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As of 2017, there were an estimated 4.8 million consumers with serious mental illness (SMI) enrolled in Medicaid and the majority were enrolled in a Medicaid managed care arrangement that covered their behavioral health services. About one-third of the Medicaid SMI population is covered by a managed care financing arrangement. The remaining one-third of the Medicaid SMI population receives behavioral health benefits under Medicaid fee-for-service (FFS) arrangements.

As with many issues around health policy, the landscape of managed care enrollment for the SMI population varies by state. There is no uniform definition for SMI among states, as each state sets its own criteria for defining SMI. However, a diagnosis of SMI plays an important role in determining how state Medicaid plans finance and deliver behavioral health services.

Behavioral health financing arrangements for the Medicaid SMI population vary dramatically by state. There are two important components to take into account when determining the behavioral health services financing landscape for the Medicaid SMI population: whether or not behavioral health services financing is integrated with physical health services financing, and whether or not behavioral health services are delivered through a managed care arrangement. These two components result in four possible scenarios for behavioral health services financing for the SMI population:

  1. Behavioral health services are integrated with physical health and financed through a managed care plan
  2. Behavioral health services and physical health services are both financed through Medicaid FFS
  3. Behavioral health services are not integrated with physical health and financed through a care management organization
  4. Behavioral health services are not integrated with physical health and financed FFS

This report estimates, on a state-by-state basis, the proportion of Medicaid SMI population with behavioral health benefits provided through a managed care plan. It also examines the overall financing and service delivery for both behavioral health services and physical health services in each state Medicaid plan.

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