CHCS - Center for Health Care Strategies

Improving the quality and cost-effectiveness of publicly financed health care

National Study Reveals Gaps in Care, High Behavioral Health Costs for Children Enrolled in Medicaid

December 12, 2013

Taylor Hendricks
Center for Health Care Strategies


Analysis informs efforts to improve health care quality and reduce unnecessary costs for children with behavioral health needs.

Hamilton, NJ, December 12, 2013 - A 50-state analysis released today by the Center for Health Care Strategies (CHCS) shows that while less than 10 percent of children enrolled in Medicaid use behavioral health care, this care accounts for roughly 38 percent of program expenses. Faces of Medicaid: Examining Children's Behavioral Health Service Utilization and Expenditures explores patterns of behavioral health service use and expense for children in Medicaid and provides valuable insights to inform state efforts for improving care for this vulnerable population.

Most children served by Medicaid are from low-income households and many are served by multiple public programs, putting them at risk for receiving fragmented or inappropriate care. This risk is even higher for children in Medicaid with behavioral health needs, who often experience poor health outcomes at high costs. To uncover ways to improve care for these children, this study analyzed the types of services children are receiving, with a focus on children in foster care, those with developmental disabilities, and those receiving psychotropic medications.

"This analysis provides a critical baseline for examining the impact of ongoing health policy changes on children's behavioral health care," said Kamala Allen, director of child health quality at CHCS. "The findings highlight significant areas where states can look to improve access to and delivery of high-quality, cost-effective behavioral health care for children, ultimately leading to improved outcomes for this population."

Additional highlighted findings reveal:

  • Children in foster care and those on SSI/disability represent one-third of the Medicaid child population using behavioral health care, but 56 percent of total behavioral health service costs;
  • Children using residential treatment/therapeutic group care represent under four percent of children in Medicaid using behavioral health services, but account for 19 percent of total behavioral health expenses: and
  • Almost 50 percent of children enrolled in Medicaid who are prescribed psychotropic medications receive no identifiable behavioral health treatment.

The findings point to several opportunities to enhance children's behavioral health, including: (1) expanding access to appropriate and effective behavioral health services, beyond psychotropic medications; (2) investing in care coordination models-especially those using the wraparound approach; and (3) enhancing collaboration between behavioral health, primary care, child welfare, and other child-serving systems. Several provisions under the Affordable Care Act-including health homes funding and increased support for home- and community-based services-may present pathways for states to pursue these improvements.

"The fragmentation of behavioral health services makes it more difficult for children to receive appropriate care," said Tammi Fleming, senior associate at the Annie E. Casey Foundation. "This analysis provides state behavioral health systems with critical information as they work to design high-quality, coordinated services that lead to significant improvements in children's health outcomes."

The analysis, which uses 2005 claims data from Medicaid Analytic eXtract (MAX) files, is part of CHCS' ongoing Faces of Medicaid series. The series provides insights into the prevalence of specific conditions among Medicaid beneficiaries and their patterns of service use, to inform state and health plan efforts to improve quality and cost outcomes.CHCS is currently pursuing a second phase of this study using 2008 data.

The report was made possible through the Annie E. Casey Foundation, with additional support from the Substance Abuse and Mental Health Services Administration and The Commonwealth Fund.


The Center for Health Care Strategies (CHCS) is a nonprofit health policy resource center dedicated to improving health care quality for low-income Americans. CHCS works with state and federal agencies, health plans, providers, and consumer groups to develop innovative programs that better serve people with complex and high-cost health care needs. Its program priorities are: enhancing access to coverage and services; advancing quality and delivery system reform; and integrating care for people with complex and special needs.


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