Key Takeaways

The Supreme Court of the United States decision in Dobbs returned the decision to restrict or protect abortion to states. In many states, abortion providers and advocates are challenging state abortion bans contending that the bans violate the state constitution or another state law.

These challenges generally fall into three categories:

• Broad Constitutional Challenges: In Ohio, Oklahoma, Georgia, and Utah, among others, the abortion ban challenges include claims that state constitutional protections, such as liberty, due process, and privacy rights encompass a right to abortion.
• Health Care Amendment Challenges: Some state constitutions were amended to include a right to make health care and health insurance decisions in an effort to block the ACA’s individual coverage mandate. In Wyoming and Ohio, abortion advocates argue that this amendment includes the right to make a decision about whether or not to have an abortion.
• Religious Freedom Challenges: In Florida, Indiana, Kentucky, Missouri, Utah, and Wyoming people from various religious backgrounds argue abortion bans either unduly infringe on their religious exercise or violate state constitutional protections against the establishment of religion.

A number of state courts have responded favorably to many of these arguments and have temporarily blocked several bans while litigation on their constitutionality is ongoing. In time, these challenges will reach each state’s highest court, which will be the ultimate arbiter of the constitutionality of state-level abortion bans.

Introduction

Since the Supreme Court’s decision in Dobbs v. Jackson Women’s Health Organization, overturning Roe v. Wade and Planned Parenthood v. Casey, the legal landscape at the state level has been activated as never before. With the aim of restricting access to abortion, many states moved swiftly to lift court orders previously blocking bans, revive dormant pre-Roe bans, certify “trigger” bans, and enact new laws. Lacking federal protections, abortion providers have been on the front lines challenging these bans in state courts, questioning their constitutionality, not under the United States Constitution, but under each state’s constitution. Since the Dobbs decision, 23 states have tried to implement a complete ban or a pre-viability ban. In 6 states, these laws are currently blocked by courts. For an overview of the current legal status of abortion across the country, please see our abortion dashboard.

Although State Constitutions are similar to one another in many respects, each state has its unique judicial history and binding precedent, with State Supreme Court rulings diverging on liberty, privacy, and due process protections. Additionally, some states have amended their constitutions to include different abortion protections, while others have moved to assert that their constitution confers no right to abortion. Given these differences, abortion bans and restrictions that may be unconstitutional in some states, may be constitutionally permissible in others. As a result, the types of challenges on state constitutional grounds have varied in states banning – or attempting to ban – abortion access, including those where the question of a constitutional right to abortion had never reached their highest courts, the ultimate arbiters of the constitutionality of state laws.

Despite the variety in the types of legal challenges to abortion bans, a few patterns in the approaches have emerged in the abortion litigation landscape. In this issue brief, we present an overview of some of the types of challenges presented in state courts since the Dobbs ruling in June 2022 and highlight some of the novel strategies that are being used to defend access to abortion in states that have enacted abortion bans.

Background

Before the Supreme Court of the United States (SCOTUS) Dobbs decision, the supreme courts of ten states had recognized a constitutional right to abortion in their states’ constitutions, but often under differing guarantees and protections. For example, in Montana in 1999, the state’s highest court found that the state constitution contained stringent protections of the right to privacy, exceeding those provided by the federal constitution, and, as such, ruled that procreative autonomy (the right to decide whether or when to have children) is protected under the right to privacy. Florida and Minnesota are two other states where the highest courts have ruled that their states’ constitutions include a more expansive right to privacy than SCOTUS had found in the federal constitution. In Massachusetts, the state’s highest court recognized that the right to abortion is found within the state constitutional due process rights.

Currently, nine state supreme court decisions finding state constitutional protections for abortion are binding precedent and have not been overturned by a subsequent decision or constitutional amendment. (Table 1). Just as SCOTUS overturned Roe, state supreme courts may overturn their previous decisions upholding the right to abortion in their state constitutions. In 2018, the Iowa Supreme Court found that the state constitutional rights of due process and equal protection encompassed the right to abortion. However, in June 2022, the Iowa court reversed itself, finding that the state constitution confers no fundamental right to abortion.

While a state’s highest court has final say about the constitutionality of laws under its constitution, the legislature and electorate may amend the constitution at a future date, rendering previous court decisions moot or severely impacting the landscape of litigation in that state. For example, in 2000 the Tennessee Supreme Court issued a decision finding the state’s constitutional protections for privacy encompassed a right to abortion. However, in 2014, voters approved a ballot measure amending the state’s constitution and explicitly expressing that the constitution did not confer a right to abortion, superseding the 2000 court’s ruling. In addition to Tennessee, Arkansas, Louisiana, and West Virginia (Table 2) have passed ballot measures to amend their state constitutions to curtail the right to abortion. Although these amendments may not explicitly prohibit abortion in the state, they can prevent the state supreme courts from ruling that other, broader constitutional protections encompass a right to abortion. This allows state legislatures to enact abortion bans and restrictions with the confidence that the state’s highest court will not find them unconstitutional and unenforceable.

After the Dobbs decision, some states used ballot measures to attempt to amend their constitutions. The ballot measures seeking to curtail the right to abortion in Kansas and Kentucky failed, while California, Michigan, and Vermont (Table 3) successfully passed constitutional amendments recognizing a right to abortion. Enshrining these rights in the state constitution amounts to a much stronger, more stable protection than simply enacting laws recognizing such a right, which can be repealed with a change in party control of a state legislature. In contrast, a constitutional amendment that explicitly protects a right to abortion, or reproductive autonomy more broadly is much harder to change or repeal.

Challenges in State Courts Following the Dobbs Decision

Who is challenging the abortion bans in state courts?

Most legal challenges to state abortion bans are being brought by abortion care providers and clinics, presenting claims on behalf of themselves, their staff, and their patients. This is common in lawsuits regarding the right to access abortion care. Many prominent cases, such as Planned Parenthood v. Casey and Dobbs v. Jackson Women’s Health Organization, have been brought by providers and clinics.

Although there is a long history of providers and clinics challenging abortion restrictions, officials in some states dispute the legal “standing” providers have to bring these suits. For courts to be able to hear a case at all there must be a party with a real, concrete injury whose protection depends on an intervention by the Court. Usually, a person can only challenge the constitutionality of a law if it infringes on their own rights, not broadly the rights of others. However, legal challenges to abortion bans and restrictions brought by providers and clinics generally argue there is a constitutional right to receive abortion care and restrictive laws violate this right. In this way, providers argue that the rights of their patients – not necessarily their own – are being infringed by the bans.

This practice of suing to vindicate the rights of a closely related party (in this case providers and their patients) is called “third-party standing.” It allows a person or organization to assert the rights of another individual when it is difficult for them to assert their own rights, and the parties’ interests are closely aligned.  Given the time limited duration of a pregnancy, it is difficult for pregnant people to personally challenge abortion restrictions while often facing numerous obstacles including financial limitations, and concerns for privacy and personal safety. For almost 47 years, federal and state courts have permitted doctors and clinics to sue on their behalf. The Supreme Court of the United States established third-party standing for abortion doctors on behalf of their patients in a 1976 decision, Singleton v. Wulff. That case was brought by two doctors challenging the exclusion of abortion in Missouri’s Medicaid program. Justice Blackmun wrote for the court, “aside from the woman herself, the physician is uniquely qualified, by virtue of his confidential, professional relationship with her, to litigate the constitutionality of the state’s interference with, or discrimination against, the abortion decision.” Singleton recognized that women can be fearful to assert their abortion rights out of concern for their privacy.

However, since the Supreme Court’s decision in Dobbs, some state courts have become more receptive of arguments against providers’ third party standing. Most notably, in Florida, a state Court of Appeals called into question providers’ ability to sue on behalf of patients in its decision refusing to block an abortion ban. If the ability of providers and clinics to bring challenges to courts is curtailed, it may be more difficult for these challenges to proceed successfully if only those who are seeking abortion are permitted to sue.

In addition to clinics and providers, other individuals and groups have challenged abortions bans. Some recent notable cases include a challenge under the Indiana Religious Freedom Restoration Act, where five unnamed women and a Jewish pro-choice organization are contesting the constitutionality of the state ban constitutionality on freedom of religious exercise grounds. This challenge is detailed below. Another notable case is the lawsuit disputing the constitutionality of the Wyoming’s total abortion ban, where a pregnant woman and a woman of reproductive age, along with two physicians, a clinic, and an advocacy organization are suing the state. This challenge rests on constitutional privacy rights and the right to make health care decisions. And, finally, in Wisconsin, the state’s Attorney General and Medical Examining Board filed a lawsuit seeking judgment that the state’s pre-Roe ban is unenforceable, arguing that the ban is incompatible and at odds with the many other abortion statutes the state enacted since the decision in Roe.

Types of Challenges

General Constitutional Challenges

In many states, lawsuits challenging the constitutionality of bans argue that the laws violate due process, liberty, equal protection, or privacy rights, or a combination of these rights. Although the states’ constitutional protections are similar, state Supreme Courts have diverged in their interpretation of these rights, with some recognizing that certain state constitutional rights are more expansive than their federal counterparts. There is active litigation in Ohio, Oklahoma, Georgia, Indiana, Kentucky, Utah and Wyoming, which include constitutional violations as the part of the basis of their challenges to the states’ abortion bans.

In issuing a preliminary injunction blocking the enforcement of Ohio’s abortion ban, the state trial court judge found that the Ohio Constitution includes the right to abortion in the right to “liberty” and in the “Due Course of Law” provision which states: “All courts shall be open, and every person, for an injury done him in his land, goods, person or reputation, shall have a remedy by due course of law, and shall have justice administered without denial or delay. Suits may be brought against the state, in such courts and in such manner, as may be provided by law.” The court also relied on the Health Care Amendment to the constitution which is discussed below.

In Wyoming, the presiding judge also found that the abortion ban’s exceptions regarding cases of rape or incest and medical emergencies could be found to be unconstitutionally vague. Judges in both Ohio and Wyoming also found the abortion bans would violate each state’s equal protection provisions, despite the states’ arguments that these laws apply to everyone equally.

