Behavioral Health Integration in Medicaid Managed Care: Evidence Roundup

Medicaid is the largest payer for behavioral health (mental health and substance use disorder care) services in the United States, and almost 75 percent of Medicaid enrollees receive services through a managed care organization (MCO). Historically, physical and behavioral health benefits have been managed and financed separately to protect dedicated funding sources and established systems for behavioral health care delivery, especially for people with serious behavioral health conditions. In recent years, state Medicaid agencies have integrated mental health and substance use disorder services into existing MCO plans. This process, often referred to as carving-in behavioral health or integrated managed care, aims to support coordinated care delivery for people with both physical and behavioral health needs.

What does the landscape look like today?

States pursue integrated managed care to improve quality of health care, increase access to behavioral health outpatient services, improve care coordination and data-sharing, and promote greater cost predictability. In the last 10 years, many have transitioned from carving-out to carving-in behavioral health services, though approaches vary widely. A significant majority of states with Medicaid managed care now carve-in services for at least some of their Medicaid enrollees, and states such as North Carolina and New Jersey have been planning and/or implementing this transition in 2024.

A growing body of research has looked at the impact of these models. Overall, research on behavioral health integration shows varied outcomes that differ by state and population of Medicaid member. For example, a review of Washington State claims data found that primary care providers and Medicaid members with varying levels of mental illness experienced minimal impacts from this transition. However, behavioral health providers experienced some disruptions due to changes in contracting and reimbursement. One notable finding from this study was that members with serious mental illness (SMI) experienced a small increase in access to primary care. In New York and Oregon, research showed that behavioral health integration led to a higher use of both behavioral and physical health outpatient services. These trends were observed among individuals with SMI and those with mild to moderate behavioral health needs. Select examples of studies on other states are summarized below.

Resources on Behavioral Health Integration Models

The following Playbook resources offer insight into the evidence base and implementation considerations for behavioral health integration:

• Carve-In Models for Specialty Behavioral Health Services in Medicaid: Lessons for the State of California - This report, published by RAND Corporation, summarizes quantitative and qualitative evidence on carve-in models in New York, Oregon, and Illinois, and outlines potential strategies for effective implementation in states like California.
• Washington State’s Transition to Integrated Physical and Behavioral Health Care - This case study describes Washington State’s journey to integrated care in the 2010s. It includes lessons for designing and implementing state efforts to advance physical and behavioral health integration.
• Access, Utilization, and Quality of Behavioral Health Integration in Medicaid Managed Care - This 2023 study uses Medicaid claims from Washington State’s MCOs to measure service utilization and health-related social needs rates before and after the rollout of the state’s behavioral health carve-in.
• Integrating Behavioral Health into Primary Care Through Medicaid Managed Care - This webinar explores how state Medicaid agencies can support behavioral health and primary care integration through managed care, with a focus on the benefits of integrating financing for both types of care. The discussion shares Arizona’s experiences integrating services and includes perspectives from health care providers in the state on the benefits and challenges of integrating services.
• Human Services and Behavioral Health Integration: A Model for Whole-Person Medicaid Managed Care: This case study describes Pennsylvania’s model for delegation of Medicaid-funded behavioral health to counties, and details the impacts of this model related to integration of behavioral health with county-led human services as well as physical health.

Considerations for Implementing Behavioral Health Integration

One key lesson from these findings is that financial integration alone is not sufficient to improve outcomes for all members. States are also exploring other pathways to promote integrated care at the service delivery level, including certified community behavioral health clinics (CCBHCs), and the recently-announced Centers for Medicare & Medicaid Services’ Innovation in Behavioral Health Model demonstration which aims to advance integration in specialty behavioral health settings. These models, along with the diverse array of state approaches to integrated managed care, highlight the range of opportunities to deliver coordinated, whole-person care. Each state should ultimately design and implement a strategy that best responds to the behavioral health needs of their Medicaid members and existing managed care and behavioral health environments. 

As states refine their approaches to financially integrate behavioral health care in Medicaid, following are key policies and programmatic components to be aware of that impact provider and enrollee experience and outcomes:

• Incentives to improve quality: Contracts should clearly outline expectations for provider and plan performance to measure behavioral and physical health care outcomes.
• Access to data: Integrated managed care allows providers to access both physical and behavioral health data to improve care coordination and to identify enrollees at high risk for acute care utilization.
• Stakeholder engagement: It is important to incorporate the voices of providers, members, caregivers, and advocates during all phases of behavioral health integration transitions.

Share Your Behavioral Health Integration Resources and Tools

Do you have a resource or emerging best practice related to behavioral health integration? Share your experience with the Playbook. We are interested in growing our library of evidence and implementation best practices to help states successfully integrate behavioral and physical health services in managed care.