States Respond to COVID-19 Challenges but Also Take Advantage of New Opportunities to Address Long-Standing Issues: Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2021 and 2022

Benefits and Telehealth


State Medicaid programs are statutorily required to cover a core set of “mandatory” benefits, but may choose whether to cover a broad range of optional benefits.1 States may apply reasonable service limits based on medical necessity or to control utilization, but once covered, services must be “sufficient in amount, duration and scope to reasonably achieve their purpose.”2 State benefit actions are often influenced by prevailing economic conditions: states are more likely to adopt restrictions during downturns and expand or restore benefits as conditions improve.3 Prior to the COVID-19 pandemic,4 trends in state changes to Medicaid benefits included enhancements of behavioral health services as well as efforts to advance maternal and infant health.5 When the COVID-19 pandemic and resulting economic downturn hit, instead of restricting benefits, most states used Medicaid emergency authorities6 to temporarily adopt new benefits, adjust existing benefits, and/or waive prior authorization requirements, and in 2020,7 some states indicated plans to permanently extend these emergency benefit changes past the public health emergency (PHE) period.8 The American Rescue Plan Act of 2021 also included several provisions designed to expand Medicaid benefits, including expanded federal funding for home and community-based services (HCBS) and for COVID-19 treatment and vaccination.9

Prior to the pandemic, the use of telehealth in Medicaid was becoming more common.10 While all states had some form of Medicaid coverage for services delivered via telehealth, state policies regarding allowable services, providers, and originating sites varied widely.11 To increase health care access and limit risk of viral exposure during the pandemic, states used Medicaid emergency authorities to expand telehealth coverage and also took advantage of broad authority to further expand telehealth without the need for CMS approval.12 For example, states expanded the range of services that can be delivered via telehealth; established payment parity with face-to-face visits; expanded permitted telehealth modalities (e.g., audio-only telephone communication); and broadened the provider types that may be reimbursed for telehealth services. Preliminary CMS data shows that utilization of telehealth in Medicaid and CHIP has dramatically increased during the pandemic,13 but telehealth access is not equally available to all Medicaid enrollees. For example, while telehealth has the potential to facilitate greater access to care for Medicaid enrollees in rural areas with fewer provider and hospital resources,14 inadequate and/or unaffordable broadband access can be a barrier.15 Prior to the pandemic, one in four Medicaid enrollees lived in a home with limited internet access, with higher rates of limited access among non-White enrollees, older enrollees, and enrollees living in non-metro areas.16 The American Rescue Plan Act17 of 2021 included funding for rural health facilities to increase telehealth capabilities, and the Biden Administration has announced investments to strengthen telehealth in rural and underserved communities.18

This section provides information about:

  • Non-emergency benefits and
  • Telehealth


non-Emergency benefits

We asked states about non-emergency benefit changes implemented during state fiscal year (FY) 2021 or planned for FY 2022, excluding temporary changes adopted via emergency authorities in response to the COVID-19 pandemic but including any emergency changes that have or will become permanent (i.e., transitioned to traditional, non-emergency authorities).19 Benefit changes may be planned at the direction of state legislatures and may require CMS approval.

The number of states reporting new benefits and benefit enhancements greatly outpaced the number of states reporting benefit cuts and limitations (Figure 3 and Table 2).20 Twenty-two states reported new or enhanced benefits in FY 2021, and 29 states are adding or enhancing benefits in FY 2022. Three states reported benefit cuts or limitations in FY 2021 and two states reported benefit cuts or limitations in FY 2022. We provide additional details about several benefit categories below (Exhibit 1). In addition to benefit categories discussed below, several states reported updated and expanded benefits in HCBS waivers. HCBS changes are a key area to watch in FY 2022 as states may expand covered services using the American Rescue Plan Act’s HCBS federal match rate (“FMAP”) increase; however, these spending plans may not have been finalized ahead of survey completion.21

