A few weeks ago we wrote about state coverage of addiction treatment benefits, which like mental health services are an optional service that states can cover. Unlike mental health services, however, the coverage of addiction treatment services is uneven. Two states offer no coverage for addiction treatment services and only six states offer the full-continuum of addiction treatment services – inpatient detoxification, non-hospital-based detoxification, outpatient treatment, intensive outpatient, residential treatment, and medication assisted treatment. (For more, see The Issue Of Limited Residential Addiction Treatment Coverage Under Medicaid and What Addiction Treatment Services Are Covered By State Medicaid Programs?: An OPEN MINDS Market Intelligence Report.)
It is important to understand the Medicaid delivery system for addiction treatment – a system that, like everything when it comes to Medicaid programs, can vary widely from state to state. Medicaid programs utilize one of three main models to delivery addiction treatment services:
- Fee-For-Service (FFS): Addiction treatment is managed by the state on a FFS basis, separate from other services that may be included in managed care.
- Managed care, with no carve-out: Addiction treatment services are the responsibility of the physical health managed care organization (MCO).
- Managed care, with carve-out to a managed behavioral health organization (MBHO): Addiction treatment services are carved-out from FFS or an MCO and delivered by a managed behavioral health organization (MBHO).
However, within these systems, how specific addiction treatment services are managed and what is included in the carve-out can vary greatly by state. OPEN MINDS completed an analysis of the 50 states and the District of Columbia to understand how addiction treatment benefits are delivered and the trends in the delivery of addiction treatment. The analysis revealed that in general, the addiction treatment delivery system largely mirrors the mental health delivery system within each state.
Additionally, the analysis found that over the past few years, most states have worked to integrate their mental health and addiction treatment delivery systems. For example, most recently in April 2016, Washington moved from three delivery systems – one for physical health, one for mental health, and one for addiction treatment – to transitional models until the state fully integrates benefits in 2020. Currently, in the Southwest Regional Service Area (Clark and Skamania counties), the MCOs have fully integrated physical and behavioral health MCOs. In the rest of the state, the Regional Service Areas have moved to a transitional model where the state contracts with MBHOs to provide mental health and addiction treatment benefits while physical health services are delivered by the MCOs (see Washington State To Move Medicaid Addiction Treatment To Managed Care & Carve-In Mental Health Services).
This leaves California as one of the last states with an addiction treatment delivery system largely separate from other Medicaid delivery systems. In California, the addiction treatment system is known as Drug Medi-Cal. Drug Medi-Cal provides the county mental health plans with financing to provide addiction treatment services. Services that are not offered by the county (and it varies by county) are provided on a FFS basis by the state. Additionally, Drug Medi-Cal is responsible for providing medications for the treatment of substance abuse.
Overall, when it comes to addiction treatment services, our analysis found that most states are relying on some form of managed care delivery system for addiction benefits:
- Of the 21 states that provide residential treatment, 11 utilize a MCO, three utilize a MBHO, and seven cover residential treatment via FFS.
- Of the 48 states that provide outpatient treatment benefits, 19 utilize a MCO, 13 utilize a MBHO, and 19 cover outpatient services via FFS.
- All 50 states cover substance abuse medications, but only two states, California and Michigan, utilize a carve-out for substance abuse treatment medications. All other states include substance abuse medications in their general pharmacy benefit (whether that benefit resides with the MCO or is carved-out to FFS is dependent upon the state).
For more on the specific delivery system of addiction treatment benefits in each state, be sure to check out: What State Medicaid Plans Carve-Out Addiction Treatment Services?: An OPEN MINDS Market Intelligence Report. The report provides:
- An explanation of the Medicaid carve-out and the different types of carve-outs utilized to manage addiction treatment benefits
- A state-by-state chart showing the delivery system used for each of the following services: inpatient detoxification, detoxification in a non-hospital based setting, outpatient services, residential treatment, and methadone maintenance
- A look at how state Medicaid programs plan to provide addiction treatment benefits in the future
I expect that in many states we’ll see the integration of addiction treatment benefits under MCO contracts as a result of the need to treat the whole person and the acknowledgement that a high number of individuals have co-occurring mental health and addiction use disorders. However, I expect California will remain committed to separate delivery systems due to the renewal of their 1915(b) specialty mental health carve-out and the approval of their Drug Medi-Cal organized delivery system, which allows some counties to test an enhanced addiction treatment benefit package (see Feds Approve California’s Medi-Cal Addiction Treatment Waiver and California’s Mental Health Carve-Out Preserved For Five Years, But With New Performance Transparency Requirements).