This is an exclusive BHB+ story
The uncertain but potentially dramatic Medicaid reforms looming over the addiction treatment industry have sucked up all the oxygen in the room.
Such a development illustrates the prominence, power and potentially complicating influence of federal reforms. Still, such reforms don’t happen in a vacuum and will have a major impact on several existing challenges, trends and evolutions in addiction treatment.
Addiction Treatment Business began its review of state-focused issues as the proposed changes to Medicaid were working their way through the U.S. House of Representatives. The One Big Beautiful Bill Act, the official name for the GOP-led budget and policy bill, cleared the House after a dead-of-night spree of legislative actions, with a slim vote to pass arriving at 7 a.m. on May 22.
The U.S. Senate introduced its own version of the Medicaid reforms that would require more people to engage in work requirements, more strictly limit state governments’ ability to forgive taxes related to Medicaid, and make additional limitations on providing coverage to immigrants, according to an analysis of the bills by the Kaiser Family Foundation. It is estimated that the reforms could result in millions of people, including those covered by plans other than Medicaid, losing health benefits.
“So that’s coloring our response because in a lot of these states, yes, we’re working on things, but if [there are these major cuts] to Medicaid, none of the other stuff matters,” Collan Rosier, vice president of government relations for Altoona, Pennsylvania-based Pyramid Healthcare, told ATB.
Nonetheless, the addiction treatment industry has and will continue to juggle multiple challenges at the same time. And non-Medicaid-related issues persist regardless of the changes that come to that safety-net program. Here are key state-level trends impacting the addiction treatment industry.
Medicaid may impact access to care
Pyramid Healthcare operates addiction treatment facilities and outpatient services in nine states. About half of its overall business is in Pennsylvania, Rosier said.
Before the proposed Medicaid reforms dominated the conversation, Pennsylvania had its own problems with Medicaid. A failed actuarial analysis severely understated the Medicaid population’s behavioral health spend. Earlier in the year, the state projected a $2.5 billion gap between the spending and the budgeted amount within the Medicaid program, according to the Harrisburg, Pennsylvania-based Rehabilitation & Community Providers Association. Even with budgetary action, the association states there is a need for the state to increase its capitation for behavioral health by $640 million.
Rosier said that this kind of problem could diminish funding for new programs meant to care for a growing population in need. It might also lead to changes in how the state funds or assesses eligibility.
Across the states, the specific dynamics at play within Medicaid programs require addiction treatment providers to be aware of the unique circumstances in each state of interest. This includes tracking the politics and personalities that clash in state government.
For example, the Arizona Medicaid director and the health services department director resigned ahead of questioning by lawmakers about the executive branch’s handling of a massive sober housing fraud scheme that had afflicted the Medicaid program. This contributed to a complex state funding environment. At the same time, several funding initiatives from the Biden-era COVID bailout bill, the American Rescue Plan Act (ARPA), are set to expire.
“It’s pretty chaotic right now,” Nick Stavros, CEO of the Scottsdale, Arizona-based outpatient medication-assisted treatment (MAT) provider Community Medical Services, told ATB.
This also comes during eligibility and disenrollment for those who would not have otherwise gained or lost coverage during the COVID-era pause in redeterminations. About 611,000 members have dropped off the program’s list over the last few years.
Other payers trends limit innovation
Lea McMahon, chief clinical officer for Naperville, Illinois-based Symetria Recovery, told ATB that payers generally are resistant to key changes in clinical services that could be game changers for the organization and its patients. Symetria Recovery offers outpatient addiction services across six locations in Illinois and seven in Texas, according to its website.
“Payers have not adopted value-based contracting for commercial contracts for opioid-use disorder (OUD),” McMahon told ATB.
Her sentiment reflects other comments Symetria Recovery CEO Masroor Ahmed previously made at Behavioral Health Business’ INVEST 2024 conference: “We’ve had some success with one-off payers digging in where there are obvious wins in retention. … It feels like everything’s moving at a snail’s pace and that it’s not moving fast enough.”
In notably idiosyncratic states such as California, value-based care can be a vital part of ensuring quality clinical services but also the provision of non-clinical services that are tied closely to recovery. However, this requires notable investment on the part of providers and incentives to make the effort worthwhile and sustainable.
“Value-based care models specific to behavioral health conditions are becoming increasingly important in California’s health care landscape,” Matthew Zubiller, CEO of Los Angeles-based Your Behavioral Health, told ATB.
Operationalizing value-based care models requires investments in technology, such as electronic health records and data tracking and reporting software, as well as administrative support for each unique partnership with individual payers.
