The COVID-19 pandemic has prompted the Center for Medicare and Medicaid Services and state Medicaid programs to respond to the healthcare needs of noninfected patients by allowing for provider flexibilities and expanding telehealth to more routine care. However, as fewer people seek elective and primary care while under stay-at-home and physical distancing orders, revenue for providers is concurrently diminishing. Coupled with expected enrollment increases due to economic uncertainty and loss of employer coverage, behavioral health providers may not have adequate resources to respond to an increase in demand, leaving substantial gaps in care.

COVID-19 and the Effects on Mental Health

Social isolation and disruption of routines caused by the COVID-19 pandemic have created challenges with maintaining mental wellbeing and may exacerbate the severity of pre-existing mental health conditions and substance use disorders. In a recent Kaiser Family Foundation poll, 45% of Americans surveyed said that the pandemic has negatively affected their mental health. With over 67,000 drug abuse-related deaths per year normally in the US, a WellBeingTrust analysis predicts a possible 75,000 additional deaths from substance use and suicide due to the pandemic. A rise in behavioral health diagnoses and episodes could severely impact already strained Medicaid budgets.

Increased Enrollment in Medicaid and Demand for Behavioral Health Services

Medicaid is the largest payer for behavioral health services in the US. With over 38 million unemployment claims filed since the public health emergency was declared, Medicaid enrollment will continue to increase, indicating that healthcare resource utilization in Medicaid will increase overall. An Avalere analysis showed that over half of US counties do not have behavioral health providers, and many behavioral health providers choose not to accept Medicaid payments. Beneficiaries requiring mental health services may pressure an already strained system with existing barriers to access.

According to the Medicaid and CHIP Payment and Access Commission (MACPAC), approximately 50% of all Medicaid spending is devoted to the 20% of Medicaid beneficiaries that have a behavioral health issue. High Medicaid behavioral costs partially result from a lack of screening, delays in treatment, and inadequate referral services for these individuals. If the existing Medicaid beneficiaries requiring these types of services have gaps in care, then new enrollees will likely have similar or worse experiences.

State Activities and Proposals to Combat Revenue Losses

To mitigate the effects of increased enrollment, an economic recession, and COVID-19 treatment, states are employing various reductions to services and rates in their respective Medicaid programs. For example, Arizona will delay the integration of behavioral health services into Medicaid managed care organizations, and Ohio will cut rates for managed care to reduce the Medicaid budget by $210 million. Measures such as these will affect the delivery, availability, and quality of Medicaid services, especially while nonemergency care is deprioritized and beneficiaries are delaying non-COVID-19 care.

Organizations like the National Association of Medicaid Directors (NAMD) express that behavioral health providers will not be able to maintain viability due to the loss of volume. Additionally, a group of mental health organizations estimated that community mental health centers’ revenue, of which Medicaid is the primary contributor, will decrease by 50%. Even though telemedicine is encouraged, many community health centers face challenges obtaining equipment, developing the infrastructure, and reaching patients via telemedicine—highlighting the gaps in the behavioral health system.

In Congress’s recent allocation of funds, both MACPAC and NAMD again indicated that behavioral health services are overlooked and require targeted funds. These organizations have recommended various proposals, including the appropriation of $38.5 billion specifically for behavioral health services, supplying retainer payments to providers, and distributing relief payments to Medicaid providers.

Behavioral health organizations, MACPAC, and Medicaid directors concede that provider viability for services related to behavioral health is threatened by the loss of patient volume and the redistribution of resources due to COVID-19. Although Congress increased the federal matching rate by 6.2% during the public health emergency, states will only receive funds for provided services. If beneficiaries are not utilizing behavioral health services due to physical distancing measures, then neither the provider nor the state will receive reimbursement.

Challenges Meeting Increased Demand

A shortage of providers, loss of revenue, and the inevitability of an addition of beneficiaries in the Medicaid program will exacerbate an already overburdened sector. Coupled with cuts to state Medicaid budgets and the elimination of certain benefits, behavioral health programs and providers will need additional support via funding and program redesign to sustain their practices and provide services for beneficiaries.

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