PRWORA gave states considerable flexibility in deciding how to spend their TANF block grant funds. States may use TANF funds to provide nonmedical mental health treatment services for welfare recipients and other low-income families at risk for TANF involvement. Such services might include specialized short- or long-term counseling services, or outreach, assessment, and case management intended to link clients to existing mental health services. In addition, TANF funds can be used to expand the capacity of treatment providers as long as the expansion covers only nonmedical services and is targeted to families who are eligible for TANF-funded services. States can also use funds from the Welfare-to-Work grants program to provide mental health services, although there are more constraints on who can be served with these funds.
Most welfare recipients qualify for Medicaid, so they can access mental health treatment through Medicaid-funded providers. While some TANF recipients may be receiving services through these providers, others may not know how to access such services, while still others may not be aware that they have a mental health condition. The flexibility of TANF allows states to fund efforts designed to identify clients in need of services and link them to existing Medicaid-funded mental health services. It is also possible that TANF recipients need services not easily accessed or offered by a Medicaid provider. Program administrators could address these needs by using TANF funds to expand existing services or to provide services not currently offered by Medicaid providers. The drawback is that TANF funds now available for mental health services may shrink as a result of either the outcome of the reauthorization debate or a downturn in the economy. (The latter would force states to use the funds to provide cash assistance and employment services to the families moving onto welfare because of the downturn.)
The states profiled in this report are leading the development of innovative approaches to providing mental health services to TANF recipients. In all of the approaches, existing services have been augmented, not replaced. In addition, all of the states have used TANF funds to identify recipients in need of mental health services and to link them with these services. Two of the states have created specialized mental health services that are delivered within the welfare system, and two have expanded the capacity of existing providers to serve TANF recipients or TANF-eligible families.
Medicaid-Funded Mental Health Treatment Providers
In most states, Medicaid covers a basic range of services for treating mental health conditions, such as individual or group therapy, crisis intervention, psychiatric evaluations, medications, day treatment, and inpatient care. States decide not only the type of Medicaid-funded mental health benefits, but also the amount, scope, and duration of benefits. In general, the type and amount of treatment for those accessing Medicaid often are more restricted than for those with private health insurance.
Within each community are Medicaid-funded mental health treatment providers, which are any mental health agency where welfare recipients can access mental health treatment using Medicaid assistance. Access to treatment through Medicaid-funded service providers tends to vary within and between states. For example, in some areas, frequent staff turnover and a limited number of staff have created difficulties in accessing treatment at the Medicaid service provider.
For TANF recipients referred to the Medicaid treatment providers, the treatment typically has a short-term orientation and tends to be provided in groups rather than individual therapy. Clients who are seen individually may be scheduled for treatment every other week. In addition, therapy may be geared toward those with diagnosable mental disorders, which may not include all TANF recipients referred to mental health services.
The advantage to using the Medicaid managed care providers for treatment is that state Medicaid funds can be used to draw down federal matching funds to help share the cost of treatment. This allows TANF funds to be used for other purposes. The drawback to using Medicaid treatment providers is that the types and amount of treatment are often restricted and, in some areas, clients have difficulty accessing treatment.