In January 2023, the South Carolina Supreme Court struck down the state’s 6 -week ban as violating the state’s constitutional privacy provision. Unlike the U.S. federal constitution, South Carolina’s constitution has an explicit right to privacy. While each state court is independent and is not obliged to follow other state court decisions, the South Carolina Supreme Court reviewed the decisions of other state Supreme Courts to inform their own ruling that the right to privacy includes the right to abortion. Ten other states also have an explicit right to privacy in their state constitutions.¹ 

Health Care Amendment Challenges

In Wyoming and Ohio, the legal challenges to abortion bans revolve around some of these same constitutional protections most other challenges rely on, but also around each respective state constitution’s amendment regarding health care and health insurance. These two states, along with Alabama, Arizona, and Oklahoma² , amended their constitutions in the wake of the passing of the Affordable Care Act (ACA), to create a right to make health care and insurance decisions and block the insurance coverage mandate in the federal ACA. By creating a right to make decisions about health care and health insurance, the state legislatures hoped they could secure the individual right to refuse to purchase health insurance and to ensure the right to purchase private health insurance, thereby circumventing the law’s individual mandate to obtain insurance. In Wyoming, the constitutional amendment was approved in a ballot measure in the November 2012 elections. This amendment safeguards the right to health care access, broadly giving every adult the right to make his or her own health care decisions. In Ohio, the Health Care Freedom Amendment was approved in a November 2011 ballot measure. This amendment protects the right to purchase health care, stating that “[n]o federal, state, or local law or rule shall prohibit the purchase or sale of health care or insurance.”

Despite the narrow intent of the amendments to block ACA implementation, their broad language has allowed providers and advocates in Ohio and Wyoming to successfully argue that these measures create a general constitutional right to make health care decisions. And abortion, they argue, is health care under any ordinary definition of health care. Thus, providers argue, these amendments protect the right to make health care decisions and then logically protecting the decision about whether to have an abortion, making Ohio’s 6-week LMP ban and Wyoming’s total ban unconstitutional.

In response, state defendants that oppose abortion rights in both cases argue these health care amendments do not remove a state’s ability to regulate health care, or outlaw abortion. The state Courts in both states, however, were receptive to the argument that the right to make health care decisions encompasses the right to make decisions about whether to have an abortion and blocked the bans from being enforced. Judges in both courts asserted that, regardless of the intent with which the amendment was passed, the plain meaning of the language used in it likely conferred a right to abortion. In short, the state trial court judges agreed with the argument that abortion qualifies as health care and the general constitutional protection to make health care decisions created by the amendments would make the bans unconstitutional. Both cases are expected to reach each state’s highest court, where the constitutionality of the bans will ultimately be decided.

Religious Freedom Challenges based on State Constitutions and The Religious Freedom Restoration Act

Individuals, religious faith leaders and organizations have brought legal challenges in several states including Florida, Indiana, Kentucky, Missouri, Utah and Wyoming claiming their state’s abortions restrictions violate their religious freedom.  Some of these litigants base their claims solely on the state’s constitution’s right to freely exercise one’s religion, while others are challenging their state abortion restrictions on their state’s Religious Freedom Restoration Act. Indiana’s case is the only religious challenge to an abortion ban to date where a court has responded to the state RFRA arguments at hand and evaluated their validity.

The plaintiffs in Indiana have based their challenge only on the state’s RFRA law. The Indiana RFRA law, adopted in 2015, “prohibits government action that substantially burdens a person’s religious exercise, unless the burden is in furtherance of a compelling governmental interest and is the least restrictive means of furthering that interest.” Several states have similar laws that are modeled after a 1993 federal law by the same name, which applies only to federal laws, not to state or local laws.   Federal and state RFRA laws have been used to challenge laws requiring contraceptive coverage and anti-discrimination laws. Most notably, the federal Religious Freedom Restoration Act was the basis for the lawsuit brought by Hobby Lobby to challenge the contraceptive coverage requirement based on the for-profit corporation’s religious objections to certain contraceptive methods.

In the Indiana case, a group of women and a religious pro-choice organization argue the state’s abortion ban substantially burdens their religious exercise. Specifically, the plaintiffs argue that their respective religions (Judaism, Islam, and Unitarian Universalism) direct them to obtain abortion care under circumstances that the ban does not allow. This includes situations where the pregnancy jeopardizes the mental health of the pregnant person or their physical health, without necessarily causing serious risk of substantial and irreversible physical impairment of a major bodily function, as the ban’s health exception would require. Plaintiffs thus argue that their sincere beliefs would be substantially burdened if the ban went into effect. They further argue that the state’s right to protect potential life is not a strong enough interest to overcome their religious exercise rights – which are protected by Indiana’s RFRA – and bar them from receiving abortion care in situations where their sincerely held religious beliefs would call for them to seek it.

On December 2, 2022, the Marion County Superior Court granted a preliminary injunction, blocking the ban from being enforced against the plaintiffs, while the underlying question is resolved. Another Indiana state trial court had already issued an order blocking this ban from being enforced due to a previous challenge to the law, which argued the liberty guarantees of the Indiana Constitution provide a right to privacy that includes the right to determine whether not to have an abortion. The state has appealed both court decisions blocking enforcement of the ban and is requesting the Indiana Supreme Court eliminate the preliminary injunction in the RFRA challenge.

Conclusion

The fate of the constitutionality of abortion bans and the legal availability of abortion services in states where there are ongoing legal battles will most likely rest on each state’s highest court. Since SCOTUS issued its decision in Dobbs, the South Carolina Supreme Court has ruled that their state constitution protects the right to abortion. Conversely, a week before Dobbs’ decision, the Iowa Supreme Court overturned their previous decision, and found that their state constitution does not include any protections for abortion. It will take some time for the other cases underway to reach their respective State Supreme Courts and to have decisions on the states’ constitutional protections of abortion that will ultimately affect abortion access across the nation.

Appendix Table 1

1. The states of Alaska (Const. art. 1, § 22), Arizona (Const. art. 2, § 8), California (Const. art. 1, § 1), Florida (Const. art. 1, § 23), Hawai’i (Const. art. 1, § 6), Illinois (Const. art. 1, § 6), Louisiana (Const. art. 1, § 5), Montana (Const. art. 2, § 10), New Hampshire (Const. art. 2-b), South Carolina (Const. art. 1, § 10), and Washington (Const. art. 1, sec. 7) all contain explicit protections of the right to privacy. ↩︎
2. Oklahoma Constitution Article II, § 37. ↩︎

Medicare, the federal health insurance program for 65 million people ages 65 and older and younger people with long-term disabilities, helps to pay for hospital and physician visits, prescription drugs, and other acute and post-acute care services. This brief provides an overview of Medicare spending and financing, based on the most recent historical and projected data published in the 2022 annual report of the Board of Medicare Trustees and the 2022 Medicare baseline and projections from the Congressional Budget Office (CBO). The brief highlights trends in Medicare spending and key drivers of spending growth, including higher enrollment, growth in health care costs, and increases in payments to Medicare Advantage plans.

Overview of Medicare Spending

Medicare Accounts for 21% of National Health Spending and 10% of the Federal Budget

Medicare plays a major role in the health care system, accounting for 21% of total national health spending in 2021, 26% of spending on both hospital care and physician and clinical services, and 32% of spending on retail prescription drug sales (Figure 1).

In 2021, Medicare spending, net of income from premiums and other offsetting receipts, totaled $689 billion and accounted for 10% of the federal budget—a similar share as spending on Medicaid, the Affordable Care Act (ACA), and the Children’s Health Insurance Program combined, and defense spending (Figure 2).

Historical and Projected Medicare Spending

Medicare spending on Part A, Part B, and Part D benefits in 2021 totaled $829 billion, up from $541 billion in 2011, according to the Medicare Trustees (Figure 3). These amounts reflect gross spending, not subtracting premiums or other offsetting receipts, and include spending on beneficiaries in both traditional Medicare and Medicare Advantage. Medicare benefit spending is expected to grow to $1.8 trillion in 2031 (Figure 3).

CBO projects that between 2021 and 2032, net Medicare spending—after subtracting premiums and other offsetting receipts—will grow as a share of both the federal budget, from 10.1% to 17.8%, and the nation's economy, from 3.1% to 4.3% of gross domestic product (GDP). Projected spending growth for Medicare is due in part to growing enrollment in Medicare related to the aging of the population, increased use of services and intensity of care, and rising health care costs.

Over the longer term, net Medicare spending will increase to 5.9% of GDP in 2052, according to CBO's most recent long-term projections. CBO projects that rising health care costs per person will account for two-thirds of the increase in spending on the nation's major health care programs (Medicare, Medicaid, and subsidies for ACA Marketplace coverage) over the next 30 years, and the aging of the population will account for one-third.

Spending on Physician and Other Outpatient Services Accounts for a Growing Share of Medicare Spending

Spending on benefits under each part of Medicare (A, B, and D) increased in dollar terms between 2011 and 2021, but the distribution of total benefit payments by part has changed over time. Spending on Part B benefits, including physician services, hospital outpatient services, physician-administered drugs, and other outpatient services, increased from 41% in 2011 to 48% in 2021, and now accounts for the largest share of total spending on Medicare benefits (Figure 4). The share of total spending on Part A benefits (mainly hospital inpatient services) decreased from 47% to 39%, reflecting a shift from inpatient to outpatient services. Moving forward, Medicare spending on physician services and other services covered under Part B is expected to grow to just over half of total Medicare spending by 2031, while spending on hospital care and other services covered under Part A is projected to decrease further as a share of the total.

Spending on Part D prescription drug benefits has been a roughly constant share of total Medicare spending since the drug benefit began in 2006 (around 12-13%) and is expected to account for a similar share in the coming decade (11% in 2031). This projection does not take into account any savings to Medicare associated with implementation of the prescription drug provisions in the Inflation Reduction Act, which CBO projects will reduce the federal deficit by $237 billion between 2022 and 2031.

Spending on Medicare Advantage Has Grown as a Share of Total Medicare Spending

Another notable change in Medicare spending over the past decade is the increase in payments to Medicare Advantage plans, which are private health plans, such as HMOs and PPOs, that cover all Part A and Part B benefits and typically also Part D benefits. Medicare payments to Medicare Advantage plans for benefits covered under Part A and Part B nearly tripled between 2011 and 2021, from $124 billion to $361 billion—increasing from 26% of total Part A and Part B spending to 47% over this period. These payments are expected to increase to $943 billion in 2031, accounting for nearly 60% of total Part A and B spending that year (Figure 5). Beginning in 2023, Medicare spending on Part A and Part B benefits for beneficiaries in Medicare Advantage will exceed Part A and Part B benefits spending for beneficiaries in traditional Medicare.

Historically, growth in spending on Medicare Advantage is due in large part to steady growth in private plan enrollment. In 2022, 48% of eligible Medicare beneficiaries are enrolled in Medicare Advantage plans, up from 26% in 2011. Based on CBO’s latest Medicare enrollment projections, Medicare Advantage enrollment will increase to 61% of eligible Medicare beneficiaries by 2031.

In addition, Medicare pays more to private Medicare Advantage plans for enrollees than their costs would be in traditional Medicare, on average, and these higher payments have contributed to growth in spending on Medicare Advantage and overall Medicare spending. In 2022, payments to Medicare Advantage plans are estimated to be 104% of what traditional Medicare would have spent on these beneficiaries, on average, according to MedPAC. This percentage is lower than in 2010, when Congress made changes to how Medicare Advantage plans are paid, but it has been trending higher since 2017.

According to the Congressional Budget Office, higher payments to Medicare Advantage plans, relative to traditional Medicare spending, are due to three factors. First, the payment methodology is based on benchmarks that are higher than traditional Medicare spending in half of all U.S. counties. Second, Medicare Advantage enrollees have higher “risk scores” than traditional Medicare beneficiaries in part because plans have a financial incentive to code for diagnoses, which increases the amount they are paid per enrollee. Third, Medicare Advantage plans typically receive higher payments based on their quality-based star ratings ($10 billion in 2022, according to KFF analysis), but these bonus payments do not apply to traditional Medicare.

Administrative Expenses in Traditional Medicare Are Relatively Low, But Higher for Medicare Part D and Medicare Advantage Plans

The overall cost of administering benefits for traditional Medicare is relatively low. In 2021, administrative expenses for traditional Medicare (plus CMS administration and oversight of Part D) totaled $10.8 billion, or 1.3% of total program spending, according to the Medicare Trustees; this includes expenses for the contractors that process claims submitted by beneficiaries in traditional Medicare and their providers.

This estimate does not include insurers’ costs of administering private Medicare Advantage and Part D drug plans, which are considerably higher. Medicare’s actuaries estimate that insurers’ administrative expenses and profits for Part D plans were 8% of total net plan benefit payments in 2021. The actuaries have not provided a comparable estimate for Medicare Advantage plans, but according to KFF analysis, medical loss ratios (medical claims covered by insurers as a share of total premiums income) averaged 83% for Medicare Advantage plans in 2020, which means that administrative expenses, including profits, were 17% for Medicare Advantage plans.

Medicare Spending Grew More Slowly in the Past Decade than in Decades Prior but Faster Growth Is Projected in the Coming Years

Looking at the average annual rate of growth in Medicare spending, both overall and per beneficiary, growth was notably slower in the most recent decade (2010-2020) than in prior decades, and somewhat slower than growth in private health insurance (PHI) per capita spending. For 2020-2030, the Medicare Trustees project that Medicare per capita spending growth will be higher than in the past decade, but on par with growth in private health insurance (PHI) per capita spending (Figure 6).

Growth in Total Medicare Spending

• Between 2010 and 2020, average annual growth in total Medicare spending was 5.9%, down from 9.0% between 2000 and 2010. The influx of younger, healthier beneficiaries since 2011, when the baby boom generation started becoming eligible for Medicare, was a contributing factor in the slower rate of growth in overall Medicare spending in the 2010s. Slower growth in Medicare spending can also be attributed to policy changes made by the ACA, including reductions in Medicare payments to plans and providers and increased revenues, and the Budget Control Act of 2011, which lowered Medicare spending through sequestration that reduced payments to providers and plans by 2%, beginning in 2013 and since extended through 2031.
• Between 2020 and 2030, average annual growth in total Medicare spending is projected to be somewhat higher than between 2010 and 2020 (6.5% vs. 5.9%).

Growth in Medicare Spending Per Person

Prior to 2010, per enrollee spending growth rates were comparable for Medicare and private health insurance. With the recent slowdown in the growth of Medicare spending and the recent expansion of private health insurance through the ACA, the difference in growth rates between Medicare and private health insurance spending per enrollee widened but is expected to be roughly the same over the next decade.

• In the 1990s and 2000s, Medicare spending per enrollee grew at a similar rate to per enrollee spending among people with private insurance: 5.8% and 5.9%, respectively, in the 1990s and 7.4% and 7.0% in the 2000s.
• Between 2010 and 2020, Medicare per capita spending was relatively low, and grew more slowly than private insurance spending, increasing at an average annual rate of 1.9% over these years, while average annual private health insurance spending per capita grew at a rate of 2.8%.
• Between 2020 and 2030, Medicare per capita spending is projected to grow at a faster rate than between 2010 and 2020, on par with average annual growth in per capita private health insurance spending (5.4% vs. 5.3%).

Growth in Per Capita Medicare Spending on Parts A, B, and D

• Between 2010 and 2020, per capita spending on each of the three parts of Medicare (A, B, and D) grew more slowly than in previous decades (Figure 7). For Part D, estimates are based on spending starting in 2006, the first year of the Part D benefit. For example, the average annual growth rate for Part A was 0.5% between 2010 and 2020, down from 4.5% between 2000 and 2010. For Part B, average annual spending grew at 3.2% between 2010 and 2020, down from 7.0% between 2000 and 2010.
• Between 2020 and 2030, Medicare’s actuaries project a higher per capita growth rate for each part of Medicare, compared to growth between 2010 and 2020: 4.5% for Part A (up from 0.5%), 7.2% for Part B (up from 3.2%), and 3.7% for Part D (up from 2.0%). The Medicare Trustees project faster growth in Part B per capita spending due to higher spending on outpatient hospital services and physician-administered drugs, while the projected increase in Part D per capita spending growth is driven by a slowdown in the generic dispensing rate and increased specialty drug use, offset somewhat but not completely by higher manufacturer rebates negotiated by private plans. The projections for Part B and Part D do not take into account any savings associated with implementation of the prescription drug provisions in the Inflation Reduction Act. The Medicare Trustees have not yet updated spending projections to reflect these changes.

How is Medicare Financed?

Funding for Medicare Comes Primarily from General Revenues, Payroll Taxes, and Premiums

Funding for Medicare, which totaled $888 billion in 2021, comes primarily from general revenues (46%), payroll tax revenues (34%), and premiums paid by beneficiaries (15%) (Figure 8). Other sources include taxes on Social Security benefits, payments from states, and interest. The different parts of Medicare are funded in varying ways, and revenue sources dedicated to one part of the program cannot be used to pay for another part.

• Part A, which covers inpatient hospital stays, skilled nursing facility (SNF) stays, some home health visits, and hospice care, is financed primarily through a 2.9% tax on earnings paid by employers and employees (1.45% each). Higher-income taxpayers (more than $200,000 per individual and $250,000 per couple) pay a higher payroll tax on earnings (2.35%). Payroll taxes accounted for 90% of Part A revenue in 2021.
• Part B, which covers physician visits, outpatient services, preventive services, and some home health visits, is financed primarily through a combination of general revenues (73% in 2021) and beneficiary premiums (25%) (and 2% from interest and other sources). Beneficiaries with annual incomes over $97,000 per individual or $194,000 per couple pay a higher, income-related Part B premium reflecting a larger share of total Part B spending, ranging from 35% to 85% (Figure 9).
• Part D, which covers outpatient prescription drugs , is financed primarily by general revenues (74%) and beneficiary premiums (15%), with an additional 11% of revenues coming from state payments for beneficiaries enrolled in both Medicare and Medicaid. Higher-income enrollees pay a larger share of the cost of Part D coverage, as they do for Part B.

Medicare Advantage Is Not Separately Financed

The Medicare Advantage program (sometimes referred to as Part C) does not have its own separate revenue sources. Funds for Part A benefits provided by Medicare Advantage plans are drawn from the Medicare HI trust fund (accounting for 42% of Medicare Advantage spending on Part A and B benefits in 2021). Funds for Part B and Part D benefits are drawn from the Supplementary Medical Insurance (SMI) trust fund. Beneficiaries enrolled in Medicare Advantage plans pay the Part B premium and may pay an additional premium if required by their plan. In 2022, 69% of Medicare Advantage enrollees pay no additional premium.

Assessing Medicare’s Financial Condition

Medicare’s financial condition can be assessed in different ways, including comparing various measures of Medicare spending—overall or per capita—to other spending measures, such as Medicare spending as a share of the federal budget or as a share of GDP, as discussed above, and estimating the solvency of the Medicare Hospital Insurance (Part A) trust fund.

The Medicare Hospital Insurance Trust Fund Faces Solvency Challenges

The solvency of the Medicare Hospital Insurance trust fund, out of which Part A benefits are paid, is one way of measuring Medicare's financial status, though because it only focuses on the status of Part A, it does not present a complete picture of total program spending. The solvency of Medicare in this context is measured by the level of assets in the Part A trust fund. In years when annual income to the trust fund exceeds benefits spending, the asset level increases, and when annual spending exceeds income, the asset level decreases. When spending exceeds income and the assets are fully depleted, Medicare will not have sufficient funds to pay all Part A benefits for the full year.

Each year, Medicare’s actuaries provide an estimate of the year when the asset level is projected to be fully depleted. In the 2022 Medicare Trustees report, the actuaries projected that the Part A trust fund will be depleted in 2028, six years from now. This is a modest improvement from the projection in the 2021 Medicare Trustees report, when the depletion date was projected to be 2026, based primarily on projections of higher revenues from payroll taxes resulting from higher employment and wage growth. Since 1990, the Trustees have projected that the Medicare Part A trust fund will come within six years of depletion six times (Figure 10).

