Medicaid and Provider Participation in Substance Abuse Treatment

Background and Purpose: Medicaid is the largest source of federal financing for substance abuse treatment, contributing over $4.6 billion in expenditures to the system annually. Between 1986 and 2005, Medicaid's share of the total costs doubled from 10% to 21%, and is expected to grow significantly in the decade ahead. Medicaid's increasing role in financing treatment has been driven by Medicaid maximization strategies used by states to establish new benefits for substance abuse. Yet, little work has examined how treatment organizations have responded to the influx of Medicaid funding for their services—a question of particular importance in light of Medicaid's impending expansion under the Affordable Care Act. In response, the present study examines how comprehensiveness of coverage for substance abuse treatment is related to organizations' participation in the Medicaid program.

Methods: The study used data from the National Drug Abuse Treatment Services Survey (2005), a nationally representative study of outpatient substance abuse treatment organizations in the United States. The sample included 566 organizations. Drawing from state Medicaid statutes from the same time period, comprehensiveness of coverage was operationalized as the number of outpatient substance abuse treatment services covered by state Medicaid programs. Multilevel Heckman selection models were used to examine the association of comprehensiveness of coverage to: (1) provider participation in Medicaid; and (2) the extent of substance abuse treatment organizations' client based covered by Medicaid. All models control for Medicaid program features as well as several organizational- and state-level variables. Multiple imputation was used to address missing data.

Results: At bivariate level, comprehensiveness of coverage for substance abuse treatment was strongly and positively associated with provider participation in Medicaid and the extent of provider participation in Medicaid (p <0.01), measured as the proportion of the clients with Medicaid coverage (p<0.01). Results of multilevel Heckman selection models yielded similar findings. When controlling for Medicaid program features and a host of organizational- and state-level factors, comprehensiveness of coverage for substance abuse treatment was positively associated with provider participation in Medicaid (p<0.05); and the proportion of substance abuse treatment organizations' client base with Medicaid coverage (p<0.01).

Conclusions and Implications: Findings suggest that substance abuse treatment organizations in states with more comprehensive coverage for substance abuse treatment bring were more likely to participate in the Medicaid program. Among those treatment organizations that did participate in Medicaid, comprehensiveness of coverage was associated with a great proportion of total clients with Medicaid coverage. These findings suggest that organizations' willingness to participate in Medicaid is sensitive to the structure and generosity of program coverage for substance abuse treatment. The results have implications for policymakers who seek to increase participation in the Medicaid program in order to ensure adequate capacity to meet the needs of newly insured individuals under the Affordable Care Act.