’s true across the board, the Medicaid program could present special opportunities for behavioral health care providers in the years to come, according to some legal experts.

“Medicaid is an incredible opportunity for us as regulatory professionals and clinicians to really expand coverage, payment and treatment for behavioral health matters,” Polsinelli shareholder Jennifer Evans said during a recent Polsinelli webinar on behavioral health reimbursement.


Polsinelli is a Kansas City, Missouri-based law firm with more than 875 attorneys in 21 offices nationwide. Evans’s legal practice is focused partially on Medicaid issues, as well as other matters.

In the behavioral health realm, the expansion of Medicaid is creating especially big opportunities for providers, she said.

Medicaid expansion was born out of the Affordable Care Act (ACA) and allows more people to be covered by Medicaid. The expansion covers adults below 65 with incomes of up to 138% of the federal poverty level.


It’s allowed nearly 10 million Americans to gain coverage, meaning now about one in five people are enrolled in Medicaid.

Traditionally, Medicaid programs had to be more selective in who they covered due to federal rules — and what they covered due to state budget strains.

“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 whether they want to pay for Medicaid services, whether they want to pay for education [or] whether they want to pay for roads or prisons,” Evans said. “There’s a lot of pressure on state budgets.”

That means states often forgo covering optional benefits that are not federally mandated. Some optional behavioral health examples include services such as medication-assisted treatment, therapy, telemedicine, intensive outpatient programs and residential services, among others.

But beneficiaries covered under expanded Medicaid often get a guaranteed level of behavioral health coverage, as the ACA mandates coverage in 10 essential health benefits categories. One of those is mental health and substance use disorder services.

That’s good news for behavioral health providers hoping to serve the Medicaid population, Evans said.

“That alternative benefit program is really why we have such an opportunity in Medicaid to grow capacity for providers and getting paid for behavioral health services,” she told webinar attendees.

Opportunities and challenges

If you’re a behavioral health provider, how exciting Medicaid expansion is to you likely depends on where you operate.

Currently, Medicare expansion is optional to states, with only 36 of them 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 said. “We saw some states that would maybe really benefit from Medicaid expansion not moving forward with it yet.”

However, that could change in the years to come.

The Centers for Medicare & Medicaid Services (CMS) continues to express its interest in expanding coverage and access to Americans to save money in the long run. This goes beyond Medicare expansion and includes measures such as waiver programs, demonstrations and the relaxing of certain regulations.

But, still, even for providers in Medicaid expansion states, it can be easier said than done to jump into the space, especially for those who have not historically been enrolled in Medicaid.

For one, federal health care programs are notoriously complex, Evans noted.

“You’ve got to be careful,” she said. “You’ve got to look at your provider agreements. You need council who can help you.”

While there are a number of areas to assess, Evans advises providers to pay special attention to billing and copay changes.

Additionally, she advises providers to meticulously review commercial and private pay contracts to ensure getting into Medicaid is financially viable.

“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 said. “If Medicaid’s one of them, you’ve got to know that Medicaid reimbursement is low.”

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