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Behavioral Health Funding: Types, Eligibility, Services Covered, and Needs of Providers

Complexities and Needs of the Behavioral Health Provider Network

The behavioral health system in Pennsylvania is complicated to understand, especially when it comes to who funds what service. The type of insurance someone may or may not have can determine the services they are able to access. Each funding stream has its own set of processes and guidelines being managed by an entity. This funding greatly affects the providers ability to effectively operate programs that provide quality support to the youth and families that depend on them. Providers receive pre-determined rates and at times, one-time lump sum payments to help support their programs, which is not enough to help sustain the services they provide on an ongoing basis.

Funding Sources

To start, the following are sources of funding for the behavioral health system in Pennsylvania:

  • Health Choices/Behavioral Health Managed Care Organizations (BHMCOs): A youth can be eligible for Medicaid based on their parent’s income or based on a documented medical or behavioral health diagnosis. The determinations of which diagnoses are eligible are reviewed and need to meet social security administration requirements. This program is regulated by Medicaid and managed by HealthChoices programs in Pennsylvania who contract with BHMCOs to implement and provide contracted behavioral health services to members based on county of residence. The local county based BHMCO provides care management to their members to assist with linkages and case management. The members have a choice of providers within each level of service. The dollar amount annually received by HealthChoices is claims-based, calculated on a per member/per month basis. These services that HealthChoices/BHMCOs fund provided to members need to be medically necessary and approved by the BHMCO. Psychiatrists and psychologists review information received and base approval on the initial information received by the BHMCO from the entity who is requesting approval of a specific level of care. There are different approval processes at the BHMCOs for different levels of behavioral health care (outpatient, intensive behavioral health services (IBHS), multi systemic treatment (MST), family based mental health services (FBMHS), community residential rehabilitation (CRR) host home, partial hospitalization program (PHP), residential treatment facility (RTF), inpatient psychiatric hospitalization).
  • Children’s Health Insurance Program (CHIP) – This insurance is statewide and is for children up to the age of 19 who do not qualify for Medicaid based on parent/guardian income being higher than that which would qualify for Medicaid. This insurance covers some, but not all behavioral health services. It is up to the provider whether they will accept youth with CHIP coverage. This insurance is provided through insurance companies of which there is a choice of.
  • Health Insurance Premium Payment (HIPP) – A youth may be covered by HIPP when at least one person in their family has active Medicaid coverage, but that person is employed by someone that offers medical insurance. If the cost of Medicaid for a person is higher than the employer insurance, the person is enrolled in the HIPP Program. There are regional HIPP offices to contact for people enrolled that may need assistance. This insurance covers some, but not all behavioral health services. It is up to the provider whether they will accept HIPP.
  • County Base Funding: This funding is contingent on the budget developed by the Governor and held by the county mental health/developmental service (MH/DS) programs. It is determined by the annual county human services plan. Base dollars can fund youth services such as outpatient, psychiatric/psychological evaluations, family-based mental health services, and student assistance program (SAP), which are contracted with the county MH/DS programs for individuals that are uninsured or underinsured. The county MH/DS program has a process in place to determine a consumer’s share of funds for each service that is funded by base dollars. Each county is mandated to have a county MH/DS program based on the Mental Health Procedures Act of 1976 to help manage mental health services within that county and provide assessment and referrals to eligible individuals. County MH/DS programs can also work with families to help them apply for insurance to meet their needs.
  • Private Insurance: Behavioral Health services that are funded by private insurance are typically outpatient and inpatient hospitalization. Some private insurances do cover other services such as RTFs or IBHS for a youth with an Autism diagnosis, but only to a certain limit. This funding decision is unique to each individual insurance company/plan as determined by that company’s formulas. Private insurances do not commonly cover IBHS for other diagnoses, FBMHS, MST or CRR Host Home. 
  • County Children and Youth, Juvenile Justice, Education: The county may at times cover the cost of behavioral health services through their own local funds when they are not otherwise funded. Most likely, however, the county will seek to determine if a service could be funded by insurance (private or MCO) and assist, at most, with linkages. The education system may cover behavioral health services when they determine they are not able to educate a student in the public school system and there are not other funding sources approved for a student.

Rate Determination Process

All of the services listed above are offered through third party, private providers that are funded through the aforementioned funding sources in order to provide their service. These services are utilized daily by youth in Pennsylvania that need support. There is an initial rate setting process that providers and BHMCOs go through to determine the rate for every service.