The actuaries estimate that in 2028, Medicare will be able to cover almost all of Part A benefits spending with revenues plus the small amount of assets remaining at the beginning of the year, and just under 90% with revenues alone in 2029 through 2031, once the assets are depleted. Over a longer 75-year timeframe, the Medicare Trustees estimate that it would take either an increase of 0.70% of taxable payroll (from 2.9% to 3.6%) or a 15% reduction in benefit payments to bring the Part A trust fund into balance.

The Solvency of the Part A Trust Fund Is Affected by Several Factors

In addition to legislative and regulatory changes that affect Part A spending (including utilization of services and payments for services provided by hospitals, skilled nursing facilities, and other providers, and for Part A services covered by Medicare Advantage plans) and revenues, Part A trust fund solvency is affected by:

• The level of growth in the economy, which affects Medicare’s revenue from payroll tax contributions: economic growth that leads to higher employment and wages boosts revenue to the trust fund, while an economic downturn can have the opposite effect.
• Overall health care spending trends: higher health care price and cost growth can lead to higher spending for services covered under Medicare Part A, which could hasten the depletion date, while moderation in the growth of prices and costs could slow spending growth.
• Demographic trends: this includes the aging of the population, which is leading to increased Medicare enrollment, especially between 2010 and 2030 when the baby boom generation reaches Medicare eligibility age; a declining ratio of workers per beneficiary making payroll tax contributions, which means lower revenue; and other factors, such as fertility rates and immigration.

While Part A is funded primarily by payroll taxes, benefits for Part B physician and other outpatient services and Part D prescription drugs are funded by general revenues and premiums paid for out of separate accounts in the Supplementary Medical Insurance (SMI) trust fund. The revenues for Medicare Part B and Part D are determined annually to meet expected spending obligations, meaning that the SMI trust fund does not face a funding shortfall, in contrast to the HI trust fund. But higher projected spending for benefits covered under Part B and Part D will increase the amount of general revenue funding and beneficiary premiums required to cover costs for these parts of the program in the future.

Impact of COVID-19 on Medicare Spending and Financing

According to the Medicare Trustees, the COVID-19 pandemic has had a significant impact on Medicare spending and financing, and some effects are expected to continue for several years. In terms of revenues, the pandemic initially resulted in a substantial increase in unemployment that caused a drop in payroll tax revenue to the HI trust fund. Spending was affected by new outlays for COVID-19 treatment, testing, and vaccine administration, plus accelerated and advance payments to providers, but this higher spending was more than offset by a steep reduction in spending on non-COVID services, as utilization dropped sharply in 2020. While utilization picked up again in 2021, it remained lower than expected that year. In addition, beneficiaries who died of COVID-19 had higher costs pre-pandemic than the average Medicare beneficiary, and the lower morbidity among the surviving Medicare population contributed to modestly lower costs in 2020 and 2021, according to the Medicare Trustees.

Moving forward, the Trustees project that the spending effects of the pandemic will not have a large effect on the financial status of the Medicare program beyond 2028. Accelerated and advance payments are expected to be fully repaid by the end of 2022. A rebound in employment since the early days of the pandemic has bolstered payroll tax revenue in the short term, while Medicare spending trends are expected to return to pre-pandemic levels in 2024 as beneficiaries seek care that was deferred in 2020 and 2021, which in fact may lead to more intensive and costly services. The morbidity effect associated with deaths due to COVID-19 is expected to decrease over time and end in 2028.

The Future Outlook

Over the longer term, the Medicare program faces financial pressures associated with higher health care costs, growing enrollment, and an aging population. Growth in Medicare spending places pressure on the federal budget, contributes to the depletion of the Part A trust fund, and results in higher Medicare premiums, deductibles, and cost sharing paid by beneficiaries.

A number of changes to Medicare have been proposed in the past to address Medicare’s fiscal challenges, including options such as raising the age of Medicare eligibility and transitioning Medicare to a premium support system. More recently, Congress passed the Inflation Reduction Act of 2022, which aims to control the growth in Medicare prescription drug spending by requiring the federal government to negotiate drug prices in Medicare and requiring drug manufacturers to pay rebates for drug price increases faster than inflation, among other changes. To sustain Medicare for the long run, policymakers may consider adopting broader changes to the program that could include both changes in payments to health care providers and Medicare Advantage plans or reductions in benefits, and additional revenues, such as payroll tax increases or new sources of tax revenue.

At the same time, proposals that could increase Medicare spending are also being discussed, or have been adopted, including policies related to provider payments and Medicare benefit improvements. For example, the recently-enacted Consolidated Appropriations Act, 2023 includes several Medicare spending provisions, such as a reduction in the scheduled physician payment cut for 2023 from 4.5% to 2%, increases in payments to certain hospitals, an extension of Medicare telehealth coverage through 2024, and improvements in Medicare coverage of mental health services. Spending on these provisions will be offset in part by extending the 2% Medicare payment sequestration, currently set to expire in 2031, partway into fiscal year 2032. In addition, policymakers have expressed interest in other policies that could increase Medicare spending, such as enhancing Medicare’s benefit package by adding coverage of vision, hearing, and dental care, adding an out-of-pocket spending cap to traditional Medicare, making permanent Medicare coverage of telehealth, and strengthening financial protections for low-income beneficiaries.

While the prospects for proposals that would affect Medicare spending and financing over the long term are unknown, evaluating such changes will involve a consideration of their effects on federal expenditures, the Medicare program’s finances, and beneficiaries, health care providers, and taxpayers.

A KFF synthesis of recent studies finds that Medicaid expansion has been beneficial to the finances of hospitals and providers, driving decreases in the share of uninsured patients, increases in Medicaid-covered patients and declines in uncompensated care.

By financing coverage for low-income people who are likely to otherwise be uninsured, Medicaid expansion provides potential economic benefits to the health care providers who provide care to that population. Studies suggest that hospitals experienced higher reimbursements and decreased uncompensated care costs. Studies also find that other providers, including federally qualified health centers and community health centers, experienced increased revenue following expansion.

Some studies find that these economic effects vary by provider type. For example, a few studies find that despite declines in uncompensated care costs, improvements in financial performance were stronger for (or only observed among) rural and small hospitals. A small number of studies suggest that improvements in payer mix and uncompensated care costs at hospitals may have been partially offset by increases in unreimbursed Medicaid care and declines in commercial revenue.

The new KFF analysis, the latest installment in our ongoing effort to document what the research shows about the effects of Medicaid expansion, summarizes 24 studies published between April 2021 and December 2022 on the economic impact of Medicaid expansion on providers. Recent study findings are consistent with previous research in this area.

The findings are particularly relevant given the fiscal stress experienced by Medicaid providers during the coronavirus pandemic, including recent challenges for hospitals as federal relief funds expire. The research also provides context for ongoing policy debates about whether to expand Medicaid in states that have not done so already. State costs also remain a key issue in expansion debates.

Thirty-nine states plus Washington D.C. have adopted Medicaid expansion under the ACA, with the federal government covering 90 percent of the cost and states 10 percent, while 11 states have not.

Prior KFF reports published in 2020 and 2021 reviewed more than 600 studies and concluded that expansion is linked to gains in coverage, improvement in access and health, and economic benefits for states and providers.

In light of the heightened attention to mental health needs and challenges that emerged during the COVID-19 pandemic, policymakers are focusing more attention on strategies to improve access to mental health and substance use disorder (SUD) services generally, and in Medicare specifically. Medicare currently covers mental health and substance use disorder services, including inpatient and outpatient services, and prescription drugs, but patient advocates and others have pushed to strengthen coverage and access to these services. To address concerns about barriers to mental health and substance use disorder care, Congress and the Biden Administration recently adopted changes to Medicare coverage that expand the types of providers that Medicare will reimburse for providing mental health and substance abuse disorder services; relax requirements related to telehealth mental health services; and clarify coverage of partial hospitalization services for mental health treatment.

These FAQs review Medicare coverage of mental health and substance use disorder treatment and cost-sharing requirements, and describe recent policy changes including mental health and substance use disorder provisions in the Consolidated Appropriations Act, 2023, which was enacted on December 29, 2022, and in the 2023 Medicare Physician Fee Schedule Final Rule.

What mental health benefits and substance use disorder benefits does Medicare cover and how much do Medicare beneficiaries pay for these benefits?

Medicare covers a range of mental health and substance use disorder services, both inpatient and outpatient, and Part D plans cover outpatient prescription drugs used to treat these conditions. Medicare Advantage plans are required to cover benefits covered under traditional Medicare and most also cover prescription drugs.

Most of these benefits are subject to cost sharing in both traditional Medicare and Medicare Advantage. Medicare Advantage plans may provide reduced cost sharing compared to traditional Medicare, though most people with traditional Medicare have some kind of supplemental coverage (e.g. Medicaid, employer-sponsored coverage and Medigap) that helps with Medicare cost sharing, though nearly six million people on Medicare do not. Out-of-pocket costs may differ between traditional Medicare and Medicare Advantage plans and vary from one Medicare Advantage plan to another.

Medicare Advantage plans can and do apply cost management tools to mental health and other services, such as prior authorization requirements and limited networks that can restrict beneficiary choice of in-network physicians. (See below section “How are mental health benefits and substance use disorder benefits covered under Medicare Advantage plans?” for more detail.)

Out-of-pocket costs for prescription drugs to treat mental health and other conditions also vary among Part D plans, including stand-alone plans that supplement traditional Medicare and Medicare Advantage plans that cover prescription drugs. Part D plans can also impose cost management tools, such as prior authorization, though they are required to cover all or substantially all drugs in six protected classes, including antidepressants and antipsychotics.

Inpatient Services

Medicare Part A covers inpatient care for beneficiaries who need mental health treatment in either a general hospital or a psychiatric hospital. For inpatient stays in a psychiatric hospital, Medicare coverage is limited to up to 190 days of hospital services in a lifetime.

Beneficiaries who are admitted to a hospital for inpatient mental health treatment are subject to the Medicare Part A deductible of $1,600 per benefit period in 2023. Part A also requires daily copayments for extended inpatient hospital stays. For extended hospital stays, beneficiaries pay a $400 copayment per day (days 61-90) and $800 per day for lifetime reserve days in 2023.

Outpatient Services

Medicare Part B covers one depression screening per year, a one-time “welcome to Medicare” visit, which includes a review of risk factors for depression, and an annual “wellness” visit, where beneficiaries can discuss their mental health status. Part B also covers individual and group psychotherapy with doctors or with certain other licensed professionals, depending on state rules, family counseling if the main purpose is to help with treatment, psychiatric evaluation, medication management, and partial hospitalization.

Partial hospitalization is a more structured program of individualized and multidisciplinary outpatient psychiatric treatments that is more intensive than outpatient treatment in a doctor’s or therapist’s office, and is an alternative to an inpatient stay. As part of the Consolidated Appropriations Act, 2023, beginning January 1, 2024, the definition of partial hospitalization under Medicare will be modified to clarify that it is for individuals who have a need for these services for a minimum of 20 hours per week, which must be confirmed by a physician once a month. Also beginning in 2024, Medicare will cover intensive outpatient services, which are the same as partial hospitalization services but only for beneficiaries who need these services for a minimum of 9 hours per week, which must be confirmed by a physician every other month.

Part B also covers outpatient services related to substance use disorders. These include opioid use disorder treatment services, such as medication, counseling, drug testing, and individual and group therapy. Medicare covers one alcohol misuse screening per year, and for beneficiaries determined to be misusing alcohol, four counseling sessions per year. Medicare also covers up to 8 tobacco cessation counseling sessions in a 12-month period, a change made by the Affordable Care Act.

Medicare also covers some telehealth services, including for mental health and substance use disorder services as well as non-mental health related services, on both a permanent basis and on a temporary basis as part of the COVID-19 public health emergency. Medicare Advantage plans also have additional flexibilities for providing telehealth benefits (See below sections “How has expanded telehealth coverage affected access to mental health benefits and substance use disorder benefits during the COVID-19 pandemic?”, “What Medicare-covered telehealth mental health and substance use disorder benefits have been extended beyond the public health emergency?” and “How are mental health benefits and substance use disorder benefits covered under Medicare Advantage plans?” for more detail).

For most outpatient services covered under Part B, a deductible of $226 deductible in 2023 applies, and 20 percent coinsurance that applies to most services, including physician visits. However, some specific Part B services have different cost-sharing amounts that depend in part on whether the provider accepts “assignment” (Table 1). Accepting assignment on all Medicare claims for all of a provider’s Medicare patients means that a provider agrees to accept Medicare’s fee schedule amounts as payment-in-full for all Medicare-covered services.

Prescription Drugs

The Medicare Part D program provides an outpatient prescription drug benefit to people on Medicare who enroll in private plans, including stand-alone prescription drug plans (PDPs) or Medicare Advantage prescription drug plans (MA-PDs). Medicare Part D prescription drug plans cover retail prescription drugs related to mental health and are required to cover all or substantially all antidepressants, antipsychotics, and anticonvulsants (such as benzodiazepines), as each is one of the six protected classes of drugs in Part D.

Part D plans are permitted to impose prior authorization and step therapy requirements for beneficiaries initiating therapy (i.e., new starts) for each of these protected drug classes. Coverage of other prescription drugs is based on an individual plan’s formulary, and depending on a plan’s formulary, beneficiaries can also be subject to prior authorization, step therapy, and quantity limits.

Medicare beneficiaries with Part D coverage face cost-sharing amounts for covered drugs and may pay an annual deductible ($505 in 2023) and a monthly premium. For example, most Part D enrollees pay less than $10 for generic drugs, but many pay $40-$100 (or coinsurance of 40%-50%) for brand-name drugs. Beneficiaries with low incomes and modest assets are eligible for assistance with Part D plan premiums and cost sharing. A majority of beneficiaries receiving the Part D low-income subsidy qualify for full benefits and pay no Part D premium or deductible and modest copayments of $1.45 for generic drugs and $4.30 for brand-name drugs in 2023.

Medicare also covers a more limited set of prescription drugs for mental health and substance use disorders under Part B, which are typically administered in outpatient settings such as physicians’ offices and hospital outpatient departments. These drugs are also subject to the Part B deductible and 20% cost sharing.

Which health providers can bill Medicare directly for mental health and substance use disorder services, and how much does Medicare pay for these services?

Medicare provides coverage and reimbursement for mental health services provided by psychiatrists or other doctors, clinical psychologists, clinical social workers, clinical nurse specialists, nurse practitioners, and physician assistants.

Additionally, beginning in 2023, Medicare allows licensed professional counselors, licensed marriage and family therapists, and other practitioners to provide mental health or substance use disorder services under the general supervision of the billing physician or non-physician practitioner, rather than under their direct supervision due to a change made in the 2023 Medicare Physician Fee Schedule Final Rule. (Prior to 2023, Medicare did not provide reimbursement for mental health services provided by licensed professional counselors and licensed marriage and family therapists, unless the service was provided under the direct supervision of a billing physician). In practice, this means that auxiliary staff such as licensed professional counselors and licensed marriage and family therapists do not need the continuous, direct physical presence of supervising physicians or non-physician practitioners to furnish these services and get reimbursement from Medicare.

Further, in changes adopted as part of the Consolidated Appropriations Act, 2023, beginning January 1, 2024, Medicare will directly reimburse marriage and family therapists as well as mental health counselors, such as certified or licensed clinical professional counselors, or professional counselors, for the provision of mental health services. (These types of providers are not currently allowed to bill Medicare to provide these services.)

Medicare fees vary by type of provider, according to the Medicare Physician Fee Schedule (Table 2).

Are psychiatrists accessible to Medicare beneficiaries?

The majority of physicians, both primary care and specialists, report taking new Medicare patients, similar to the share who take new privately insured patients. Psychiatrists, however, are less likely than other specialists to take new patients, whether covered by Medicare or private insurance. According to a KFF analysis, 60% of psychiatrists are accepting new Medicare patients, which is 21 percentage points lower than the share of physicians in general/family practice accepting new patients (81%).

In addition, psychiatrists are more likely than other specialists to “opt out” of Medicare altogether. Providers who opt out of Medicare do not participate in the Medicare program and instead enter into private contracts with their Medicare patients, allowing them to bill their Medicare patients any amount they determine is appropriate. Overall, 1% of all non-pediatric physicians have formally opted-out of the Medicare program, with opt-out rates highest among psychiatrists: 7.5% of psychiatrists opted out in 2022. Psychiatrists account for 42% of the 10,105 physicians opting out of Medicare in 2022.

The relatively high rate of psychiatrists not taking new Medicare patients, combined with relatively high opt out rates, could pose access issues for Medicare beneficiaries who need mental health services. The extent to which access problems may exist, including for other mental health provider types, is unknown. (For additional information on access to providers in Medicare Advantage plans, see “Provider Networks” in the section below: “How are mental health benefits and substance use disorder benefits covered under Medicare Advantage plans?”)

How has expanded telehealth coverage affected access to mental health benefits and substance use disorder benefits during the COVID-19 pandemic?

Prior to the COVID-19 pandemic, Medicare coverage of telehealth services was very limited. Before the COVID-19 public health emergency, telehealth services were generally available only to beneficiaries in rural areas originating from a health care setting, such as a clinic or doctor’s office. One exception, however, was for individuals diagnosed with a substance use disorder for the purposes of treatment of such disorder or co-occurring mental health disorder, where the geographic and originating site (i.e., the health care setting where the beneficiary is located) restrictions were lifted as of July 1, 2019, based on changes included in the SUPPORT Act.

During the COVID-19 public health emergency and extended through December 31, 2024 (based on changes in the Consolidated Appropriations Act, 2023), beneficiaries in any geographic area can receive telehealth services, and can receive these services in their own home, rather than needing to travel to an originating site. During the first year of the pandemic, 28 million Medicare beneficiaries used telehealth services, a substantial increase from the 341,000 who used these services the prior year. Telehealth accounted for 43% of all behavioral health services during the first year of the pandemic, including individual therapy, group therapy, and substance use disorder treatment, but just 13% of all office visits.

Medicare covers telehealth services under Part B, so beneficiaries in traditional Medicare who use these services are subject to the Part B deductible of $226 in 2023 and 20% coinsurance. The HHS Office of Inspector General has provided flexibility for providers to reduce or waive cost sharing for telehealth visits during the COVID-19 public health emergency, although there are no publicly-available data to indicate the extent to which providers may have done so. Some Medicare Advantage plans reduced or waived cost sharing during the public health emergency, though these waivers are likely no longer in effect.

What Medicare-covered telehealth mental health and substance use disorder benefits have been extended beyond the public health emergency?

Medicare has made permanent some changes to telehealth coverage related to mental health services. Based on changes in the Consolidated Appropriations Act, 2021, as implemented under the 2022 Medicare Physician Fee Schedule Final Rule, Medicare has permanently removed geographic restrictions for telehealth mental health services and permanently allows beneficiaries to receive those services at home. Also under the 2022 Physician Fee Schedule final rule, Medicare now permanently covers audio-only visits for mental health and substance use disorder services when the beneficiary is not capable of, or does not consent to, the use of two-way, audio/video technology.

While Medicare does impose some in-person requirements in tandem with coverage of these mental health services through telehealth, these requirements have been delayed as part of the Consolidated Appropriations Act, 2023 until January 1, 2025. Once the requirements take effect, in order for a beneficiary to receive telehealth mental health services, there must be an in-person, non-telehealth service with a physician within six months prior to the initial telehealth service, and an in-person, non-telehealth visit must be furnished at least every 12 months for these services, though exceptions can be made due to beneficiaries’ circumstances. These requirements for periodic in-person visits (in conjunction with telehealth services) apply to treatment of mental health disorders other than treatment of a diagnosed substance use disorder.

How are mental health benefits and substance use disorder benefits covered under Medicare Advantage plans?

Medicare Advantage plans are required to cover all Medicare Part A and Part B services, but cost-sharing requirements for beneficiaries enrolled in Medicare Advantage vary across plans. Medicare Advantage plans can require provider referrals and impose prior authorization for Part A and B services, including mental health and substance use disorder services. Medicare Advantage plans typically have networks of providers, which can restrict beneficiary choice of in-network physicians and other providers, although plans must meet network adequacy requirements for the number of providers and facilities that are available to beneficiaries. Medicare Advantage plans also have different flexibilities for telehealth benefits than under traditional Medicare.

Cost Sharing for Medicare-Covered Mental Health Benefits

Medicare Advantage plans have the flexibility to modify cost sharing for most Part A and B services, subject to some limitations. For example, Medicare Advantage plans often charge daily copayments for inpatient hospital stays starting on day 1, in contrast to traditional Medicare, where there is a deductible and no copayments until day 60 of a hospital stay. Medicare Advantage enrollees can be expected to face varying costs for a hospital stay depending on the length of stay and their plan’s cost-sharing requirements.

Prior Authorization and Referrals

Medicare Advantage plans can require referrals and prior authorization for Part A and B services, including mental health and substance use disorder services. In 2022, virtually all enrollees (99%) are in plans that require prior authorization for some services, including for inpatient stays in a psychiatric hospital (94%), partial hospitalization (92%), opioid treatment program services (85%), mental health specialty services (therapy with other mental health providers besides psychiatrists; 85%), psychiatric services (therapy with a psychiatrist; 85%), and outpatient substance abuse services (83%) (Figure 1).

To address concerns related to the use of prior authorization in Medicare Advantage, CMS released a proposed rule in December 2022 that would institute an electronic prior authorization process in Medicare Advantage and increase the speed at which Medicare Advantage plans must respond to prior authorization requests, which would apply both to mental health and non-mental health related services.

Another proposed rule issued by CMS in December 2022 would clarify the coverage criteria Medicare Advantage plans can use when making prior authorization determinations, including that they follow traditional Medicare coverage guidelines when making medical necessity determinations, and require that a prior authorization approval remain valid for a full course of treatment, proposals which would apply to both mental health and non-mental health related services.

Provider Networks

Unlike in traditional Medicare, where Medicare beneficiaries can see any provider who accepts Medicare, beneficiaries enrolled in Medicare Advantage plans are limited to receiving care from providers in their network or must pay more to see out-of-network providers (in most cases). To ensure that enrollees have adequate access to providers, Medicare Advantage plans are required to meet network adequacy standards, which include a specified number of physicians and other providers, along with hospitals, within a particular driving time and distance of enrollees.

Currently, Medicare Advantage plans are required to meet network adequacy requirements for two mental health specialty types: psychiatry and inpatient psychiatric facility services. However, prior KFF analysis showed that access to psychiatrists has been more restricted than for any other physician specialty: on average, plans included less than one-quarter (23%) of the psychiatrists in a county, and more than one-third (36%) of the Medicare Advantage plans included less than 10 percent of the psychiatrists in their county. Data are not available on network inclusion of other types of mental health providers, such as clinical psychologists and clinical social workers.

CMS has proposed to add three new provider specialty types or categories to Medicare Advantage network adequacy requirements: (1) clinical psychology, (2) clinical social work, and (3) prescribers of medication for Opioid Use Disorder.

Telehealth

As of 2020, Medicare Advantage plans have been permitted to include costs associated with telehealth benefits (beyond what traditional Medicare covers) in their bids for basic benefits. The above-mentioned geographic and originating site limitations do not apply in Medicare Advantage plans, which have had flexibility to offer additional telehealth benefits outside of the public health emergency, including telehealth visits provided to enrollees in their own homes and services provided to beneficiaries residing outside of rural areas. In 2022, 98% of Medicare Advantage enrollees in individual plans had a telehealth benefit. During the first year of the COVID-19 pandemic, 49% of Medicare Advantage enrollees used telehealth services.

Do mental health and substance use disorder parity laws apply to Medicare?

Prior to 2010, Medicare beneficiaries paid a higher coinsurance rate (50%) for outpatient mental health services than for other outpatient services covered under Part B (20%). The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) phased in parity for cost sharing for all outpatient services covered under Part B between 2010 and 2014, so that as of 2014, cost sharing for outpatient mental health services is the same as for other Part B services.

Federal parity laws, including the Mental Health Parity Act of 1996 and the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), do not apply to Medicare, however. The Mental Health Parity Act of 1996 requires parity in annual and aggregate lifetime dollar limits for mental health benefits and medical or surgical benefits in large groups plans, but not in Medicare. The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which expanded on the 1996 law, extends parity to substance use disorder treatments and prevents certain health plans from making mental health and substance use disorder coverage more restrictive than medical or surgical benefits, but also does not apply to Medicare. In 2016, some of these parity rules were applied to Medicaid Managed Care Organizations (MCOs) but not to Medicare benefits that are provided by Medicaid MCOs to beneficiaries dually enrolled in Medicare and Medicaid.

Because MHPAEA does not apply to Medicare, some mental health benefits can be more restricted than other health services. Some stakeholders have asserted that this lack of parity is reflected in the lifetime limit of 190 days on inpatient hospitalizations in psychiatric hospitals, because Medicare does not have any other lifetime limits on comparable inpatient services.

What policy approaches have been proposed related to coverage of mental health benefits and substance use disorder benefits in Medicare?

As part of the President’s FY 2023 budget, the Biden Administration proposed a number of changes to enhance coverage of and access to mental health services, including but not limited to Medicare. These include, for example: applying the Mental Health Parity and Addiction Equity Act to Medicare, requiring Medicare to cover three behavioral health visits without cost sharing, and authorizing licensed professional counselors and marriage and family therapists to bill Medicare directly. As noted above, this last proposal was incorporated in the Consolidated Appropriations Act, 2023 and will go into effect January 1, 2024.

During the 117^th Congress, policymakers in the House passed legislation to improve access to mental health services in Medicare by establishing an electronic prior authorization process in Medicare Advantage that would have provided real-time decisions on the status of a request, and would have applied both to mental health and non-mental health related services. A similar proposal was included in a CMS December 2022 proposed rule. Some lawmakers have also proposed to remove the 190-day lifetime limit on inpatient psychiatric hospital services under Medicare.

Because many of these proposals would increase access to mental health and substance use disorder treatment, there would likely be an increase in costs to the Medicare program. For example, eliminating the 190-day lifetime limit on psychiatric hospital services is estimated to increase Medicare Part A spending by $3 billion over 10 years, according to CBO. Other changes, such as requiring Medicare to cover three behavioral health visits without cost sharing is estimated to increase Part B spending by $1.4 billion over 10 years.

About 5 million uninsured people across the country could get coverage through an Affordable Care Act Marketplace health plan with virtually no monthly premium if they enroll soon, a new KFF analysis finds.

In most states, open enrollment runs through January 15, with tax credits available to help eligible low- and middle-income people afford coverage. Those tax credits would offset the full monthly premium for the lowest cost plan or plans for millions of uninsured residents, the analysis finds.

Free or nearly-free premium silver plans with very low deductibles are available to all Marketplace subsidy-eligible enrollees with incomes up to 150% of poverty ($20,385 for individuals or $41,625 for families of four enrolling in 2023).  In some cases, there could be a small extra charge – usually no more than a few dollars per month – for non-essential benefits covered by the plan.

In some parts of the country, people with incomes above 150% of poverty can also get free or nearly free silver plans, with somewhat less generous cost-sharing reductions. For example, as can be seen in the interactive map, a 40-year-old making $25,000 per year (184% of poverty) could get a free or nearly free silver plan with a smaller cost-sharing reduction in about 8% of counties, excluding counties where individuals are eligible for Medicaid or Basic Health Program (BHP) plans. Less generous bronze plans with higher deductibles are often available without a premium at even higher incomes.

KFF has an online calculator that estimates the tax credits and premiums available to individuals and families based on their age, income, and location, and maintains more than 300 frequently asked questions about open enrollment, the health insurance marketplaces and the ACA.

Two new KFF analyses examine how state Medicaid programs have utilized telehealth to increase access to behavioral health care during the pandemic and the strategies they are employing to address workforce shortages in behavioral health.

The studies come as the 2022 Bipartisan Safer Communities Act legislation requires the federal government to issue telehealth guidance by the end of 2023, and the omnibus spending bill that Congress passed last month included several provisions affecting behavioral health telehealth and workforce issues. They include requirements or funding related to provider directories, crisis services, virtual peer mental health supports, increases in new psychiatry residency positions, and expansions in access to providers who prescribe certain medications for opioid use disorder.

Both new analyses draw their findings from KFF’s Behavioral Health Survey of state Medicaid programs, fielded as a supplement to our annual budget survey of Medicaid officials.

The first study finds that states’ expansion of telehealth has taken a variety of forms, including the addition of audio-only coverage of behavioral health services; the expansion of the types of behavioral health services that can be delivered via telehealth (e.g., group therapy or medication-assisted treatment); and the expansion of provider types that may be reimbursed for telehealth delivery of behavioral health services (e.g., marriage and family therapists, addiction specialists, and peer specialists).

States reported high utilization of telehealth for behavioral health care across all or most populations served by Medicaid. Some states found that utilization was higher in rural areas, among younger enrollees, or among White individuals. Utilization has declined from peak levels but remains higher than before the pandemic. Most states report that they are likely to keep many of the pandemic-driven telehealth policy expansions in place.

Even as the pandemic exacerbated mental health and substance use issues among the public, documented workforce challenges raise barriers to care, in Medicaid and beyond. Nearly half of the US population – 47 percent, or 158 million people – live in a mental health workforce shortage area.

Workforce challenges are widespread and go beyond Medicaid, but shortages may be worsened in Medicaid, particularly given low participation rates among mental health providers.

The second KFF analysis finds that some state Medicaid programs are implementing strategies to address the behavioral health workforce shortage, including:

• Increasing provider reimbursement rates—two-thirds of responding states reported rate increases, which may encourage providers to participate in Medicaid.
• Extending the workforce by reimbursing for new provider types, loosening restrictions on in-person requirements, and targeting outreach to recruit new providers.
• Reducing administrative burdens though steps that may include streamlining documentation, centralizing enrollment processes, and asking providers for their thoughts on Medicaid’s administrative process.
• Incentivizing provider participation through the adoption of measures such as prompt payment policies and loan repayment.

For more data and analyses about behavioral health, telehealth and Medicaid, visit kff.org

The pandemic has exacerbated mental health and substance use issues and 90% of Americans believe the nation is in the midst of a mental health crisis. Despite increases in need, data show that treatment rates across all payers are low. Documented workforce challenges contribute to barriers in access to care and nearly half of the US population – 47% or 158 million people – living in a mental health workforce shortage area. Behavioral health conditions (i.e. mental health and substance use disorders) are most prevalent in Medicaid enrollees, with data from 2020 showing that approximately 39% of Medicaid enrollees were living with a mental health or substance use disorder. Workforce challenges are widespread and go beyond Medicaid, but shortages may be exacerbated in Medicaid. On average, only 36% of psychiatrists accept new Medicaid patients – lower compared to other payers and compared to rates for physicians overall (71%). Even when providers accept Medicaid, they may only take a few patients or may not be presently taking new Medicaid patients. There is attention at the federal level to address workforce shortages—and states are also taking action to address these issues for Medicaid enrollees and more broadly. The Consolidated Appropriations Act passed in December 2022 authorized additional provisions to address workforce shortages, including new psychiatry residency positions, removal of additional requirements for providers who want to prescribe certain medications for opioid use disorder (OUD), requirements for improved Medicaid provider directories, and new funds that can be used toward workforce initiatives for peer support providers.

We surveyed state Medicaid officials about their state’s strategies for addressing behavioral health workforce shortages that were in place in state fiscal year (FY) 2022 or implemented/planned for FY 2023. 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, but response rates varied by question.

State strategies to address the behavioral health workforce shortage fall into four key areas: increasing rates, reducing burden, extending workforce, and incentivizing participation. We asked states about their strategies to address behavioral health workforce shortages. Nearly all states indicated using at least one specified strategy to increase behavioral health workforce, with almost half of states endorsing at least one strategy in all four key areas. This issue brief describes these four categories of behavioral health workforce strategies and summarizes state Medicaid program activity in each area.

Increasing Reimbursement Rates

Gaps in access to certain providers, especially psychiatrists, are an ongoing challenge in Medicaid and often in the broader health system due to overall provider shortages and geographic maldistribution of behavioral health providers. Lower Medicaid payment rates (relative to other payers) as well as disparities in pay between physical and mental health providers could limit participation in Medicaid and further exacerbate existing workforce shortages. Psychiatrists, for example, receive lower Medicaid reimbursement than primary care providers for similar services. States have considerable flexibility to set provider payment rates in fee-for-service. Managed care plans, which now serve most Medicaid beneficiaries, are responsible under their contracts with states for ensuring adequate provider networks and setting rates to providers, but states have several options to ensure that rate increases are passed to the providers that contract with managed care organizations (MCOs). The American Rescue Plan Act (ARPA) gave states temporary funding (primarily through an increase in the Medicaid match rate for home and community based services (HCBS)) to increase certain provider rates or provide payments to attract or retain workers. COVID-19 Medicaid public health emergency (PHE) authorities gave states additional flexibility to adopt temporary rate increases.

To attract or retain Medicaid behavioral health professionals, nearly two-thirds of responding states (28 of 44) implemented fee-for-service (FFS) rate increases in FY 2022 or plan to do so in FY 2023 (Figure 1). Of these, 19 states reported rate increases in FY 2022 and 23 states reported plans to increase rates in FY 2023. Sixteen states reported no rate increases for 2022 and 2023.

Many states report the use of ARPA HCBS funds to temporarily increase behavioral health provider rates. For example, behavioral health providers in Ohio have been approved to receive a one-time payment equal to 10% of claims paid in FY 2021. In some states, rate increases were targeted to specific provider types, such as increases to residential level of care for SUD or increases for applied behavioral analysts. Other states implemented increases that were more widespread. For example, the state of Oregon directed its Medicaid coordinated care organizations to increase the rates of behavioral health providers: a 30% increase for providers who receive 50% or more of their revenue from Medicaid; 15% increase for providers who receive less than 50% Medicaid revenue; and additional differentials for certain types of care (such as culturally or linguistically specific services). Missouri and Oklahoma are increasing some provider rates to be more in line with Medicare rates. In most states that contract with MCOs, states reported that they would require MCOs to implement the FFS rate increases (for example, through a state-directed payment). A smaller share of MCO states do not require, but may encourage, MCOs to implement FFS rate increases.

Extending the Workforce

Given the substantial behavioral health workforce shortage, many state strategies focus on options that extend the workforce such as reimbursing for new provider types, adding provider types that can bill without a supervising practitioner, loosening restrictions on in-person requirements (such as telehealth or interprofessional codes), or reimbursing for care delivered by trainees or the license-eligible workforce. Each state has its own set of laws and regulations that set standards and specify the scope of practice for different provider types. Medicaid agencies have flexibility to decide which types of providers and services are eligible for reimbursement, as well as the settings in which those services must be provided, though there may be some variation across MCOs.

Nearly all responding states reported they had at least one strategy in place or planned for FY 2022/2023 to expand the workforce, such as extending the types of providers that could bill for services, using inter-professional consultation codes, or engaging in outreach efforts to recruit new providers (Figure 3). Most states with MCOs reported that requirements in FFS were also required for MCOs. Adding peer or family specialists as providers was the most commonly reported strategy for expanding the workforce. In addition, some states reported extending direct reimbursement privileges to other types of mental health practitioners. For example, New Jersey now includes licensed clinical social workers as a type of provider that can bill independently. Nearly two-thirds of responding states reimburse services delivered by individuals who are license-eligible and practicing under supervision as of FY 2022. Less common strategies included Medicaid reimbursement for inter-professional consultations and targeted recruitment efforts, with around one-third of reporting states having either of these strategies in place as of FY 2022. Interprofessional consultation codes can extend the workforce by allowing general providers to be reimbursed for consultations with specialists. For example, with this code, a rural primary care provider could get reimbursed for a consultation with a psychiatrist to discuss medication management for a patient with a serious mental illness. State interest in interprofessional consultations may increase following recent CMS guidance stating that interprofessional consultation can be covered as a distinct service.

Telehealth may also address behavioral health workforce shortages and increase access to care. States have broad authority to cover telehealth in Medicaid without federal approval. To increase health care access and limit risk of viral exposure during the pandemic, all 50 states and DC expanded coverage and/or access to telehealth services in Medicaid, including expansions aimed at increasing access to telehealth delivery of behavioral health care. As of July 2021, most states reported wide coverage of telehealth services in both FFS and managed care programs. In FY 2022, more than three-quarters of states reported that behavioral health services were among those with the highest utilization. In the current survey, the state of Nebraska noted that telehealth was the most effective strategy for addressing its behavioral health workforce challenges.

Reducing Administrative Burden

Provider administrative burden refers to a wide range of administrative activities and can include prior authorization, lengthy forms or documentation requirements, unclear processes to navigate, lengthy credentialling process, and unclear reasons for denials or auditing. Research indicates that administrative burden can impede provider insurance acceptance, particularly if the administrative burdens are disproportionate for Medicaid relative to other payers. Providers contracting with multiple MCOs may notice that administrative requirements and processes vary between MCOs due to the lack of standardization at the state level. Varying administrative burdens may be particularly challenging for smaller behavioral health providers/organizations. Thus, addressing administrative burdens could reduce time associated with unbillable provider time and resources and result in higher rates of Medicaid acceptance.

About three-quarters of responding states reported at least one strategy in place or planned for FY 2022/2023 to reduce provider administrative burden both in FFS and/or MCOs (Figure 4). States most frequently reported seeking behavioral health provider feedback on administrative processes, followed by implementing centralized or standardized credentialling. Notably, multiple states reported plans to implement centralized or standardized provider credentialing in FY 2023, suggesting growth in the adoption of this strategy. Somewhat fewer states reported standardized prior authorization, treatment plan forms, or initial number of units or days for prior approved services.

Notably, the authority of state Medicaid programs to independently reduce administrative burden may vary by state, with some Medicaid programs having this authority independent of other state agencies, and others sharing it. As an example, one state noted that their state's behavioral health authority also regulates documentation, so efforts to streamline documentation require collaboration between the two agencies.

Incentivizing Participation

Delays in reimbursement have been shown to reduce provider participation in Medicaid, leading some Medicaid agencies to adopt prompt payment policies to incentivize provider participation (in addition to federal prompt pay requirements). In North Carolina, for instance, health plans must notify providers within 18 calendar days of any additional information needed to process a claim and they must pay for approved clean claims within 30 calendar days. Some states may choose to use financial incentives to encourage providers to participate in integrated physical and behavioral health systems, with some incentives aimed at increasing behavioral health screenings or developing the workforce. Financial incentives for integrated care may result in more facilities providing behavioral health care. Provider participation may also be encouraged through student loan repayment programs or other efforts to grow the workforce.

Most states reported prompt payment policies in place in FY 2022 or planned for FY 2023, but fewer reported financial incentives for integrated behavioral health care (Figure 5). As of FY 2022, about two-thirds of reporting states have prompt payment policies in place in FFS and/or MCOs. Fewer states reported providing financial incentives to providers to participate in physical and behavioral health integration, with less than one-fifth of responding states reporting doing so for FFS and/or MCOs in FY 2022.

Some states reported strategies to grow the workforce or to create new training opportunities, including efforts such as student loan repayment, outreach, and clinical supervision. For example:

• Massachusetts is leveraging various funding streams to implement student loan repayment programs in exchange for four years of service in a community-based health care setting; increase family nurse practitioner residency slots; and support peer specialist training to increase the number of certified peers.
• Washington launched a campaign to increase interest in behavioral health careers, as well as a pilot and training program to encourage behavioral health providers to increase internships in FY 2022.

