State Health Care Reform: Behavioral Health Services Under Medicaid Managed Care: The Uncertain Implications of State Variation

During the past several years most state Medicaid programs began to enroll their beneficiaries in managed care plans. The Balanced Budget Act of 1997 accelerated this trend by facilitating mandatory enrollment in managed care and permitting states to contract with health plans that serve populations composed either predominantly or solely of Medicaid enrollees. Although this growth mirrors that of managed care enrollment in the Medicare and commercial health care sectors, the rise in market penetration of Medicaid managed care raises many unique issues because of the structural features of the Medicaid program and the health care needs of those enrolled in it. In this column we argue that the delivery of mental health and substance abuse services under Medicaid managed care merits particular attention, given the health care needs of those seeking such care and the variety of ways in which states have structured these services. We describe some of the decisions that state Medicaid programs face in the delivery of behavioral health services and discuss the origins and nature of variations among states and the potential implications of different approaches to delivering these services. (April 2001)