One of the best tools to protect access to urgently needed behavioral health care, including mental health and substance use services, is to raise the federal share of Medicaid costs (or “FMAP”). House Speaker Nancy Pelosi’s new economic relief bill would do that by building on the modest, shorter-term FMAP increases that policymakers provided in the Families First Coronavirus Response Act of March.
The need for behavioral health care was already high before the pandemic, with deaths from overdose and suicide at near-historic and three-decade highs, respectively. Need has likely only risen since then, given the stress and trauma from the public health and economic crises. Meanwhile, huge state budget crises threaten cuts to health care services and provider payments, with several states already announcing cuts to Medicaid — the largest behavioral health funding source. Community-based providers also face heavy financial losses and new expenses as they scale up telehealth services and provide personal protective equipment to staff and the people they serve. The situation is forcing providers to make tough decisions to lay off staff, delay care, and even turn away patients or close programs.
Together, Medicaid and state general revenue spending comprise an overwhelming majority of state behavioral health funding. Without more federal support, states will likely make deep cuts, as they did in past recessions. In the wake of the Great Recession of a decade ago, for example, more than 3 in 4 states cut mental health budgets in each of 2009, 2010, and 2011, totaling over $1 billion in estimated cuts per year (including Medicaid cuts). States cut funding for community-based services — such as crisis services, targeted case management, and peer supports — even as providers experienced a surge in demand. Many states also cut Medicaid reimbursement rates for behavioral health and other health care providers, even though Medicaid payment rates were already low.
The temporary FMAP increases that policymakers enacted during the Great Recession prevented even deeper cuts to Medicaid provider rates and services and helped buoy behavioral health care access. With more federal Medicaid funding, states could stretch their Medicaid budgets further by freeing up state funds that they already allocated to Medicaid to cover enrollment increases and Medicaid budget shortfalls, rather than having to make service or provider rate cuts to cover these additional costs. In fact, over a dozen states expanded or restored behavioral health services in their Medicaid programs in 2010 and 2011 as the economy began to recover and as they received the additional federal funding.
For the current crisis, policymakers took an important first step by enacting a 6.2 percentage-point FMAP increase as part of Families First. But that increase is too small: much less than the increase during the Great Recession and too low to discourage harmful cuts. It could also end too soon: the increase will turn off at the end of the official public health emergency, even if state budgets are still in crisis.
In addition, community-based behavioral health providers have received minimal assistance from the $175 billion fund in the Coronavirus Aid, Relief, and Economic Security (CARES) Act of March and the Paycheck Protection Program and Health Care Enhancement Act of April, which is intended to help address providers’ immediate revenue needs and enable them to stay in business. And even if the Department of Health and Human Services (HHS) structures future allocations from the fund to give these providers more help, these are short-term, stop-gap measures for providers that won’t avoid the cuts that states will invariably make as they confront the enormous budget shortfalls that are projected through at least 2022.
The Pelosi bill would provide a 14 percentage-point FMAP increase for July 1, 2020 through June 30, 2021. The larger FMAP increase would support state efforts to improve access to mental health and substance use care. Many states are using Medicaid authorities tied to the public health emergency to maintain access to behavioral health care and other services, such as by easing access to prescription medications, lifting prior authorization requirements, paying providers the same rate for telehealth services as for face-to-face visits, and waiving telehealth copays for beneficiaries. But states are less likely to adopt and continue some of these policies as their budget crises grow more acute.
If states don’t get enough federal support, cuts in services and provider payments will prevent some states from enhancing services and improving access while undermining efforts in other states that have already made them. Federal policymakers should heed calls from bipartisan organizations such as the National Governors Association and National Association of Medicaid Directors to enact additional, longer-lasting Medicaid funding increases.