Based on their cost of managing these programs, providers may ask BHMCOs for rate adjustments, especially if the BHMCO does not proactively offer regular rate increases themselves, which is not common practice. All BHMCOs differ with the level and type of information they require to support provider requests. Information typically requested for a Psychiatric RTF (PRTF) rate increase, for example, are the updated program description, budget, and an application. Some BHMCOs require additional documentation, such as expected outcomes and quality improvement activities. Also, BHMCOs may send the information they receive out to their county clusters for consideration, which makes it possible to have multiple rates within the same BHMCO.

All too often, however, BHMCOs limit how often providers can make requests for rate increases and some limit the amount of increase you can request. Also, it may not be acceptable for providers to ask for rate increases for other services. Providers may ask for rate increases for a variety of reasons, but it is mostly due to their expenditures not matching their intake as well as salaries/wages being too low and not attractive to people who may want to consider a career in the BH field. Rate increases help with sustainability and planning when looking at budgets and future spending.

One-Time Funds

Recently, in light of the COVID-19 pandemic and its impact on the behavioral health field, one-time American Rescue Plan Act funding and Act 2 of 2022 funding was made available to home and community based service providers as well as inpatient psychiatric hospitals and PRTFs to assist with recruitment and retention of staff due to high staff vacancy and turnover rates. Some of Pennsylvania’s HealthChoices programs, through the BHMCOs, also offered time-limited alternative payment arrangements, such as one-time lump sum payments or temporary rate adjustments, to support behavioral health providers during the difficulties of the pandemic due to levels of care that were continuing to see clinical volumes significantly below pre-COVID levels.

RTF and other provider recipients of this funding, used the ARPA one-time funds for things such as:

  • Staff bonuses (both a signing bonus and retention/recognition bonus for current staff)
  • Bolster recruitment efforts by advertising for their organizations
  • Increased mileage reimbursement during a time when gas prices rose by significant levels
  • Staff secondary trauma and self-care initiatives such as membership to apps that offer mindfulness and other self-care techniques
  • Meals to strengthen staff morale and camaraderie
  • Reimbursement for wellness-related activities

This one-time funding was critical and necessary to sustain a field that was considerably exhausted and depleted of resources during the pandemic. The field of behavioral health services, especially children’s behavioral health, offered a critical safety net during a time when individuals needed it most. However, while beneficial, funding support such as this needs to be provided annually – one time funding is not enough.

Funding Needs and Recommendations made by PCCYFS to Adequately Support the Behavioral Health System in Pennsylvania

Children’s behavioral health providers reimbursement rates are not sufficient to fully support an organization’s true cost of care. Workforce is at a critical place and providers have had to reduce admissions simply based on lack of staff to serve the youth. The system needs an influx of funds to recruit and retain staff to serve the youth that are being referred and prevent further trauma. As stated in The Workforce Crisis Affecting Behavioral Health & Child Welfare Services: Analysis & Recommendations, there have been and continue to be many challenges providers face based on lack of funding and workforce shortage.

With inpatient, RTFs and community-based providers not being able to staff their programs and serve youth at the rate referrals coming in, there is an increase of youth being seen in the emergency room due to behavioral health symptoms. This then causes a backup at the emergency room and hospital levels. This waterfall effect hurts the exact population this type of service is supposed to help, our youth and families.

While the pandemic-related funding insurgence assisted with some of these needs, the behavioral health system is in need of more than just one-time funding and requires more sustainable solutions:

  • Provider rates must be increased to adequately cover the true cost of care. The true cost of care should be inclusive of expenses that are standard in other industries but seen as a luxury in the children’s behavioral health sector. One agency estimates that their single RTF program would require a minimum of a $1 million increase in order to adequately offer the quality and level of services that they would like. Rate increases should be calculated to represent:
    • Higher and actually competitive wages.
    • Consistent recruitment/retention funds
    • Ongoing opportunities for staff bonuses that are competitive with the current market.
    • Improved funding to support rising healthcare needs, especially for an industry that engages in ongoing traumatizing and challenging work, which can be especially physically and mentally taxing on the professionals in this sector. 
  • Student loan forgiveness programs for children’s behavioral health professionals.
  • Any additional funding made available should go to the behavioral health system and the providers who operate in this space instead of other systems to provide behavioral health-type services. Funding should go directly to the system with the expertise, capacity, and knowledge to then support other systems with the needed services.

See below attachment describing types of behavioral health funding sources, eligibility and services covered: