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H H S Department of Health and Human Services
Health Resources and Services Administration
Maternal and Child Health

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Mental Health and EPSDT: Structuring Services

Keys to Financing and Structuring Children’s Mental Health Services

Improving children’s mental health services requires engagement of the multiple parties who have a stake in children’s mental health treatment.  

Managed Care Organizations  

When Medicaid or other health insurance is provided through a managed care arrangement, mental health services may or may not be included.  Often, States exclude mental health services from the managed care benefit or separately contract for behavioral health services from a specialized managed behavioral health care organization (MBHO).  These arrangements are sometimes called “behavioral health carveouts.”  Even when mental health services are included in the managed care contract, an MCO may chose to subcontract with an MBHO to manage benefits.   

Services for Children with Serious Emotional Disturbances (SED)

The State agency designated as the children’s mental health authority is responsible for developing service systems to meet the needs of children with more serious problems, specifically, those meeting criteria for SED.  Depending on the State, this agency may have additional responsibilities for uninsured children with less serious conditions as well.  A number of States have county based mental health systems, which are responsible for administering mental health services.  Many of the specialized services for children with SED are supported in whole or in part by Medicaid funds.  In recognition of this shared responsibility, some States have located the children’s mental health authority in the same agency as Medicaid.

Community Mental Health Centers 

Community Mental Health Centers (CMHCs) are usually the primary providers for outpatient mental health services for children with SED and those who are on Medicaid or the Child Health Insurance Program (CHIP).  CMHCs may be administered by a State mental health or health agency, by a county or city government, or be part of a network of independent nonprofit health centers. In many regions the CMHC may be the only available outpatient service provider in a county or catchment area, especially in rural areas.  They are usually included in the Medicaid network as well as getting funding from county or State contracts. In most areas of the country, CMHCs do not have the capacity to provide service for at risk children and families.

Individuals with Disabilities Education Act

Individuals with Disabilities Education Act (IDEA) entitles children with certain conditions to services and supports. IDEA Part C entitles infants and toddlers (birth to 3) with developmental disabilities and delays to early intervention services. However, some State early intervention programs do not cover social and emotional problems to the same extent as other developmental disabilities. Part C programs are typically administered by State Education, Health, or Disabilities agencies. For preschoolers and school age children (ages 3 to 21) with an emotional problem that causes difficulties in learning, IDEA Part B, administered by school systems are responsible for providing special education services.  School systems may also provide mental health services.  A number of models exist, including referrals to outside practitioners, partnerships with mental health clinics, and school based health clinics that include mental health clinicians. Part B programs are generally administered by State Education Agencies, working through local education agencies.

State Agencies Responsible for Abused and Neglected Children and for Youth in the Juvenile Justice System

These agencies serve a population of children that include disproportionate numbers with mental illnesses and SED.  State Child Welfare Agencies are responsible for abused and neglected children, including those in foster care. State Juvenile Justice agencies have responsibility for a variety of children, including those who are incarcerated. All foster children and some youth in the juvenile justice system become eligible for Medicaid when they become wards of the State.  In addition, these State agencies often purchase or deliver specialized services for children with intensive behavioral health problems.  These services may be funded jointly by Medicaid and other public sources.  In some States, giving up custody to the State has been the only pathway for children to become eligible to receive these specialized services.