Administration of Mental Health Services by Medicaid Agencies

Executive SummaryState Medicaid agencies are playing an increasing role in funding,managing, and monitoring public mental health services in States,reflecting the steady growth over the last three decades in the shareof public mental health services funded by Medicaid. Yet relatively little isknown on a State-by-State basis about how Medicaid agencies are exercisingtheir responsibilities for mental health services. The survey described in thisreport begins to fill that gap.This report presents the results of hour-longtelephone interviews with State Medicaiddirectors or their designees in all 50 Statesand the District of Columbia that exploredhow State Medicaid agencies are addressingthe organizational, funding, policy, management,and data issues that arise from theirincreased and often shared responsibilities formental health services.Growth in Medicaid Funding of MentalHealth ServicesThe Medicaid share of total national mentalhealth spending (both public and private)rose from 19 percent in 1991 to 27 percentin 2001, while non-Medicaid State mentalhealth spending dropped from 27 percent oftotal national mental health spending to 23percent during the same period. The Medicaidshare of total State mental health spendingis projected to rise from its current levelof more than half to as much as two-thirdsby 2017. The shift toward greater Medicaidfunding of mental health services has resultedin part from the movement of mental healthservices from institutional settings, whereMedicaid funding is limited, to communitysettings, where it is more readily available. Italso reflects efforts by States to obtain FederalMedicaid funding for services that previouslywere funded entirely with State or localdollars.FindingsStates have taken varying approaches inexpanding Medicaid to cover mental healthservices. While Federal law requires that theMedicaid agency must retain ultimateauthority over all aspects of the Medicaidprogram, States may delegate responsibilityto other State agencies or to private contractorsfor activities such as certifying andenrolling providers, defining covered servicesand setting rates, administering payments toproviders, and collecting and reporting data.Some States have chosen to have the Medicaidagency retain full administrative responsibilityfor all mental health services if theyare funded with Medicaid dollars and providedto Medicaid enrollees, while otherStates have chosen to share those responsibilitiesin various ways with mental health orother agencies in the State. As a result of thisflexibility, the administration of Medicaidmental health services varies considerablyacross States.Administration of Mental Health Services by Medicaid Agencies xi