Perspective on Practice

Medicaid, our nation's single largest public payer for mental health services, is a health-care safety net for millions in need. According to the Kaiser Commission on Medicaid and the Uninsured, in 2005 Medicaid paid 28 percent of the $113 billion spent on mental health care and 21 percent of the $22 billion spent on substance abuse treatment. Among Americans under age 65, 36 million — 13 percent of the population — participate in this voluntary federal program that provides health care for low-income parents and children, older adults and people with disabilities. While Medicaid is publically funded, it is not a government-run program. Most health services are purchased in the private sector and approximately 70 percent of Medicaid participants receive services through managed care. Medicaid funding will become increasingly important for integrated care as states begin to structure payment strategies and incentives to support the patient-centered medical home concept for enrollees with chronic illnesses and disabilities, including mental illness.

Unfortunately, there are significant barriers to psychologists' ability to serve Medicaid patients. For one, 17 states completely bar psychologists from participating in Medicaid. Other states restrict to whom, how often and where psychological services can be provided. For example, in Massachusetts, psychologists can be reimbursed for the full scope of their practice only when those services are provided in outpatient mental health clinics. In New York and North Carolina, psychologists can be reimbursed for psychological testing, evaluation, and group and individual psychotherapy — though in New York, patients need a referral from a physician or nurse practitioner to see a private practice psychologist. In North Carolina, services are limited to 16 outpatient visits a year for minors and eight outpatient visits for adults. These barriers to psychologists' participation contribute to a significant shortage of qualified mental and behavioral health professionals and deny access to needed psychological services for many Medicaid enrollees.

In addition, psychologists are limited in their ability to bill using the health and behavior codes, which are critically important as psychologists treat patients with medical illnesses as members of integrated care teams. Medicaid also restricts same-day billing: two practitioners from one provider organization cannot bill on the same day, a provision that puts an undue burden on Medicaid beneficiaries who often have transportation challenges or live far away from their health-care providers. This prohibition poses a significant barrier for agencies wanting to integrate behavioral health into the primary-care environment. Allowing multiple appointments in a single day and/or setting would increase access to needed care.

Each state designs its own Medicaid plan within a basic federal framework and has its own limits on the types and frequencies of psychological services eligible for reimbursement. Maryland is an example of a state that gets it right. The state's Medicaid program reimburses psychologists for working with both children and adults in clinics and outpatient offices. Paul Berman, PhD, professional affairs officer of the Maryland Psychological Association, has worked with state government officials to keep psychology in the forefront as the Medicaid expansion planning moves forward.

The Practice Directorate's Legal and Regulatory Affairs Office has commissioned a research project to elucidate Medicaid barriers and evaluate strategies for overcoming them. The project will be conducted by Epstein Becker Green, a nationally recognized law firm with expertise in Medicaid and complex health-care issues. We have selected Massachusetts, New York, Maryland and North Carolina as our initial research targets, based on their strong state association involvement in Medicaid and health-care reform initiatives.

Meanwhile, state governments are soliciting input from stakeholders, including provider associations, about health-care reform initiatives, including delivery-system models and financing structures. Practice staff are available to consult with state association leaders and staff about these important issues as they emerge in the states.

As always, we welcome your input on these issues. Contact me at by email.