CMS’ Moves Point to Huge Medicaid Behavioral Health Opportunity for Integrated Community Based Care

The federal government’s focus on community-based services and whole-person care has made the Medicaid space prime for behavioral health innovation.

However, operators in the Medicaid space continue to struggle with reimbursement challenges and staffing shortages. Yet for those willing to stick with it, Medicaid can offer a prime opportunity to explore new territory, especially around community-based care.

Additionally, those efforts could also provide a road map for commercial insurers looking to incorporate more holistic care.


“It’s for the brave of heart and those that have some grit,” Kana Enomoto, senior expert at McKinsey & Company, said during a panel discussion at Behavioral Health Business’ VALUE event.

As the single largest payer for mental health services in the U.S., Medicaid has a major impact on the market. Eight percent, or 4.6 million Medicaid beneficiaries aged 12 and older, were treated for a substance use disorder in 2019.

Kana Enomoto, senior expert at McKinsey & Company, speaks during a fireside chat at VALUE. Photo by Jason Dixon for Behavioral Health Business.

What Medicaid can teach commercial insurers

Medicaid’s approach to community-integrated, whole-person behavioral health care could be a model for the future.


The Center for Medicare & Medicaid Innovation (CMMI) is looking at using community-based resources to help improve Medicaid. In fact, Tequila Terry, group director of state innovation and prevention and population health at CMMI, said at VALUE that “there are a lot of opportunities to engage community resources, to provide services, to do screenings of social needs.”

Furthermore, in September, the Biden administration announced it would invest $825 million into community centers nationwide to expand access to behavioral health services.

Additionally, in March, the U.S. Department of Health and Human Services (HHS) announced it would be investing over $300 million in Certified Community Behavioral Health Clinics (CCBHCs) to help treat substance use disorder and mental health conditions.

“If I had a person who had a serious behavioral health need, I would prefer that they go to a community-based Medicaid funded provider,” Enomoto said. “Because there’s more likelihood that they’re going to get evidence-based care, that they’re going to get [the] level of care that they need tailored to their needs, in a more holistic fashion.”

Medicaid’s behavioral health approach is often different from commercial insurance.

Specifically, Enomoto pointed to the fact that commercial insurance often does not cover coordinated speciality care, community treatment and dialectical behavior therapy (DBT).

“Wraparound care, peer support, home crisis stabilization, none of those things happen generally, with commercial insurance,” Enomoto said. “Yet, those are the things that, especially for people in crisis, that’s what they need.”

A McKinsey report co-authored by Enomoto highlights the need for public, private and social sector involvement in addressing health care disparities for behavioral health.

“Establishing the groundwork for whole person care will require addressing supply-demand inequities in behavioral health services, expanding equitable access to evidence-based models of care, and investing in behavioral health at parity with other health conditions,” the report reads. 

Workforce woes

Staffing shortages can make expansion difficult – if not impossible – for behavioral health operators in the current Medicaid climate.

“If you talk to the providers who are delivering Medicaid services, every one of them will just look at you with a blank stare, if you’re talking about expansion,” Enomoto said. “Because they’re like, ‘I have a 25% to 30% vacancy rate. I don’t have the people to do the additional work that we’d like to do or to serve the additional people.’”

An estimated 122 million Americans lived in 5,833 mental health professional shortage areas as of March 31, according to federal data. To meet that demand, the country needs more than 6,000 mental health professionals.

Yet workforce concerns are an issue across the behavioral health landscape – not just in Medicaid. In fact, Enomoto said that the top concern of behavioral health CEOs she has spoken to is staffing.

Additionally the workforce’s mental health impacts overall performance.

To alleviate some of these pressures, the Biden administration has put an emphasis on behavioral health and staffing. In fact, the president’s FY23 budget includes $700 million for programs designed to bring providers into behavioral health and train new providers.

“If you think about who’s leading CMS now, where the administration has put its markers and the awareness that they’ve expressed in terms of how vital it is not just on the deeper end, but all across the spectrum to manage mental health and substance use issues, I think there’s a huge opportunity in Medicaid coming down the pike,” Enomoto said.

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