Administration of Mental Health Services by Medicaid Agencies

services for adults ages 22 to 64 in institutionsfor mental diseases (the IMD exclusion),so the shift toward community care hasincreased the opportunity for States to useMedicaid funding to provide mental healthservices (White & Draper, 2004). Since theStates and the Federal Government jointlyfinance Medicaid, States that use Medicaidfunding to deliver mental health services needto provide only the “State match,” whichcurrently ranges from 24 to 50 percent of thetotal cost of providing services, with the FederalGovernment providing the remainder.States have flexibility in choosing the sourceof State match funds for Medicaid-financedservices. Usually, the State match for Medicaidservices comes from the State generalfund as part of the Medicaid agency budget.However, State match funds for mentalhealth services may also be provided from thebudget of other State agencies (usually themental health agency) or from sources otherthan the State general fund.In almost two-thirds of the States (32), theState match for Medicaid mental health servicescomes at least partially from the Statemental health agency. This arrangement ismore common in States with separate Medicaidand mental health agencies: 74 percent ofStates with separate agencies reported Medicaidmatch money was provided by the mentalhealth agency, compared to 54 percent ofStates with an umbrella agency.Slightly more than half of the States (26)reported that Medicaid State match fundscome at least partially from sources otherthan the State general fund (Table 2). Amajor source of separate funding is counties,which provide Medicaid match funds formental health services in 22 States. Otherstreams of Medicaid mental health dollarscome from property taxes or other local revenueused to fund community mental healthcenters (CMHCs), or through schools ormunicipalities that provide funding for Medicaidmental health services to children.County funding occurs at about the samerate in States where Medicaid and mentalhealth are under an umbrella agency as inStates where the agencies are separate.Some States track Medicaid spending onmental health services, while other States donot treat mental health as a separate categoryof services for Medicaid budgeting purposes.In slightly fewer than half of the States (23),the Medicaid agency maintains a separateline item in its budget for mental health services.This is more likely to occur in Stateswhere Medicaid and mental health are underthe same umbrella agency. Half of all Stateswith an umbrella agency have a separate lineitem for Medicaid mental health services,compared to only 39 percent of States withseparate agencies.2. Covered ServicesStates reported electing to classify a widerange of services as Medicaid mental healthservices for State budgeting or rate-settingpurposes. Every State reported that outpatientservices provided by psychiatric or designatedmental health providers were definedas Medicaid mental health services. Outpatientservices provided at a community mentalhealth center, mental health services providedunder the rehabilitation option, andinpatient mental health services in a psychiatrichospital were classified by more than 45States as Medicaid mental health services.Inpatient mental health services at a generalhospital are classified as Medicaid mentalhealth services in 43 States, and outpatientmental health services provided by a generalor family physician are classified as Medicaidmental health services in 31 States.14 Administration of Mental Health Services by Medicaid Agencies