“While these models are used with some of the largest plans, data accuracy, consistent benchmarks, and quality measures can be inconsistent and difficult to normalize/standardize,” Zubiller said. “If higher performance can lead to tiered provider networks, there can be a mutual incentive to drive toward value and quality for the patients and members.”
McMahon also said that Symetria Recovery has seen payers in Illinois and Texas restricting reimbursement for Vivitrol, a long-lasting injectable version of naltrexone formulated by Alkermes Inc. (Nasdaq: ALKS). The restrictions have gone to the point that providers are discouraged from using the drug.
Payers continue to restrict reimbursement for Vivitrol to a point that providers are choosing not to prescribe the medication. These medications are considered a way to help people get back to a more normal life after more intensive addiction treatment services. Presently, most medications, especially for treating opioid use disorder, are required to be administered through daily, provider-supervised dosing. Other take-home medications present the risk of diversion.
States improve, worsen staffing issues with policy
Workforce challenges remain a key limitation to the addiction treatment industry generally. Providers in regions with acute shortages face the worst of it. For example, every county in Nevada has been designated by the federal government as health care provider shortage areas. Keeping the providers that are available at an organization is also a problem.
“Retention remains a top challenge across clinical and non-clinical roles,” Kristin Berg, executive director of Desert Hope Treatment Center in Las Vegas, told ATB. “To address this, providers are adopting trauma-informed supervision, mental health support for staff, professional growth pathways, and flexible scheduling.”
Desert Hope Treatment is part of American Addiction Centers.
Such shortages have forced the creation and amplification of lower-educational-attainment roles to ensure that there are professionals available to support people seeking recovery. These roles include the certified peer support specialist and other paraprofessional roles.
One part of the workforce challenge in Nevada is the state’s rurality.
This situation underscores the need for expanded telehealth services and mobile treatment options to improve patient engagement and retention. Berg described peers as a “cornerstone” of the behavioral health system today, and states are more commonly covering their services given their ability to connect lived experiences to treatment pathways.
“Peers are now embedded not just in treatment but in every step of the recovery journey — providing motivation, accountability, and linkage to essential services like housing, employment, and continued care,” Berg said.
This type of wraparound support is rarely compensated, yet it requires significant investments to provide these services directly or to invest in infrastructure through partnerships with other organizations. Yet, many social determinants of health have major impacts on potential substance use disorders as well as recovery, depending on a person’s stage of life.
In some cases, state policy suppresses the ability of certain providers from meeting the needs of a patient population, even when this might be permitted at the federal level.
In Texas, McMahon said that “mid-levels” — nonphysician providers such as nurse practitioners (NPs) and physician assistants — are not allowed to prescribe methadone, even in the confines of an opioid treatment program, a state and federally regulated type of medication-assisted treatment (MAT) facility.
In California, mid-level providers are getting a key boost from the government. After the passage of AB 890 in 2020 and its effective date of Jan. 1, 2023, nurse practitioners would be allowed to start a three-year process to practice medicine with autonomy from physician oversight. While the impact of this regulatory change can’t be realized until 2026, Emily Pedersen, executive director of operations of Neuro Wellness Spa, a part of Your Behavioral Health, said that the law could be a boon to California, which faces a severe shortage of psychiatrists.
“At [Your Behavioral Health], we deeply value the essential role [psychiatric mental health nurse practitioner (PMHNP)] play in delivering high-quality, patient-centered care,” Pedersen said. “As the landscape shifts, we are committed to fostering collaborative, supportive environments where PMHNPs can thrive — balancing autonomy with mentorship to ensure every patient receives effective, accessible, and compassionate treatment.”
Impact of courts and cops
The addiction treatment industry has had a close association with the courts and law enforcement agencies by default, given the last several decades of federal and state “War on Drugs” policies. In some cases, providers and local legal and court entities have sought to take a collaborative approach.
Even if an addiction treatment provider is not directly collaborating with the courts or law enforcement, it is crucial for them to be aware of major police actions.
“Whenever there’s a drug seizure in an area, you see an increased rate of overdose deaths,” Stavros said. “What we’ve seen anecdotally is, when there’s a drug seizure, we see clinic census increase because people no longer have access to the supply on the streets that they were using to stave off the withdrawals.”
One study released earlier this year showed an association between increased fatal doses and following police seizures in San Francisco. An earlier study found that overdoses can spike in specific localities near the seizure to twice what would be expected within a week.
Berg said that in Nevada, courts are expanding their ability to deal with those in need.
“Court-based programming has expanded significantly, with behavioral health courts, diversion programs, and reentry initiatives taking center stage,” Berg said.