Behavioral Health Services

States continue to focus on behavioral health through the introduction of new and expanded mental health and/or substance use disorder (SUD) benefits in FY 2021 and FY 2022. For example, states report implementing or plans to implement coverage of intensive outpatient services, clinic services, school-based services, and supportive employment services. State approaches to targeting SUD include new or expanded residential/inpatient SUD benefits and coverage of opioid treatment programs.22 Examples of targeted behavioral health services enhancements/additions include:

  • If approved by CMS, Illinois will implement a team-based model of care providing trauma recovery services for adults and children due to chronic exposure to firearm violence in FY 2022. This model will include outreach services, case management, community support services, and group and individual therapy.23
  • California plans to become the first Medicaid program to cover dyadic care, beginning in FY 2022.24 Dyadic care is a family- and caregiver-focused model of care that provides for early identification of developmental and behavioral health conditions and supports prevention, coordinated care, child social-emotional health and safety, developmentally appropriate parenting, and maternal mental health. During a medical visit, the caregiver and child will be screened for behavioral health conditions, interpersonal safety, tobacco and substance misuse, and social determinants of health.
  • Wisconsin is testing a new approach to care for individuals with SUD and other health conditions. This model, called the Hub and Spoke Health Home Pilot, will provide Integrated Recovery Support Services through “hubs” or lead agencies that deliver SUD treatment and supports and “spokes” that are community partners providing additional supports and care management.25
Pregnancy and Postpartum Services

States are expanding and transforming care for pregnant and postpartum women to improve maternal health and birth outcomes. Six states will newly cover services provided by doulas.26 Doulas are trained professionals who provide holistic support to women before, during, and shortly after childbirth. A few states are investing in the implementation or expansion of home-visiting programs to teach prevention, parenting, and other skills aimed at keeping children healthy and promoting self-sufficiency. Several states have or will expand behavioral health services for pregnant and postpartum women. For example, in 2021, Louisiana initiated coverage for tobacco cessation services during pregnancy and perinatal depression screening; in 2022, two states (Maine and Maryland) will implement or expand their Maternal Opioid Misuse (MOM) Model, a Center for Medicare and Medicaid Innovation (CMMI) initiative for pregnant and postpartum women with opioid use disorder. Two states (Maryland and Tennessee) have or will implement coverage of dental services for pregnant or postpartum women. In addition to benefit changes aimed at improving maternal health, many states are pursuing eligibility changes in this area, especially through the American Rescue Plan Act’s new option to extend Medicaid postpartum coverage to 12 months via a state plan amendment.27

Dental Services

States aim to improve oral health by expanding covered dental benefits and extending coverage to new populations. Seven states added, expanded, or restored dental coverage for the adult population28 and several states expanded dental services for pregnant or postpartum women (counted separately and discussed above). Arizona is requesting Section 1115 waiver authority to expand covered adult dental services, which are currently limited to an emergency dental benefit only, for the AI/AN population. In FY 2021, Georgia and New York started covering Silver Diamine Fluoride (SDF). SDF is a topical agent that can be used to halt the development of cavities in children and adults.29

Housing and Housing-related Supports

Five states reported new and expanded housing-related supports, as well as other services and programs tailored for individuals experiencing homelessness or at risk of being homeless. All five states plan to implement these services in FY 2022. Arizona is requesting Section 1115 waiver authority to enhance housing services and interventions for certain beneficiaries who are homeless or at risk of becoming homeless, including by: strengthening outreach strategies, securing funding for housing, and expanding available wraparound housing services and supports.30 The state is requesting federal funding for room and board for short-term, transitional housing (up to 18 months) for individuals leaving homelessness or institutional settings. In early FY 2022, Connecticut established four new service categories targeted to adults experiencing homelessness and high inpatient admissions: care plan development and monitoring, pre-tenancy and transition assistance, housing and tenancy sustaining services, and transportation. When North Carolina implements a new pilot program in FY 2022, called “Healthy Opportunities Pilots,” it will provide coverage of non-medical services to address housing instability and other needs related to social determinants of health (SDOH).31 The District of Columbia and Maine also reported plans to cover certain housing-related supports for certain high-need groups.

