Medicaid Managed Care Plans Struggle to Integrate Behavioral Health

The Medicaid managed care industry faces several challenges stemming from the behavioral health industry’s struggle to integrate itself into several aspects of health care.

The Institute for Medicaid Innovation’s annual Medicaid plan survey for 2020 details how a large swath of managed care companies interacted and felt about the health care industry last year and provided insights into managed care interactions with behavioral health. Medicaid is the single largest payer of mental health services in the U.S.

The report didn’t articulate how many plans participated in the survey, only indicating that survey respondents represented 67% of all covered lives in Medicaid managed care.


It found that 61% of Medicaid managed care plans identified problems with sharing information among care managers and behavioral health teams as a barrier to integrating behavioral and physical health. In a similar vein, 50% of plans said that other barriers to integrated care included having different systems than subcontractors and 44% pointed to communication barriers between providers and care managers.

Troubles with integrated care were the top network barrier identified by respondents: 89% of respondents said that providers’ capacity to integrate physical and behavioral health at the point of care was a problem.

Source: Institute for Medicaid Innovation annual Medicaid managed care survey

Other specific network barriers to integrated care included behavioral health providers’ readiness for managed care (61%) and behavioral health providers adopting electronic health records (44%).


At a policy level, nearly all (89%) Medicaid managed care providers pointed to limitations in federal law — cited as 42 CFR Part 2 — that bar the sharing of treatment information from substance use disorder providers with other providers as a problem.

A large majority (67%) of survey respondents pointed to the fragmentation in program funding and contracting for physical and behavioral health services as a policy barrier.

The survey found that 85% of Medicaid plans surveyed managed behavioral health at full risk in at least one market in 2020. That’s an increase from 80% the year before.

It also found that an increasing number of behavioral health providers are entering value-based purchasing (VBP) arrangements with managed care providers. The report states that 44% of behavioral health providers were not in VBP arrangements compared to 54% in 2017.

Behavioral health is the only medical specialty to see the number of providers not contracted with managed care organizations in VBP arrangements consistently decrease year-over-year since 2017. In 2020, the only medical specialty to see a lower number of providers not in VBP arrangements was primary care providers (21%).

A major portion of respondents (40%) incentivize behavioral-physical health integrated care adoption as an incentive in VBP.

The No. 1 barrier to VBP adoptions, regardless of specialty, was provider willingness and readiness to adopt the payment model.

Across all Medicaid managed care plans, 85% included behavioral health as an element of the plan. However, there is a significant spread between mid-sized plans and their small and large plan counterparts, according to the survey report.