Stethoscope on table next to a RX paper and another paper that says "medical".

There are 2.2 million uninsured adults with incomes too low to qualify for the Affordable Care Act but do not qualify for Medicaid, and about 25% of them have a behavioral health condition.

During Going Digital: Behavioral Health Tech 2022, we were fortunate to host two incredible talks focused on Medicaid and behavioral health. The first talk was a Keynote by Chiquita Brooks-LaSure, the Administrator for the Centers for Medicare and Medicaid Services (CMS). We also had a panel discussion, hosted by Margaret Laws, the President and CEO of Hopelab, and featured panelists including Kinda Serafi, a Partner at Manatt, Judy Mohr Peterson, PhD, the Medicaid Director for Hawaii, Anna Fagin, a Principal at Town Hall Ventures, and Jeff Luce, Vice President at Optum, and the East Coast Medicaid Channel Lead. 


Medicaid covers nearly 80 million Americans and produces $617B in annual spend and 20% of total healthcare spending in the US. Additionally, 42% of all births are covered by Medicaid. Medicaid also covers much behavioral health care. In 2020, 23% of adults with mental illness, 26% of adults with serious mental illness, and 22% of adults with substance use disorder were covered by Medicaid. Unfortunately, there are 2.2 million uninsured adults with incomes too low to qualify for the Affordable Care Act but do not qualify for Medicaid, and about 25% of them have a behavioral health condition. 

As Margaret Laws explains, Medicaid is “an incredibly important area, particularly for historically underserved and underinvested populations and access to innovation, our mental and behavioral health services, and Medicaid has never been more important than it is today.” Chiquita Brooks-Lasure says that focusing on underserved populations is one of their top priorities continuing, “as we make our Medicare policies, we’re looking at how is it affecting the underserved people as well as the providers that serve the underserved?”

Quality Outcomes

As startups look to contract Medicaid managed care organizations, they must focus on specific quality and outcome metrics for contracts to succeed. Jeff explains that three domains for startups to focus on are: standard HEDIS metrics, consumer experience metrics such as net promoter scores (NPS), and tangible, measurement-based care metrics. Anna agrees and continues that startups that are “able to show that they’re best in class in that member experience and operational point of view, if you can be a partner in that, I think it can be a really effective strategy to get your foot in the door.”

Bundled Payments

As many startups start to utilize coaching models and other models of care that are not standard fee-for-service arrangements, they have to think about how to work with Medicaid for coverage of these services. Kinda explains, if you have a “bundled payment model, where you’re saying, I’m going to offer this set of services, this is my payment rate. And then this is how to save you money because I’m going to do this under this particular cap payment. It’s a really smart way to do it.”

Dr. Mohr Peterson explains that sometimes startups need to think about utilizing a consideration known as “in lieu of services” which means, “I’m going to provide this typically not billable service. And in lieu of this, more expensive traditional healthcare billable service in lieu of services means within a managed care environment.” Jeff gives startups hope that even in this complicated regulatory environment, “if the operational piece is super clear, I think the funding piece can get worked out.”

Expanding Markets

 Another complex aspect for Medicaid is that different markets operate differently and need unique contracts. Anna says that it is important for startups to remember “that markets are unique and different, states are different, populations are different, individuals are different. So being… both clear in your message and clear about the problem that you’re trying to solve is critical. But being flexible in your thinking and how you’re willing to get there… is equally critical.” Startups should have a clear vision of the problem and which market they are targeting but be flexible in their approach.

Anna continues, “the easiest way to sell your second Centene contract is to really crush it with your first Centene contract.” Startups can be most successful with subsequent contracts when they can show a first deal that worked really well. Dr. Mohr Peterson says when they are looking at new contracts for Hawaii, “We absolutely need to see that they have been successful [in other states].” Jeff also advises that startups “bring something to the table that I can react to or a plan can react to. [And] identify what about your first contract and your first deal worked really well hone in on that key success element.”

 Fortunately, Administrator Brooks-LaSure tells us that “across the agencies [we] have been working together to try to think about how do we encourage states to coordinate their care to ensure that children are receiving mental health services.”

Top Tips for Startups

1. Focus on Quality Outcomes

Make sure your product provides a top-notch member experience, works well operationally, and delivers incredible clinical outcomes. 

2. Work with Medicaid Plans on Bundled Payments

If you are offering services like coaching that fall out of the traditional ICD-10 code model, work with Medicaid plans to find a billing setup that works for both of you.

3. Crush Your First Contract

In order to successfully expand to additional states and markets, focus on excelling with your first contracts and having something positive to show your second market.

To hear both of these sessions, please visit our website.