On the Horizon: Expanding Access to Psychedelic-Assisted Therapy Through Medicaid
By Meryl Schulman, Senior Program Officer, Center for Health Care Strategies and Tanya Shah, Advisor, Psychedelic Mental Health Access Alliance
Preface by Dara Menashi, PhD, Co-Director, PMHA Alliance
Why Partnering with CHCS Is Central to PMHA Alliance’s Medicaid Strategy
The Center for Health Care Strategies (CHCS) is one of the nation’s leading Medicaid policy organizations, known for improving care through smart policy design, implementation support, and cross-sector collaboration.
PMHA engaged CHCS to understand what considerations are important to state Medicaid agencies when determining current or future coverage of psychedelic-assisted therapy (PAT). Their insights are shaping our strategy to build Medicaid access to PAT, highlighting the evidence most important to state and managed care decision-makers, and identifying what systems are necessary to successfully integrate PAT for vulnerable populations.
The blog post co-authored by CHCS and PMHA Alliance that follows highlights findings from their detailed report based on independent interviews and research. What is exciting to us is that PMHA’s core strategies support the strategies CHCS highlights as critical for Medicaid access.
Our partnership is about more than Medicaid mechanics—it’s about connecting the emerging field of psychedelics with the broader health equity and state policy community. Psychedelics offer promising new treatments for depression, PTSD, and substance use disorders. To realize that potential, the leaders who serve marginalized populations must understand what’s coming and help design the models that will bring PAT into mainstream care.
Through CHCS, we are engaging Medicaid agencies directly—asking what they know about PAT, how they’re preparing, and what support they need. This builds awareness, trust, and readiness within institutions that determine access. Just as we work with groups like the APA and national Social Work and Nursing Associations, we are cultivating the same two-way dialogue across Medicaid stakeholders to ensure solutions reach the people who need them most. CHCS has demonstrated an interest in continuing to work with us because they see us as a trusted partner and recognize this important behavioral health opportunity.
By laying this groundwork now—through evidence generation, stakeholder engagement, and provider education—PMHA is helping ensure that when FDA approval arrives, equitable access can follow quickly. We aim to show that innovation and equity can advance together in public care.
Introduction
Nearly 40% of adult Medicaid enrollees under 65 years of age have a mental health or substance use disorder (SUD). Given that Medicaid is the single largest payer in the U.S. for behavioral health services — including mental health and SUD services — state Medicaid agencies have a clear incentive to explore new, effective behavioral health treatments for their members.
Psychedelic-assisted therapy (PAT), which integrates psychedelic medicines with psychotherapy, is emerging as a new and effective treatment for people with serious behavioral health conditions. There is a growing evidence base showing rapid, sustained improvements for people with major depressive disorders, post-traumatic stress disorder, SUD, and depression and anxiety symptoms. As research on psychedelic medicines and PAT advance and coverage pathways begin to take shape, it is important to consider how Medicaid, as a major payer and access point for behavioral health care, can expand access to these emerging therapies. The Center for Health Care Strategies (CHCS) recently partnered with the Psychedelic Mental Health Access Alliance (PMHA Alliance) to explore how PAT can be integrated into Medicaid.
Medicaid and Psychedelic-Assisted Therapy
As noted, researchers are exploring how psychedelic drugs — including psilocybin, 3,4-methylenedioxymethamphetamine (MDMA), and ketamine, which has psychedelic properties — can support treatment for various behavioral health conditions. This is particularly relevant for Medicaid agencies, given the prevalence of behavioral health conditions among Medicaid enrollees and the potential need to cover these drugs in the future. Importantly, state Medicaid programs that opt to cover outpatient prescription drugs (which all currently do) are required to cover all drugs approved by the U.S. Food and Drug Administration (FDA) that are offered by a pharmaceutical manufacturer participating in the Medicaid Drug Rebate Program.
At present, the only FDA approved “psychedelic” is Spravato, or esketamine in its generic form, a prescription medication used to treat adults with treatment-resistant depression or major depressive disorder. Because Medicaid programs must cover all FDA approved drugs, they cover Spravato for the aforementioned indications; however, each state sets its own coverage and medical necessity requirements for the drug. Beyond Spravato, some state Medicaid programs like Massachusetts and Wisconsin (and others), cover off-label use of intravenous ketamine for treatment-resistant depression and major depressive disorder, respectively.
Building the Evidence Base for PAT with the Medicaid Population
To support future Medicaid coverage of PAT, investment in research that aligns with the requirements of state Medicaid agencies is crucial. Research should be high-quality, rigorous and reflect the demographics and needs of Medicaid members — including those with multiple chronic conditions and unmet social needs. Building this targeted evidence base can help to inform Medicaid decision-makers and stakeholders. When reviewing new drugs and therapies, Medicaid agencies will consider several factors, such as:
Effectiveness and outcomes. This includes understanding how effective a new drug or therapy is compared to a placebo, outcomes among Medicaid-eligible subpopulations, and comparative effectiveness with existing treatments. It also includes understanding the short-, medium-, and long-term outcomes associated with a new drug or therapy, as well as if there are different (or similar) outcomes for different populations. Medicaid programs have flexibility to limit coverage and will be particularly interested in the conditions that are most effectively treated by PAT, and where step therapy (i.e., trying a less expensive therapy before a more expensive one) or other utilization management approaches might be appropriate.
Safety. Beyond effectiveness, Medicaid agencies will want to understand the safety of a new drug or therapy, including any potential side effects or risks. In general, agencies seek to determine whether the benefits of a drug or therapy outweigh the risks for the populations they serve, particularly those with complex social, medical, and behavioral health needs.
Setting and Administration. Medicaid agencies will want to understand where (e.g., at home, in a provider’s office) and how (e.g., by the patient, by a licensed provider) a new drug or therapy will be administered. They will also want to consider if the treatment has monitoring requirements or involves logistics, such as coordination with specialty pharmacies.
Cost. Like other insurers, Medicaid programs want to understand the projected fiscal impact of a drug or therapy — including potential reductions in emergency department visits, psychiatric hospitalizations, and drug costs. This includes comparing costs to existing treatments and evaluating population impacts for Medicaid.
Designing Scalable Care Models
Beyond current clinical trial research, PAT clinicians and other stakeholders can support the development of scalable PAT care models that can be integrated into existing settings where Medicaid members receive behavioral health treatments. Key areas for exploration include:
Group delivery of PAT. One challenge for PAT within Medicaid delivery systems is staffing — not only for therapy during the “preparation” and “integration” phases, but also during “dosing” and “aftercare” (read more about the phases of PAT). One promising model to address these staffing costs is group delivery of care. Notably, all states responding to a national survey noted that group therapy is a covered Medicaid service. Group delivery may create staffing efficiencies, including for medical providers required to be on-site during dosing and aftercare, and for team-based care models that include peer support specialists or community health workers.
Integrating PAT into settings with integrated care or within intensive outpatient programs. Entities that employ both physical and mental health providers and/or where Medicaid members already receive behavioral health treatments — such as federally qualified health centers, certified community behavioral health clinics (CCBHCs), or intensive outpatient programs (IOPs) — may be key sites for delivery of PAT care. To effectively integrate these approaches, it will be important to define staffing needed for each phase of PAT, support staff in practicing at the top of their license, and as noted above, explore group-based therapy forums to help reduce costs.
Partnering with reputable leaders in the field to develop clinical practice guidelines. Medicaid stakeholders will need clear clinical guidelines that outline the components of PAT care models to inform coverage decisions and reimbursement approaches. These guidelines should be tailored to safety net settings to ensure they can be integrated into places where Medicaid members receive care.
Working with providers and prescribers. Medicaid coverage of a new drug or therapy does not guarantee that providers will prescribe or provide it. To support provider uptake of PAT, it is critical to invest in education and capacity building. PAT will be new to many providers serving Medicaid populations, and they will need training, technical assistance, and consistent support to effectively provide PAT. It may also be worth exploring provider uptake and experience of prescribing and providing esketamine and IV ketamine to inform future adoption of PAT.
Looking Ahead
Expanding access to PAT through Medicaid is a long-term endeavor that will require strategic planning, continued research on psychedelics, and stakeholder engagement. Organizations like the PMHA Alliance are well positioned to help lead this and support this work by furthering the following strategies:
Supporting research that reflects Medicaid populations and priorities. While FDA approval is a necessary prerequisite for coverage, Medicaid programs can also seek strong, population-relevant evidence to guide access for beneficiaries most likely to benefit from PAT.
Developing scalable care models and clinical guidelines tailored to safety-net settings. To encourage spread within the safety net, efforts can focus on established delivery settings such as CCBHCs, community mental health centers, and IOPs. Medicaid stakeholders will also need clear clinical guidelines that are geared toward safety-net settings.
Engaging Medicaid providers to build awareness and capacity. Targeted investments in training, outreach, and capacity building will be essential, since PAT will be unfamiliar to many providers serving Medicaid populations.
By laying the groundwork now — through evidence generation, stakeholder engagement, and provider education — Medicaid agencies can be better positioned to support expanded coverage for PAT pending FDA approval, advancing innovation and improving outcomes in behavioral health care.