Benefit restrictions in FY 2021 and FY 2022 were infrequent and narrowly targeted. Benefit restrictions reflect the elimination of a covered benefit, benefit caps, or the application of utilization controls such as prior authorization for existing benefits. In FY 2021, Wyoming eliminated its chiropractic services benefit and imposed prior authorization for children’s mental health services in excess of thirty visits per calendar year; Utah imposed more restrictive quantity limits for medically necessary urine drug testing; and Missouri eliminated coverage of counseling and person-centered strategies consultation from its four Developmental Disabilities waivers. In FY 2022, South Carolina updated its Vaccines for Children coverage policy following direction from CMS, which resulted in the elimination of Medicaid coverage for component-based vaccine counseling.32


Prior to the COVID-19 pandemic, the use of telehealth in Medicaid was becoming more common. While all states had some form of Medicaid coverage for services delivered via telehealth, the scope of this coverage varied widely across states.33 To understand the impact of the pandemic on telehealth service delivery, we asked states about telehealth coverage and reimbursement policies as of July 2021, including for live audio-visual and audio-only delivery; telehealth efficacy and utilization trends during the pandemic; changes to telehealth policy planned for FY 2022; and challenges regarding telehealth from the member, provider, and state Medicaid agency perspectives.

Coverage and Reimbursement of Telehealth

Nearly all responding states reported covering a range of fee-for-service (FFS) services delivered via audio-visual telehealth, with slightly fewer states reporting audio-only coverage for each service (Figure 4).34 States were asked to indicate what telehealth modalities (audio-visual and/or audio-only) were covered for each specified service as of July 1, 2021, and whether the service is “always” or “sometimes” covered via each modality. All or nearly all responding states reported that they sometimes or always covered audio-visual delivery of the specified behavioral health, reproductive health, therapy, and well/sick child services, with fewer states reporting audio-visual coverage of HCBS and dental services. Across all service categories, states reported covering audio-only services less frequently than audio-visual services. However, majorities of responding states do report sometimes or always covering audio-only delivery of each specified service and, notably, access to audio-only mental health and SUD telehealth services is available in nearly all responding states. In states that reported covering a service via telehealth “sometimes,” coverage typically depends upon clinical appropriateness or the nature of the service or visit. Thirty-three states with managed care organizations (MCOs) (out of 36 responding)35 report requiring MCOs to cover the same services via telehealth as covered in FFS; one MCO state indicated requiring MCOs to cover the same services “in part.”

All responding states ensure payment parity between telehealth and in-person delivery of FFS services, and most states require MCOs to maintain these same payment parity policies. Prior to the COVID-19 pandemic, Medicaid telehealth payment policies were unclear in many states;36 however, during the PHE, many states issued temporary or permanent guidance in this area.37 As of July 1, 2021, 45 states (out of 47 responding) reported that they maintain payment parity between telehealth and in-person visits for all services and telehealth modalities,38 while two states reported generally having parity with some variation for audio-only reimbursement.39 Twenty-seven MCO states (out of 36 responding)40 require MCOs to maintain the same telehealth payment parity policies that are applied in FFS.

Telehealth Efficacy and Utilization During COVID-19 Pandemic

An overwhelming majority of states noted the benefits of telehealth in maintaining or expanding access to care during the pandemic, particularly for behavioral health services. We asked states for examples of services delivered via telehealth and/or modalities that were particularly effective in improving access and/or health outcomes since the beginning of the pandemic. States commonly identified expanded audio-only coverage and allowing the enrollee’s home as an originating site as particularly effective policy flexibilities. Thirty-one states (out of 45 responding) reported that telehealth had particular value in maintaining or improving access to behavioral health services. We also asked states to list the top two or three categories of physical health and behavioral health services that had the highest telehealth utilization during FY 2021:

  • For physical health services, states most frequently identified physician office visits and therapy services, particularly speech and hearing services.
  • For behavioral health services, states most frequently identified psychotherapy, counseling (for mental health conditions and/or substance use disorder), and patient evaluations.

