The Effect of Medicaid Reimbursement Policies on Serious Mental Illness (SMI) Outcomes

Objective: To compare healthcare resource utilization (HCRU) and cost among Medicaid patients with serious mental illness (SMI) based on state reimbursement rates.
Methods: Using the Kythera National Medicaid data (2021-2023), the 20 most frequently billed procedures by participating psychiatrists were identified to generate a reimbursement rate index. States with high (top 20%) and low (bottom 20%) reimbursement rates were selected for analysis. The SMI population was defined by ≥1 medical claim for SMI during the identification period and continuous enrollment for 1 year pre- and post-diagnosis date. Clinical and sociodemographic characteristics and other outcomes were analyzed descriptively. Fixed-effect models estimated the effect of reimbursement rates on health outcomes, controlling for patient-level and fixed-state characteristics.
Results: The high-reimbursement-rate cohort (n=99,024) was 5% less likely to have psychiatry-related inpatient visits (OR: 0.9527, p= .0398), 4% less likely to have psychiatry-related outpatient visits (OR: 0.9623, p=.0433), and 23% less likely to have psychiatry-related emergency visits than the low-reimbursement cohort (n=154,437) (OR: 0.7664, p < .0001). For adjusted total HCRU, the high-reimbursement cohort was 7% less likely to have inpatient visits (OR: 0.9363, p=.0259) and 6% less likely to have emergency visits (OR: 0.9416, p < .0001) than the low-reimbursement cohort. The high-reimbursement cohort also had 24% lower overall total costs (p < .0001) and 19% lower psychiatry-related total costs (p=.0047).
Conclusion: Higher Medicaid reimbursement rates for psychiatric services were associated with various benefits for patients with SMI. These findings underscore the importance of equitable reimbursement structures to ensure access to quality mental healthcare for individuals with SMI.