Looking Ahead

State Medicaid program efforts to bolster the behavioral health workforce track with continued efforts at the federal level. In December 2022, Congress passed the Consolidated Appropriations Act, which authorized the funding for at least 100 new residency positions dedicated to psychiatry. Additionally, provisions in the Act will substantially increase the number of providers authorized to prescribe buprenorphine for the treatment of OUD by eliminating additional administrative requirements to prescribe buprenorphine to patients with OUD. The Act will also require additional training on treating and managing patients with OUD or SUD for all prescribers of controlled substances. Other relevant provisions include grants for mental health peer support providers and requirements to improve the accuracy and usability of Medicaid provider directories, which have been shown to be particularly inaccurate for mental health. A number of these provisions were included in bipartisan legislative drafts produced by the Senate Finance Committee.

Telehealth can be an important component of facilitating access to care for Medicaid enrollees, particularly the nearly four in ten enrollees with behavioral health needs (mental health conditions and/or substance use disorder (SUD)). During the COVID-19 pandemic, states took advantage of broad authority to expand Medicaid telehealth policies, resulting in high telehealth utilization across populations. In particular, states report that telehealth has helped maintain and expand access to behavioral health care during the pandemic. Indeed, in state fiscal year (FY) 2022, behavioral health, especially mental health, remained a top service category with high telehealth utilization among Medicaid enrollees. Similarly, CMS data indicates that behavioral health services delivered via telehealth increased dramatically during the pandemic; this finding is consistent with other analysis of outpatient visits (including but not limited to Medicaid patients). However, CMS also notes that this increase was not enough to fully offset the decline in the rate of in-person utilization of mental health outpatient services.

Given ongoing provider workforce challenges that present barriers to enrollees’ access to behavioral health care, Medicaid telehealth policy may continue to serve as an important tool for extending the workforce and facilitating improved access to behavioral health care, even beyond the COVID-19 pandemic. The 2022 Bipartisan Safer Communities Act requires CMS to issue guidance on Medicaid and telehealth by the end of 2023. The Consolidated Appropriations Act passed in December 2022 authorized additional telehealth provisions, including requirements or funding related to provider directories, crisis services, and virtual peer mental health supports. In the future, Congress could pass additional legislation suggested in a Senate Finance Committee draft on mental health and telehealth.

Against this backdrop of state and federal policy activity, KFF surveyed state Medicaid officials about policies and trends related to telehealth delivery of behavioral health services. 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, but response rates varied by question. This issue brief utilizes this survey data to answer three key questions:

• How have states expanded behavioral health telehealth policy in response to COVID-19?
• What trends have states observed in behavioral health telehealth utilization?
• What are key issues to watch looking ahead?

How have states expanded behavioral health telehealth policy in response to COVID-19?

States have broad authority to cover telehealth in Medicaid without federal approval. Prior to the pandemic, the use of telehealth in Medicaid was becoming more common; in particular, most states offered some coverage of behavioral health services delivered via telehealth, and the majority of telehealth utilization was for behavioral health services and prescriptions. However, Medicaid policies regarding allowable services, providers, and originating sites varied widely, and telehealth payment policies were unclear in many states. To increase health care access and limit risk of viral exposure during the pandemic, all 50 states and DC expanded coverage and/or access to telehealth services in Medicaid. We asked states to indicate specific behavioral health Medicaid policy actions taken to expand telehealth in response to COVID-19 and any implemented or planned changes to these policies.

Nearly all responding states took at least one specified Medicaid policy action to expand access to behavioral health care via telehealth (Figure 1). States most commonly reported adding audio-only coverage of behavioral health services, which can help facilitate access to care, especially in rural areas with broadband access challenges and for older populations who may struggle to use audiovisual technology. Also, nearly all states reported expanding behavioral health services allowed to be delivered via telehealth, such as to newly allow telehealth delivery of group therapy or medication-assisted treatment (MAT). Many states noted that virtually all behavioral health services were eligible for telehealth delivery during the pandemic. Finally, most states reported expanding the provider types that may be reimbursed for telehealth delivery of behavioral health services, such as to allow specialists with different licensure requirements (e.g. marriage and family therapists, addiction specialists, and peer specialists). A small number of states noted additional behavioral health Medicaid policy actions beyond those specified; for example, Washington reporting providing technology to enrollees and providers to improve access to behavioral health care during the pandemic.

As of July 2022, states were more likely to allow audio-only coverage of behavioral health services compared to other services. As reported on KFF’s 2022 Medicaid budget survey, nearly all states added or expanded audio-only telehealth coverage in Medicaid in response to the COVID-19 pandemic. As of July 1, 2022, a majority of states reported providing audio-only coverage (at least sometimes) across service categories, with mental health and SUD services the most frequently covered categories (Figure 2).

Many states reported permanently adopting some or all of these behavioral health Medicaid telehealth policy expansions. Consistent with responses to KFF’s 2022 Medicaid budget survey, many states reported permanent (i.e. non-emergency) adoption of telehealth policy expansions that were initially enacted during the pandemic on a temporary basis. In particular, states frequently noted that all or most expansions of behavioral health providers and/or services allowed for telehealth would be maintained after the public health emergency. However, some states also reported limiting or adding guardrails to pandemic-era behavioral health telehealth flexibilities. Most commonly, states reported that they would limit coverage of audio-only telehealth for behavioral health services, consistent with concerns about the quality of audio-only telehealth reported on the budget survey.

What trends have states observed in behavioral health telehealth utilization?

To better understand the impacts of behavioral health telehealth policy changes during the pandemic, we asked states to indicate whether they monitor behavioral health telehealth utilization in Medicaid and, if so, to report utilization trends by geography, demographics, and other factors.

Nearly all responding states monitored utilization of behavioral health services delivered via telehealth in FY 2022 or plan to begin doing so in FY 2023 (Figure 3). Telehealth utilization data can help states assess the impacts of expanded telehealth policy. These assessments may inform future quality and other analyses. Some states that already monitor behavioral health telehealth utilization reported future plans to increase this monitoring and/or to stratify utilization data by additional demographic or other factors.

Many states reported high utilization of telehealth for behavioral health care across all or most Medicaid populations, though some states noted utilization trends among certain subgroups of Medicaid enrollees, such as:

• Geographic trends, with states most commonly reporting particularly high behavioral health telehealth utilization in rural areas compared to urban areas. Telehealth could be an important tool for facilitating access to behavioral health care for Medicaid enrollees in rural areas with fewer provider and hospital resources.
• Demographic trends, which were most commonly captured by race/ethnicity and age. These trends generally mirror overall data indicating that behavioral health conditions are most prevalent among young adults and White people. In particular, some states reported that younger enrollees (including children and non-elderly adults) were most likely to utilize telehealth for behavioral health care. Several states reported higher telehealth utilization among White individuals compared to people of color. A small number of states reported that female enrollees were more likely to utilize telehealth compared to male enrollees.
• Temporal trends, with states frequently reporting that behavioral health telehealth utilization has declined from its peak earlier in the pandemic, but remains high compared to the pre-pandemic period. Future policy changes, such as to further expand or to limit telehealth flexibilities, may impact ongoing utilization. For example, South Carolina reported anticipating an increase in behavioral health telehealth utilization among children in FY 2023 as part of an initiative to increase access for school-based mental health services.

The trends summarized above are generally consistent with overall Medicaid telehealth utilization trends reported on KFF’s 2022 budget survey. Additionally, several states reported that telehealth utilization was higher for mental health services compared to SUD services (this trend likely reflects the higher prevalence of mental health conditions compared to SUD conditions among Medicaid enrollees). A few states reported that demographic utilization trends varied by service or provider type. For example, New York indicated that female enrollees were more likely than male enrollees to receive psychological and psychiatric services via telehealth, but that male enrollees were more likely to receive SUD services via telehealth. Colorado reported that utilization trends by race/ethnicity were related to provider type, as community mental health centers are likelier to use telehealth and are also likelier to serve more racially/ethnically diverse populations.

What are key issues to watch looking ahead?

Key issues that may influence states’ future behavioral health Medicaid telehealth policy decisions include analysis of utilization and other data as well as federal guidance:

• Data and quality: As states continue and expand their monitoring of behavioral health telehealth utilization, the results of these analyses may provide information that can inform policy decisions. Also, the Government Accountability Office (GAO) has recommended that CMS collect information to assess the impact of telehealth on quality of care for Medicaid enrollees, and most states report questions and/or concerns about the quality of services delivered via telehealth that may be addressed through ongoing data analysis.
• Federal guidance and legislation: States also report watching for further guidance from the federal government related to Medicaid telehealth policies. The Bipartisan Safer Communities Act signed into law in June 2022 directs CMS to issue guidance to states on options and best practices for expanding access to telehealth in Medicaid, including strategies for evaluating the impact of telehealth on quality and outcomes. CMS must issue this guidance by the end of 2023. The Consolidated Appropriations Act passed in December 2022 authorized additional telehealth provisions, such as requirements for Medicaid provider directories to include information on telehealth coverage and for CMS to issue guidance on how states can use telehealth to deliver crisis response services. The Act also authorized grants for nonprofits to expand and improve virtual peer mental health support services, as well as other non-Medicaid telehealth provisions (such as telehealth policies for veterans and for Medicare enrollees). Several of these federal Medicaid telehealth policies passed in 2022 follow from a Senate Finance Committee discussion draft on ensuring access to telehealth, released by the Committee in May 2022 as part of a series of drafts associated with its mental health care initiative. Looking ahead, Congress could take up additional policies suggested in the draft, such as to require public awareness campaigns on the availability of behavioral health telehealth coverage.

As states emerge from the COVID-19 pandemic and grapple with behavioral health workforce shortages, the continuation of expanded telehealth policy—informed by data analysis and federal guidance—may be an important component of maintaining access to behavioral health care for enrollees.