The Covid pandemic has highlighted long-standing unmet needs in home and community-based services for substance use and mental health challenges (also called “behavioral health”). As evidenced by record-breaking drug overdose deaths and worsening trends in youth mental health, the federal government must take action to support behavioral healthcare. People with substance use and mental health challenges are more likely to have chronic health conditions, live in congregate settings, and face barriers to healthcare. Innovative support from HCBS can begin filling in gaps in behavioral healthcare.
Compared to high-cost institutional care, home and community-based services allow Medicaid beneficiaries to receive more accommodating services in their own homes and communities. Traditionally, this funding is associated with care for seniors and those with intellectual and developmental disabilities. However, Section 9817 of the American Rescue Plan Act of 2021 included time-limited incentives for states to expand home and community-based services, providing an opportunity to leverage increased federal matching funds alongside state investment to improve behavioral healthcare. For example, the rescue plan included a temporary 10% increase in the Federal Medical Assistance Percentage for Medicaid HCBS and mental health and substance use care in home and community-based services, addressing previous gaps highlighted during the pandemic. Of all state spending plans, 34 states requested substantive support for substance use and mental health care.
Medicaid financing for home and community-based services could become a lever by which states transform behavioral healthcare. With 988 around the corner, HCBS could also help states meet the anticipated increase in demand of the crisis continuum. Telecom companies must direct 988, the three-digit number for mental health, substance use, and suicide crises, to the National Suicide Prevention Lifeline by July 16.
Main Asks from States: Increased Provider Pay, Workforce Development, and Crisis Support
In reading the ARPA spending plans, states were most likely to focus on increased provider pay, workforce development, and the crisis continuum. About half of plans with substantive mental health budget items focused on increased provider reimbursement rates and bonuses and often referenced major health workforce shortages as reasoning for these investments. Mental health providers included case managers, direct care staff, and clinicians. Many of the specific requests from states were substantial in response to systemic inequities like low Medicaid payment rates and lower reimbursements to mental health providers than primary care providers. For example, at approximately $300 million, the HCBS provider payment rate enhancements and rate study for 1915(c) waivers was the largest projected budget item in Georgia’s spending plan. Mental health agencies, crisis centers, and crisis stabilization units were among the providers receiving a temporary payment enhancement in Georgia’s effort to retain a stable workforce and ensure access to home and community-based services.
Along with mental health-related investments in increased provider pay, half of the states sought investments in workforce development for case managers, direct care staff, and clinicians through enhanced training and promotion opportunities. The workforce development initiatives included foreign language classes, expedited licensure pathways, and differential pay structures tied with specialized service delivery. In Massachusetts’ spending plan, the state invested $100 million of its own money (for the increased federal match) to develop pipeline programs with higher education institutions, offer enhanced training opportunities for youth behavioral health case managers, support loan repayments for direct care staff, and establish employer-workforce partnerships.
The third main request in ARPA spending plans was for supporting the behavioral health crisis care continuum, including crisis stabilization units and the overall 988 system. For example, Washington State’s ARPA spending plan specified supporting 988 by using $6.5 million of funding to establish at least 1 adult and 1 youth mobile crisis team in each region of the state. In addition, the state will require that each crisis team meets specific standards of care. Other ways Washington sought to support the crisis continuum in its spending plan included: substance use disorder family navigators ($244K), an opioid treatment network ($244K), and a rural behavioral health pilot program ($183K).
A Parallel Focus on Prevention: Housing, Youth Mental Health, and Equity
Though higher rates and wages are essential for sustainability, other themes in the ARPA spending plans use innovation to connect mental health with critical whole-person care. For example, several states identified additional supports for housing and youth mental health due to longstanding reform priorities and needs arising during Covid. Such coverage can create whole-person care that addresses social determinants of health.
