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ABSTRACT Medicaid is characterized by low rates of provider participation, often attributed to reimbursement rates below those of commercial insurance or Medicare. Understanding the extent to which Medicaid reimbursement for mental health services varies across states may help illuminate one lever for increasing Medicaid participation among psychiatrists. We used publicly available Medicaid fee-for-service schedules from state Medicaid agency websites in 2022 to construct two indices for a common set of mental health services provided by psychiatrists: a Medicaid-to-Medicare index to benchmark each state's Medicaid reimbursement with that of Medicare for the same set of services, and a state-to-national Medicaid index comparing each state's Medicaid reimbursement with an enrollment-weighted national average. On average, Medicaid paid psychiatrists at 81.0 percent of Medicare rates, and a majority of states had a Medicaid-to-Medicare index that was less than 1.0 (median, 0.76). State-to-national Medicaid indices for psychiatrists' mental health services ranged from 0.46 (Pennsylvania) to 2.34 (Nebraska) but did not correlate with the supply of Medicaidparticipating psychiatrists. As policy makers look to reimbursement rates as one strategy to address ongoing mental health workforce shortages, comparing Medicaid payment across states may help benchmark ongoing state and federal proposals.
Medicaid now covers more than one-fifth of all Americans with mental health disorders, but many enrollees with mental health conditions report difficulty accessing treatment. Half of Medicaid beneficiaries with serious mental illness reported unmet needs in 2018.1 As a driver of provider acceptance of Medicaid insurance,2 low provider reimbursement rates may be one important determinant of access to care and health outcomes for Medicaid enrollees.3,4 Reimbursement rates in Medicaid are typically lower relative to commercial insurance or Medicare; for instance, one study found that Medicaid feefor-service payments for physician services were nearly 30 percent below those of Medicare in 2019.5 Likewise, hospital base payments were 22 percent less in Medicaid compared with Medicare in 2020.6
States generally have broad flexibility in determining payments for physician services through one of three methods:7 a resource-based relative value scale taking into account physician time and effort, as a fixed percentage of either Medicare or commercial payments; or the use of a state-specific internal process based on market conditions, costs of care, legislative action, and other factors.8 Medicaid fee-for-service rates for mental health services may differ...