HELPLINE: 650-638-0802 / CRISIS LINE: 650-579-0350 / TEXT 988 LIFELINE

About Mental Health

Behavorial-HealthcareMedicaid is turning 50 this month, and the program’s influence hasn’t slowed. In fact, experts say its role in behavioral healthcare is only expected to grow in the next 50 years.

Currently the largest payer for mental health services in the country, Medicaid is expanding in 30 states including Washington, D.C., under the Affordable Care Act, now covering more categories of beneficiaries such as childless adults. More people than ever before are eligible for Medicaid benefits, helping to reduce the uninsured population.

According to the Urban Health Institute’s monitoring survey, the rate of uninsured people in states choosing to expand Medicaid has dropped from 14.8 percent in the last quarter of 2013 to 7.5 percent in the first quarter of 2015. Even states without Medicaid expansion have seen a drop in the rate of uninsured, from 21.6 percent in the final quarter of 2013 to 14.4 percent in the first quarter of 2015.

Cuts in recent years made to non-Medicaid state mental health spending have further increased the reliance on the program. According to a report from the National Alliance on Mental Illness, from 2009 to 2011, nearly $1.6 billion was cut in non-Medicaid state mental health spending.

“State Medicaid agencies are growing rapidly in importance, and the state behavioral health agencies are receding in importance at the state level as a result of this financial dynamic that’s going on,” says  Ron Manderscheid, PhD, executive director of the National Association of County Behavioral Health and Developmental Disability Directors (NACBHDD).

Manderscheid says state Medicaid agencies are gaining influence as they represent an increasingly greater proportion of total health expenditures. As a result, the nature of the behavioral healthcare field is changing as states reorganize the way healthcare is delivered.

For example, in California, as part of the 2012-2013 budget, the state chose to eliminatethe Department of Mental Health and dispersed the responsibilities to other departments. That same year, officials created the Department of State Hospitals that manages the state hospital system and includes mental services for those admitted to state-run hospitals and prison psychiatric programs.

Manderscheid says behavioral providers need to work closely with state Medicaid directors in the years ahead to ensure leaders understand key behavioral health issues and community needs.

“It’s very important that that person develops some understanding of the behavioral health population, behavioral health services, the effort to integrate services, and all these kinds of things,” he says.

IMD Exclusion

Organizational changes to healthcare delivery aren’t the only changes providers can anticipate. Manderscheid says Medicaid’s Institutions for Mental  Diseases  (IMD) exclusion is also likely to be adapted. The policy has long been talked about and experimented with, but look for new interest in wholesale reforms.

The IMD exclusion has been in place since 1965 and was initially created as a way to prevent any spending of federal dollars to care for people indefinitely at inpatient institutions. Over the last 50 years, exemptions have been made for children, the elderly and facilities with 16 beds or fewer.

Virtually all psychiatric hospitals have more than 16 beds, so virtually all are excluded from Medicaid payment. The providers still treat Medicaid enrollees, but providers aren’t getting paid for the services. In most cases, the treatment becomes uncompensated care.

But Manderscheid says, there’s a movement to change the policy. NACBHDD  for one plans to present a proposal to revise the IMD exclusion this month to the National Association of Counties and a number of other proposals exist as well. With about 7 million new Medicaid beneficiaries as a result of the ACA, there are even more patients who need beds, and that’s one reason policymakers are looking at the IMD rule seriously.

“There’s attitudinal movement on this issue. There’s legislative movement on this issue,” he says. “I think it’s going to be changed over time—maybe not completely removed, but it’s going to be changed dramatically—and I expect that will happen in the next one to two years.”

Only an act of Congress can change the IMD exclusion.

State regulation

Medicaid has no fewer than 50 different sets of regulations because it is state-driven. Manderscheid says the Coalition for Whole Health plans to lobby for one national essential health benefit to improve consistency in benefits among states. Advocacy efforts will also be made to try to improve the pharmacy benefit for patients, which now only allows coverage of one to two drugs per class.

“There are probably eight or nine medications for schizophrenia alone, there are half a dozen medications for depression and so on, but if you have only two or one per class, you know a lot of people are not going to get the medication that they need,” he says.

Half-a-century ago, Medicaid began as a social healthcare program to meet the needs of special patient populations, but with the help of the Affordable Care Act, it’s now serving a more broad population base. Health reform has helped to level the playing field in eligibility and make the program more inclusive for low-income people who need health services.


“I would argue that the system is actually moving in the direction that promotes removing disparities and increasing equity,” Manderscheid says.

The Centers for Medicare and Medicaid Services has a number of events scheduled around the July 30 anniversary date. It is also the anniversary of Medicare.