Many states identified areas related to prevention as a result of public input. New Jersey, for example, connected leadership from its Department of Human Services with stakeholders to give comments on the creation of its spending plan. As a result of this process, the state set aside $53 million to develop subsidized and accessible rental units for Medicaid beneficiaries across the state. Initiatives to make safe and affordable housing available to Medicaid members has the potential to improve a variety of health outcomes, as humane housing has been identified as a vital condition for well-being.
Youth mental health efforts also arose in many spending plans. For instance, Iowa is providing training to help parents with IDD and guardians of children with IDD, a particularly vulnerable population at risk for out-of-home placement and crisis services, learn strategies to provide care at home. Funding is also set aside in New York’s Plan to support programs reaching youth with services and therapeutic interventions that rely on teams of clinical staff and peer advocates.
States are investing in mental health and substance use crisis prevention by focusing on housing and youth mental health. Several other state plans do so with an equity lens, including racial equity, through financing for housing, rural health, and justice-involved populations.
Moving Forward: The Role of HCBS in Behavioral Health and the Crisis Continuum
Although a response to the Covid pandemic, ARPA has helped to temporarily fill in some of the gaps in addressing states’ most pressing needs related to behavioral health. In the coming months, states must move quickly in making their investments to best maximize ARPA’s financial incentives. In addition, states should consider longer-term strategies for supporting the programs and rate increases that they identified in ARPA spending plans. To build on the temporary federal match for home and community-based services, including behavioral health services, states could:
- Evaluate the need for changes to spending plans to better address behavioral health challenges (states can update plans quarterly).
- Prioritize seeking HCBS financing for the essential elements of the mental health crisis continuum to prepare for the arrival of 988.
- Support prevention of mental health and substance use crises by making future investments in health equity, racial equity, housing, rural health, and youth mental health.
- Advocate for more HCBS financing from the federal government in light of both the ongoing behavioral health crisis and children’s mental health needs.
- Ensure sustainability of initiatives beyond enhanced FMAP, including increased provider pay, attention to workforce development, and building out the crisis continuum.
- Implement evaluation projects and share findings with other states on the impact of HCBS initiatives in behavioral health that benefitted from ARPA’s enhanced FMAP.
To underscore the urgent need for access to home and community-based services and its inclusion in the Build Back Better framework, the White House cites that over 800,000 people are on Medicaid HCBS waiting lists. This large number is perhaps just the tip of the iceberg in assessing the need for home and community-based services when considering that many states do not include mental healthcare as part of home and community-based services at all. As the White House calls for a national strategy to address the mental health crisis and Congress considers related bipartisan legislation, the mental health workforce, youth mental health, crisis care, and the social determinants of health will be essential areas to target for sustained financial support. Though BBB negotiations have stalled, the next iteration of legislative action should consider the home and community-based services provisions related to mental health and substance use in its previous versions including $270M for competitive integrated employment, $130M for HCBS improvement planning grants, a 6 percentage point FMAP increase (up to 95%) in HCBS improvement program states, and $450M for the permanent extension of Money Follows the Person. Also, the original Build Back Better would have made permanent a state option to provide qualifying community-based mobile crisis intervention services. Along with maintaining the original home and community-based services provisions in BBB, in future legislation, Congress could:
- Create sustainable HCBS funding mechanisms for behavioral health.
- Support urgent state requests related to behavioral health, including increasing provider pay, developing the workforce, and funding the crisis continuum.
- Prioritize the unique needs of youth mental health with targeted funding.
- Incentivize states to focus on crisis prevention by creating funding streams for housing, employment, rural health, and other equity goals.
The ARPA spending plans give us some insight into what states most need to support mental health and substance use care as the debut of 988 fast approaches. Along with direct funding for mobile crisis teams, enhanced federal funds may help state Medicaid programs increase provider pay, improve workforce development, bolster youth mental health, and address equity goals for Medicaid beneficiaries.
About the Authors:
The authors work at Well Being Trust, a national philanthropy focused on advancing the mental, social, and spiritual health of the nation. Executive fellows with Master of Public Health degrees in Health Policy wrote the article draft, and edits were provided by Laura Blanke, a senior policy associate with 15 years of expertise in health policy.
