Manatt on Health: Medicaid Edition

Medicaid's Growing Role for SUD Services in Montana

By April Grady, Director | Deborah Bachrach, Partner | Patricia Boozang, Senior Managing Director

Editor's Note: Montana's 2016 expansion of Medicaid provides an important opportunity to strengthen the state's substance use disorder (SUD) prevention and treatment system. In a new report for the Montana Healthcare Foundation, summarized below, Manatt Health explores Medicaid's new role as a primary payer for SUD services in Montana and offers strategies that the Medicaid program may pursue to improve SUD service delivery in the state. The report begins with an overview of the impact of SUD in Montana, then reviews Medicaid's growing role in the SUD system and concludes with options Montana's Medicaid program may consider to deliver and finance Medicaid services for beneficiaries with SUD most efficiently and effectively. Click here to download the full report free.


Even as Congress and the Administration consider broad changes to healthcare reforms implemented under the Affordable Care Act (ACA)—including the elimination of Medicaid expansion and deep cuts to federal Medicaid funding—Montana's Medicaid program has a unique point-in-time opportunity to make meaningful progress in SUD delivery system and payment policy to improve the health, wellbeing and lives of Montanans. With expansion, all Medicaid enrollees have access to comprehensive benefits, including SUD services—and Medicaid is becoming a primary funding source for SUD services in Montana.

The Growing SUD Problem in Montana

Montana is grappling with a serious and growing public health problem in SUD—including alcoholism, methamphetamine use, and opioid abuse and overdose—as well as the related, profound economic and social consequences of those conditions. The state's rate of alcohol dependence and abuse is higher than the national average, yet more than 90% of those with alcohol and drug problems are not receiving treatment.

The number of children in Montana's foster care system due to abuse or neglect related to parental substance abuse has nearly doubled since 2010. In addition, more than half of Montana's prison inmates are receiving or in need of SUD treatment. Across the state, alcohol and drug abuse consistently tops the list of health concerns in community health assessments, yet there are only 32 state-approved facilities providing inpatient and outpatient SUD treatment, along with a small number of community health centers and tribally-run programs.

Funding SUD Services Pre- and Post-Expansion

Prior to the implementation of Medicaid expansion, SUD services in Montana were funded through a patchwork of federal grant dollars and state alcohol tax and general funds. Medicaid did not play a central role in funding these services, because the program covered few adults (other than parents, pregnant women and the elderly and disabled) and provided only limited SUD services for those it did cover.

That changed in January 2016, when Montana expanded its Medicaid program to include most adults with incomes up to 138 percent of the federal poverty level (FPL). In the last year, Montana has enrolled 71,000 additional Montanans in Medicaid, all of whom receive comprehensive health benefits, including robust SUD services. As expansion has grown, so has Medicaid's role in financing these services.

A key factor in Medicaid's major impact on SUD services is that Montana receives an enhanced federal match for its Medicaid spending on expansion adults—100% in 2016, 95% in 2017 and phasing down to 90% in 2020 and beyond. As Medicaid covers a larger share of SUD treatment costs, federal Medicaid dollars replace federal block grant and state dollars previously used to fund SUD services for uninsured Montanans. These funds are then freed up to be reinvested in Medicaid, the broader SUD treatment and prevention system, and other state priorities.

In state fiscal year (SFY) 2016 alone, after only six months of Medicaid expansion, Montana freed up approximately $1.5 million in state general funds, as SUD services for adults previously supported with non-Medicaid dollars were replaced by federal Medicaid funds. In each of SFYs 2018 and 2019, Governor Bullock has proposed freeing up nearly $3 million in state general funds from the expanded availability of federal Medicaid funds for SUD.

Using Montana's Purchasing Power to Improve SUD Services

In addition to the fiscal benefits of its new role as key payer for SUD services, Montana Medicaid has an opportunity to use its purchasing power to improve access, quality and efficacy for Medicaid enrollees with addiction and its myriad of co-occurring physical and mental health issues. Medicaid now can tackle long-standing challenges in Montana's SUD system that include delivery system capacity issues, which are driven in part by coverage and reimbursement policies that that may not pay appropriately for benefits, professionals and settings that would advance Montana's goals for improving both access to high-quality care and patient outcomes.

Drawing Solutions from Best Practices

There is no silver bullet solution to ensure that the right services are provided at the right time and place for Medicaid enrollees with SUD. Rather, effective strategies can be drawn from best practices among state Medicaid agencies nationally, all of which recognize that the Medicaid program is a potent weapon to combat the addiction crisis. Strategies for consideration by Montana include:

  • Improving identification of individuals with SUD and ensuring their access to a full range of SUD treatment services, potentially including recovery services, such as peer supports;
  • Promoting integration of SUD screening and intervention in primary care settings;
  • Using prior authorization and other utilization management techniques to ensure that all Medicaid enrollees receive the care that best meets their needs and, conversely, removing prior authorization requirements that impede access to essential services, like medication-assisted treatment (MAT);
  • Enhancing delivery system capacity by allowing state-licensed addiction counselors to enroll in and bill Medicaid directly for services provided to all Medicaid enrollees, and pursuing elimination of statutory limits to state approval of SUD facilities, as proposed in pending state legislation;
  • Modernizing payment methodologies and levels to support and incentivize state priorities, and ensure Medicaid is purchasing quality, cost-effective care; and
  • Pursuing innovative approaches to improving SUD coverage, service delivery and payment through a Section 1115 waiver.

By adopting some of these practices, Montana Medicaid can leverage its critical role as a primary purchaser of SUD services to shape a delivery system that improves the health and wellbeing of its residents while efficiently and effectively administering limited state and federal dollars.



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