New Medicaid Rule Could Indirectly Impact Behavioral Health Providers

The Centers for Medicare & Medicaid Services (CMS) proposed a new rule Tuesday designed to increase oversight of Medicaid supplemental payments by creating new reporting requirements.

While it’s not yet clear what the changes would mean for the behavioral health care industry, Medicaid is one of the largest financing sources in the space. It accounted for 25% of all mental health spending and 21% of all substance abuse spending in 2014 alone, according to the Kaiser Family Foundation.

As such, the proposed rule could create small — yet distinct — waves for behavioral health providers, some experts predict.


“It is likely that there will be few direct impacts for behavioral health, but anything that reduces the amount of resources available for the Medicaid program will undoubtedly have an impact on access to behavioral health care,” Chuck Ingoglia, president and CEO of the National Council for Behavioral Health, told Behavioral Health Business.

The goal of the proposed Medicaid Fiscal Accountability Rule is to cut back on improper Medicaid payments and ensure longevity and sustainability of the program, CMS Administrator Seema Verma said in a press release announcing the proposed rule.

“We have seen a proliferation of payment arrangements that mask or circumvent the rules where shady recycling schemes drive up taxpayer costs and pervert the system,” Verma said. “Today’s rule proposal will shine a light on these practices, allowing CMS to better protect taxpayer dollars and ensure that Medicaid spending is directed toward high-value services that benefit patient needs.”


The rule applies to supplemental payments specifically, which behavioral health care providers typically don’t receive.

Supplemental payments are additional Medicaid payments to providers beyond what they typically receive for services. These types of payments have increased from 9.4% of all Medicaid payments in 2010 to 17.5% in 2017, according to CMS.

The proposed regulation would clarify important definitions within the Medicaid supplemental payment programs, provide guidance on which payments are legal and establish new reporting requirements for the states that participate in such programs.

For example, the proposed rule outlines new regulatory definitions for Medicaid “base” and “supplemental” payments, which are not currently defined. It also clarifies definitions and procedures associated with non-federal shared financing agreements to prevent states from abusing loopholes related to funding their share of Medicaid costs.

When it comes to reporting, CMS is proposing stricter rules designed to give them better oversight.

Specifically, the proposed rule would require stakeholders to supply provider-level payment details and identify the authority for payments received for state plan services and through demonstration programs (i.e. state plan amendment or demonstration), as well as the source of the non-federal share of the payments.

The rule will be open for public comment for the next 60 days.

The National Council for Behavioral Health is still reviewing the rule to analyze what it means for behavioral health providers. 

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