Medicaid Financing for Services in Supportive Housing for Chronically Homeless People: Current Practices and Opportunities. 5.4. Looking Ahead to 2014: How are Services for Substance Abuse Likely to Change?


Much uncertainty exists about the scope of substance abuse treatment services that Medicaid will cover for newly eligible people in 2014. An additional issue is the implication of requirements for “parity” between benefits for treatment of substance abuse disorders and medical and surgical benefits, which are pending promulgation and testing. Guidance and regulations from CMS will be forthcoming, but Benchmark Plans must include ten “essential health benefits” which include mental health and substance use disorder services, including behavioral health treatment, rehabilitation, and habilitation.

In the current fiscal climate, many states are spending less on substance abuse treatment. The availability of Medicaid reimbursement for alternative treatment services currently funded by state resources or federal block grants may free up some of those resources to pay for types of recovery support services that are not covered by Medicaid.

For some of the people who will be newly enrolled in Medicaid, substance abuse will be found to have a significant impact on other health conditions for which treatment will be reimbursed by Medicaid, including the avoidable use of hospital emergency rooms and, ambulances. For these Medicaid enrollees, Medicaid state programs or Medicaid managed care plans may consider covering substance abuse treatment as a strategy for reducing costs. However, health care costs will be relatively low for people who have substance abuse problems without co-occurring serious medical conditions or mental illness,27 and this may discourage the use of resources for improving access to substance abuse treatment. Thus, Medicaid coverage and other sources of funding for substance abuse treatment services may continue to be limited.

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