How State Medicaid Programs Address the Behavioral Health Workforce Shortage

State Medicaid programs have implemented or plan to implement strategies to address the behavioral health workforce shortage, including increasing reimbursement rates and reducing administrative burden, according to an issue brief from the Kaiser Family Foundation (KFF).

The COVID-19 pandemic exacerbated mental health issues and increased the need for behavioral healthcare. However, workforce challenges have made it difficult for people to access care.

Data from 2020 revealed that around 39 percent of Medicaid beneficiaries were living with a mental health or substance use disorder. Meanwhile, only 36 percent of psychiatrists accept new Medicaid patients.

KFF surveyed state Medicaid officials about their strategies that addressed the behavioral health workforce shortage in fiscal year (FY) 2022 and the strategies they plan to implement in FY 2023. Forty-three states and the District of Columbia responded to the survey, with response rates varying by question.

State strategies fell into four areas: increasing reimbursement rates, extending the behavioral health workforce, reducing administrative burden, and incentivizing provider participation in Medicaid.

Reimbursement gaps often limit access to care, especially for Medicaid beneficiaries. Psychiatrists receive lower Medicaid reimbursement than primary care providers. In addition, overall Medicaid payment rates may be lower than other payers.

States have opportunities to increase reimbursement rates in fee-for-service (FFS) Medicaid and managed care organizations (MCOs).

Nearly two-thirds of responding states (28 of 44) implemented FFS payment rate increases in FY 2022 or plan to in FY 2023.

Many states used the temporary funding provided through the American Rescue Plan Act (ARPA) that boosted the Medicaid match rate for home and community-based services (HCBS) to increase behavioral health provider rates.

In some states, specific provider types received payment rate increases, such as applied behavioral analysis or those providing residential-level care for substance use disorders.

Other states implemented broader increases. For example, Oregon instructed its Medicaid coordinated care organizations to raise rates by 30 percent for providers who receive 50 percent or more of their revenue from Medicaid and 15 percent for those who receive less than 50 percent of their revenue from Medicaid.

Strategies to expand the workforce were common, with 33 out of 38 responding states reporting they had at least one strategy in place or planned for FY 2023. The top strategy reported was adding peer or family specialists as providers who can bill without a supervising practitioner.

States also reported extending direct reimbursement privileges to other types of mental health practitioners, such as clinical social workers. In addition, almost two-thirds of states reimbursed services delivered by license-eligible individuals practicing under supervision in FY 2022.

Providers can experience significant administrative burden when managing prior authorization, documentation requirements, and lengthy credentialing processes.

Around 75 percent of responding states reported at least one strategy to reduce provider administration burden in FFS and MCOs. Many states said they had sought behavioral health provider feedback on administrative processes, while multiple states reported plans to implement centralized or standardized provider credentialing in FY 2023.

Certain state Medicaid programs have more flexibility than others regarding reducing administrative burden. For example, one state shared how their behavioral health authority regulates documentation, meaning streamlining the process would require collaboration between the Medicaid agency and the authority.

Provider participation in Medicaid programs may be slim due to reimbursement gaps and delays, but implementing prompt payment policies could help incentivize participation.

Two-thirds of reporting states had prompt payment policies in FFS and MCOs in FY 2022. However, less than one-fifth of states reported providing financial incentives to encourage providers to participate in physical and behavioral health integration.

The brief found that state Medicaid programs’ efforts to support the behavioral health workforce are on par with federal efforts. The Consolidated Appropriations Act passed in December 2022 authorized funding for new psychiatry residency positions and included provisions to boost the number of providers authorized to prescribe medications for opioid use disorder.