• Posted April 5, 2023

On Medicaid & Need Mental Health Services? Where You Live in U.S. Matters

Medicaid reimbursement for mental health services varies widely across the United States, making it hard for many folks who need help to get it, a new study finds.

Researchers found as much as a fivefold difference among states in Medicaid reimbursement rates.

Even though Medicaid, the governmental health care program for low-income Americans, serves a population that is disproportionately affected by mental illness, many providers choose not to care for Medicaid patients due to low reimbursement rates.

At the same time, a growing demand for help with depression, anxiety and substance use means many psychologists are unable to take on new patients, according to a 2022 American Psychological Association survey.

Medicare, the federal health insurance program for American seniors, pays much more for mental health services, the study found.

"We find that Medicaid reimbursement to psychiatrists for a common set of 20 frequently billed services varies across states and that on average, Medicaid pays about 80% of what Medicare pays for the same services," said lead researcher Dr. Jane Zhu, an assistant professor of medicine at Oregon Health & Science University.

Mental health services generally have low insurance acceptance rates, but this is worse in Medicaid, partly due to low reimbursement rates, she said.

"Our study confirms that some states are setting these reimbursement rates quite low, which has implications not just for provider acceptance of Medicaid insurance but also the extent to which they see Medicaid patients," Zhu said.

For the study, her team compared Medicaid reimbursement rates state by state.

The highest reimbursement rates were in Nebraska, Alaska and Arkansas. The lowest: Pennsylvania, Rhode Island and Maine.

The researchers noted that a handful of states, including Nebraska, Alaska, Arkansas, Montana, Arizona, Oregon, New Mexico and North Dakota, offered Medicaid reimbursement for mental health services that was on par with or higher than that of Medicare.

Zhu noted that the study comes as several states are implementing or considering policies to expand the behavioral health workforce and increase access to mental health services.

"In Medicaid, states generally set their own payments for services, and have broad flexibility in this capacity," she said. "Understanding variation in reimbursement rates across states for mental health services is important and helps to guide policymakers' attention -- in particular, for states that chronically underfund or underpay for their mental health services, reimbursement rates may be one lever to help address a critical shortage of providers."

Hannah Wesolowski, chief advocacy officer for the National Alliance on Mental Illness, reviewed the findings.

"We see inadequate provider networks for people who have Medicaid coverage and an increasing number of people with mental health conditions," she said. "It's really created an environment that makes it incredibly hard for people to get the care they need."

One factor underlying the poor reimbursement rates for Medicaid is politics, Wesolowski said.

"Cost is always political," she said, adding that there appears to be some effort to improve mental health services.

Low reimbursement rates, however, are only one factor preventing people with low incomes from getting the mental health care they need, Wesolowski said.

A shortage of mental health professionals is also a factor. Many who treat depression, anxiety and other mental health problems are swamped, resulting in long waits for appointments and plenty of patients who can pay for care out-of-pocket. This forces many who can't afford treatment to rely on emergency rooms for help when a crisis occurs, Wesolowski said.

"We've really gotten to a place where accessing mental health care has become more of a privilege," she said. "For individuals that are covered by Medicaid, it becomes increasingly difficult if you can't find a provider that will take your Medicaid coverage and you don't have the ability to pay for these services out of pocket."

Not getting care early can make mental health problems worse, leading to the need for hospital treatment or long stays in emergency rooms without the care of a mental health professional, Wesolowski said.

For people who can't find a provider who will take their insurance, Wesolowski suggested finding a community mental health clinic. She said these are becoming more common and provide care regardless of a person's ability to pay.

Barring that, Wesolowski said it becomes a matter of calling and calling until you find a provider who will accept your insurance and can see you.

What's needed is pressure on policymakers for better access to mental health care, especially for low-income individuals, she said.

"We need everyone pushing policymakers to say this isn't OK," Wesolowski said. "Mental health impacts all of us, and we need policymakers to act urgently to address this crisis."

The study was published April 3 in the journal Health Affairs.

More information

The National Alliance on Mental Illness has more about Medicaid and mental health.

SOURCES: Jane Zhu, MD, assistant professor, medicine, Oregon Health & Science University School of Medicine, Portland; Hannah Wesolowski, MPA, chief advocacy officer, National Alliance on Mental Illness, Arlington, Va.; Health Affairs, April 3, 2023