Blog Post

Reimbursement for Behavioral Health Services Remains Inadequate

Reimbursement For Bh Web

With rates of suicide among children and adolescents rising at an alarming rate, and increasing numbers of youths reporting symptoms of anxiety and depression, children’s hospitals have declared pediatric mental health a national emergency. These organizations are being forced to grow services to meet skyrocketing demand, but they’re having to do it in an environment where reimbursement is fundamentally inadequate.

To help illustrate this point, we examined Medicaid reimbursement across four states for a common set of outpatient (OP) BH CPT codes.[1]What we found is that even though there has been a legislative push to expand coverage of BH services, there has not been a commensurate push to improve reimbursement.

  • Medicaid rates remain at 61% of Medicare.
  • Medicaid often does not reimburse for BH care management services.
  • Medicaid pays for nearly a quarter (24%) of all spending on mental health and substance use disorder services; for children’s hospitals, the majority of their visit volume is Medicaid.[2]

Revisiting Rates

There is a historical philosophy for managed care contracting: commercial reimbursement should help offset your losses from government payers. That’s not happening in BH. Based on our national managed care contracting experience, commercial BH reimbursement typically falls below Medicare, which seriously inhibits organizations’ ability to sustain their existing services, expand their offerings, and recruit and retain staff in one of the fiercest job markets on record.

This is not a new trend. BH rates have long been carved out from provider agreements and have rarely been a priority in payer negotiations. By failing to negotiate appropriate rates, BH service line leaders are forced to perpetually justify costs when reimbursement doesn’t cover them.

What Needs to Change

While we know that patients with BH diagnoses drive total healthcare costs, studies are starting to demonstrate that there is potential opportunity to bend the cost curve by focusing on the impact of BH on the total cost of care.[3]

  • BH service line leaders must work with their organization’s managed care leaders to prioritize the negotiation of rates and reimbursement structures that are aligned with the care model investments being made to increase access to BH services. This will also likely include the need to lobby state Medicaid and managed Medicaid payers for the inclusion of BH care management codes.
  • Payers need to use their claims data to not only understand the downstream savings opportunity associated with OP BH services but also to justify shifting reimbursement dollars so that investments can be made in expanding access to care settings focused on prevention and treatment.
  • Without those investments and incentives, inpatient and crisis management care will continue to be the primary treatment options.


    Here’s how Rady Children’s Hospital developed an integrated behavioral health/primary care model.

    Learn More


    • 1.

      Analysis was based on a proxy utilization data set of nine common OP CPT codes. 2021 national Medicare rates were compared to Medicaid across California, Florida, Illinois, and New Jersey.

    • 2.

      Medicaid and CHIP Payment and Access Commission,

    • 3.

      Milliman, Potential Economic Impact of Integrated Medical-Behavioral Healthcare (January 2018).