Leveraging Medicaid for School-Based Behavioral Health Services: Findings from a Survey of State Medicaid Programs

Concerns about youth mental health and well-being continue to increase, particularly in light of gun violence and the COVID-19 pandemic. Despite these mental health concerns, many children and adolescents face barriers in accessing behavioral health services (including mental health and/or substance use services). To address these challenges, recent legislation includes provisions to improve access to behavioral health services for youth. A number of these provisions involve expansions through Medicaid, including leveraging Medicaid to further build on school-based behavioral health services. Medicaid covers nearly four in ten children and adolescents nationwide, and provides significant financing for the delivery of behavioral health services through school-based programs.

To better understand the use of Medicaid in delivering and promoting of school-based behavioral health services, KFF surveyed state Medicaid officials about initiatives to promote access to Medicaid behavioral health services in school-based settings. These questions were part of KFF’s Behavioral Health Survey of state Medicaid programs, fielded as a supplement to the 22^nd annual budget survey of Medicaid officials conducted by KFF and Health Management Associates (HMA). A total of 44 states (including the District of Columbia) responded to the survey; of these, 41 states responded to the question about school-based care. In this analysis, we explore the strategies state Medicaid programs reported taking to promote and improve access to school-based behavioral health services, and how recent policies call on Medicaid to expand access to care for youth, particularly in schools.

Most schools offer behavioral health services to students and over time Medicaid has played a larger role in the delivery of these services. In the 2021-2022 school year, almost all (96%) public schools reported offering mental health services (although student utilization of offered services was unclear). These services are often supported through multiple sources of funding at the national, state, and local level. Over time, Medicaid has played a larger role in supporting these services and by 2014, nearly nine in ten school-based health centers (SBHCs) reported billing Medicaid. School-based behavioral health programs may rely on Medicaid in several ways, including reimbursement for medically necessary services that are part of a student’s Individualized Education Plan (IEP), for eligible health services for students with Medicaid coverage, and for some administrative activities. Additionally, since the 2014 reversal of the free care policy, the Centers for Medicare and Medicaid Services (CMS) has permitted payment of Medicaid services delivered to covered children, regardless of whether the school provides these services to all students without charge.

State Medicaid programs vary in how they promote access to Medicaid behavioral health services provided in schools. Although most schools provide mental health services, many report challenges in meeting the needs of all students, such as insufficient provider coverage and funding shortages. These challenges underscore the importance of addressing access issues in the school setting. KFF’s 2022 Behavioral Health survey asked Medicaid officials to report state initiatives to promote access to Medicaid behavioral health services provided in school-based settings. We found that states vary in their approaches – for example, some state Medicaid programs reported working more closely with local education agencies to help promote school-based behavioral health services (including Alabama, Massachusetts, Tennessee, and Vermont). Several states (including Arizona, Kentucky, Michigan, and Virginia) reported that they had or planned to take advantage of the reversal of the free care policy by expanding Medicaid reimbursement for school-based services provided to children without IEPs. A few states (including Oklahoma and the District of Columbia) are taking steps to incorporate crisis services for students. To incentivize providers, several states have also increased reimbursements for school-based providers (including Arizona, California, and South Carolina) – a strategy that many state Medicaid programs have adapted more broadly in order to attract Medicaid behavioral health professionals.

Below we highlight findings from several states that offer innovative and multipronged approaches to promoting access to Medicaid-based services.

• Arizona: Arizona has expanded its work with the local Department of Education to facilitate mental health and suicide prevention trainings in schools; and has taken steps to expand the number of school-based behavioral health providers. For example, the state Medicaid program has encouraged collaboration between schools and behavioral health outpatient providers interested in providing services at schools; and they incentivize behavioral health providers through enhanced payments. Additionally, Arizona’s Medicaid agency oversees administration of funds from the Children’s Behavioral Health Services Fund, which provides a pathway for students who are underinsured or uninsured to receive behavioral health services from providers contracted with Arizona’s Medicaid program.
• California: California’s recent state-wide Children and Youth Behavioral Health Initiative is a multistep approach to expanding access to youth behavioral health care. One focus of this initiative allows for managed care plans to earn incentive payments for implementing interventions that increase access to school-based behavioral health services (further outlined in the Student Behavioral Health Incentive Program). Higher incentive payments may be offered for interventions that increase reimbursement rates, serve vulnerable youth populations, and/or reduce inequities. Further, California will develop statewide all-payer fee schedules for school-based behavioral health services with the intention of streamlining the reimbursement process; and will develop a statewide network of school-based behavioral health counselors..
• South Carolina: Beginning in 2022, South Carolina modified its school-based behavioral health policy to give districts more options for delivery of behavioral health services in their schools. Previously, school districts were only able to provide behavioral health services through the Department of Mental Health (DMH). However, districts will now be able to either contract with DMH, hire their own counselors, and/or contract with private providers. With each option, school districts can bill the state’s Medicaid program. Additionally, through this initiative, an alternative fee schedule was developed in order to ensure that schools have sufficient provider capacity.

Some school-based programs have long provided behavioral health services through telehealth, even before the pandemic. In our survey, a few states reported plans to expand these remote services in unique ways, including creating a hub location away from school grounds that is staffed with behavioral health providers. Students could then access these providers remotely from their schools or travel to the hub location for in-person services. While this model may expand access to students overall by increasing telehealth services, if telehealth replaces existing in-person behavioral health services, some students may experience disruptions in care. In general, during the COVID-19 pandemic states have taken advantage of broad authority to expand Medicaid telehealth policies, resulting in high telehealth utilization across populations.

Looking Ahead

Recognizing Medicaid’s importance in covering and financing behavioral health care for children, recent legislation utilizes Medicaid as one pathway to expand school-based behavioral health services. The Bipartisan Safer Communities Act signed into law in June 2022 included a requirement for CMS to provide updated guidance on how to support and expand school-based behavioral health services, and also allocated $50 million in planning grants for states. In August 2022, CMS released its first guidance outlining state flexibilities and strategies for expanding Medicaid-covered behavioral health services in schools. Additionally, CMS indicated it intends to release further guidance, including an updated claiming guide and technical assistance guide. This guidance is expected to provide best practices for paying for school-based services, provide strategies for reducing administrative burdens, and supply examples of providers who can provide school-based Medicaid services.

More recently, the Consolidated Appropriations Act (CAA) passed in December 2022 includes Medicaid provisions that may promote access to behavioral health and other care for children, such as a requirement for states to implement 12 months of continuous eligibility for children in Medicaid and CHIP and a requirement for CMS to issue guidance and provide technical support to expand crisis services.  The CAA also requires state Medicaid and CHIP programs to maintain updated provider network directories that include behavioral health providers participating in Medicaid and information on whether they are accepting new patients and on language and cultural competencies, among others. Current directories are often outdated and may contribute to barriers to care. In addition to expanding access through Medicaid, the CAA includes other provisions focused on youth behavioral health support. For example, additional funding was allocated for Project AWARE, which provides trauma-based support for youth.

These recent changes at the federal level combined with state-level Medicaid efforts to streamline and promote access to services further highlight the increased attention on youth mental health and substance use concerns. Moreover, in his State of the Union address, President Biden spotlighted continued efforts to improve school-based mental health services, including how Medicaid can be used. Moving forward, steps to address workforce shortages and increases in behavioral health care via telehealth may also help mitigate access to care issues for youth mental health.