States reported telehealth utilization across all population groups during the pandemic, with considerable state-by-state variation in the eligibility groups with highest utilization. We asked states to identify trends in telehealth utilization by eligibility group and by other demographic categories:

  • Telehealth utilization by eligibility group. A similar number of states identified that telehealth utilization was highest for adult eligibility categories (especially the Medicaid expansion group, but also parents and pregnant women) as states that identified that utilization was highest for children. Many states reported particularly high telehealth utilization among people with disabilities. Utilization trends may vary by service: for example, Utah noted that adult populations (including expansion adults, pregnant women, and parents) have had higher telehealth utilization for behavioral health services, whereas other populations (including children, elderly, and people with disabilities) have had higher utilization for physical health services.
  • Telehealth utilization by race/ethnicity. A few states reported utilization trends by race/ethnicity, nearly all of which identified higher telehealth use for White, non-Hispanic adults. For example, California noted that the rate of telehealth visits among Hispanic beneficiaries was 10% lower than the statewide rate.
  • Telehealth utilization by geography (urban vs. rural). We asked states whether rural or urban populations had experienced greater growth in telehealth utilization since the onset of the pandemic. Of the states that answered this question, 16 saw similar growth in rural and urban areas, ten observed higher growth in urban populations, and only two states observed higher growth in rural populations.41 Some states reported that audio-only coverage helped to expand access in rural areas that may not offer broadband coverage.
Post-Pandemic Policies and Telehealth Challenges

Post-pandemic telehealth coverage and reimbursement policies are under consideration in most states, with states weighing expanded access against quality concerns especially for audio-only telehealth. Across service categories, the majority of states reported that FY 2022 changes to telehealth coverage policies were “undetermined” at the time of the survey. Similarly, while eleven states indicated plans to change FFS telehealth reimbursement policies in FY 2022, 25 states have not yet determined whether changes will occur.42 In particular, plans for post-pandemic audio-only telehealth coverage and reimbursement parity vary by state. Many states identified that expanded audio-only coverage during the pandemic was particularly important for maintaining and expanding access to care, especially in rural areas and for older populations. However, states also expressed uncertainty regarding the legal authority to continue reimbursing audio-only telehealth services post-PHE due to state and federal privacy laws, as well as concerns about the clinical effectiveness and quality of audio-only visits for some services. States that did report plans to maintain audio-only coverage post-PHE particularly highlighted the continued use of this modality for mental health and SUD services.

Key factors under consideration for post-pandemic telehealth policy, including audio-only, include:

  • Evaluation of telehealth access, utilization, and outcomes. Many states cited anecdotal feedback and preliminary data analysis suggesting that expanded telehealth has been viewed positively by members and providers and has decreased barriers to care. However, states also note that ongoing and planned review of data is necessary to further evaluate the impacts of telehealth expansions on access and health outcomes.
  • Quality assurances and clinical appropriateness. States reported working to determine what services are clinically appropriate to be delivered via various telehealth modalities. While states may allow providers to make decisions of clinical appropriateness in some cases, states are working on developing guidelines and guardrails to ensure quality.
  • Coordination with policies in other states, from other payers, and at the federal level. States are awaiting federal guidance relevant to allowable telehealth modalities. In many cases, states also note an interest in telehealth policies in other state Medicaid programs, Medicare, and private insurers.
  • Costs of expanded telehealth. States reported budgetary questions and concerns about expanded telehealth, especially pertaining to whether increased telehealth use substitutes for in-person visits or contributes to overall increased utilization.

Commonly reported challenges associated with telehealth include access to internet and technology, as well as needs for education/outreach and quality assurances. Exhibit 2 highlights telehealth-related barriers reported by states from member, provider, and state Medicaid agency perspectives. Nearly all responding states reported that inadequate access to internet or technology was a barrier to telehealth utilization for members and/or providers. Other barriers for members include the need for outreach about the availability of telehealth and education on how to use telehealth technologies. Other barriers for providers include needs related to staffing, training, and help navigating a complex set of regulations and billing rules. At the agency level, states expressed concerns about assuring clinical effectiveness and quality, program integrity, and equity. Several states also identified challenges or concerns related to development of telehealth policy post-PHE and the need for federal guidance.

Delivery Systems Social Determinants of Health

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