KFF Analysis of Medicaid Work & Reporting Requirements on MH & SUD Patients Nationwide

KFF, formerly the Kaiser Family Foundation, has recently released a new brief, “Implications of Medicaid Work and Reporting Requirements for Adults with Mental Health or Substance Use Disorders”, taking a deep look at house the new Medicaid work requirements in the recently passed budget reconciliation bill would impact adults in the Affordable Care Act (ACA) expansion group specifically related to mental health (MH) and substance use disorder (SUD) treatment.

Medicaid plays a large part in coverage and treatment of behavioral health conditions, covering nearly one-third of all adults with mental health disorders and one-fifth of all adults with substance use disorders; among Medicaid expansion enrollees specifically, 24% have a diagnosed behavioral health condition. Continuous Medicaid coverage supports ongoing treatment for mental health and substance use disorders, and disruptions may negatively affect individuals’ mental and physical health.

Medicaid expansion is the primary coverage pathway for people with mental health or substance use disorders. Among Medicaid-covered adults diagnosed with a substance use disorder, 59% qualify through ACA expansion, similar to those with opioid use disorders (61%), any mental health disorder (51%), and serious mental illness (45%), defined here as schizophrenia, other psychotic disorders, and bipolar disorders). These shares are higher when limited to ACA Medicaid expansion states.

While the bill does specify exemptions for individuals with SUD, who are participating in a treatment program, or who are living with other “disabling” mental disorders from work requirements under the “medically frail” designation, the bill does not define which diagnoses constitute “disabling” mental health disorders; and federal guidance as well as state decision-making will be forthcoming.

The bill likewise does not specify that states will be required to use available data to automatically verify exemptions or could still miss some individuals due to data limitations. These issues would be amplified in states with outdated or less integrated data systems, and even among those with well-functioning systems, there is often a delay of weeks or months between a service being provided and claims being fully processed, as well as increased likelihood of disputes or denials.

KFF points to Arkansas as a litmus test. When they implemented Medicaid work requirements, data-matching identified about two thirds of enrollees, exempting them from reporting work hours or exemption status. Among those who had to actively report, about 70% did not obtain an exemption or report compliance with the work requirements, ultimately resulting in over 18,000 people who would have otherwise been eligible to lose coverage.

The report also points to complexities for people experiencing mild or moderate mental health disorder who may not qualify for an exemption from work requirements; however the symptoms could lead to employment gaps, making compliance with new requirements more difficult. As well as challenges with individuals experiencing severe mental health or addiction symptoms managing expectations around paperwork, verifications, and compliance while also experiencing severe and persistent mental health disorders.