$5 Billion Can Breathe New Life into Long-Term Behavioral Health Efforts

Five ways states and community providers should use American Rescue Plan funds to build future capacity and address behavioral health needs.

While the nearly $2 trillion American Rescue Plan (ARP) touches almost every facet of the US economy impacted by COVID-19, behavioral health is a central feature of the legislation.

The Biden administration and Congress have targeted nearly $5 billion in supplemental funding for existing behavioral health programs and services, as well as new value-based initiatives. Although this is one-time funding, it will be allocated over a period of years and affords states and providers a financial bridge to build their capacity for services into the future.

ARP funding for behavioral health is targeted in several key areas: block grant funding, workforce, and local community provider services, as well as new value-based models to promote expansion of community crisis services.

States and providers should use the funds to address immediate needs exacerbated by the COVID-19 pandemic, but also build a roadmap for the future.

Some state officials, provider leadership, and stakeholders alike are concerned about the one-time injection of ARP funds and the sustainability of the service expansion into the future. However, with the right strategy, ARP funding can be used to build internal capacity for providing services and as a bridge to sustainable funding options.

Five ways to capitalize on this one-time funding opportunity

  1. Assessment of service gaps: ARP mental health and substance abuse block grant funding gives states an opportunity to update their gap assessments for the continuum of care of behavioral health services. Targeted investments in lagging service areas are critical to address behavioral health needs.

  2. Long-term planning: The ARP can provide states and providers resources to examine their 5-year or 10-year behavioral health plans. Beyond immediate gaps and needs, understanding future enrollment and margin impacts, and examining longer-term delivery and funding needs is critical. The continued transition away from commercial insurance to Medicare and Medicaid has significant implications for both states and providers.

  3. Workforce investments: ARP behavioral health funding creates the potential for states to ensure that providers enhance their workforce and address workforce needs to improve access to care. Education and awareness for existing workforce behavioral health needs will encourage retention. Partnerships with local community colleges and other educational institutions will be important to the availability of the future workforce.

  4. Value-based payment initiatives: Value-based payment models are proliferating and they will occupy a central place in the new administration’s health policy initiatives, as witnessed in part by the inclusion in the ARP of a new Medicaid bundled payment for behavioral health crisis services. Through available ARP funding, states now have the opportunity to design and test new payment models to achieve the long-term goals of improving quality and generating program savings. Advancing health equity and reducing disparities should be central features of these new value-based models.

  5. Prevention services: Questions about the sustainability of services expanded under the ARP are legitimate, especially in public programs like Medicaid that have seen significant enrollment growth with widespread job losses due to COVID. State healthcare leaders should be focused on maximizing the use of ARP behavioral health funding for allowable prevention services as a key component of their long-term plan for sustainability.

Obtaining maximum benefits from ARP behavioral health funding will ultimately be tied to careful planning and close coordination with other ARP funds, such as its state and local recovery funding stream.

Guidehouse is helping states and community providers obtain and leverage ARP funds to develop strategic behavioral health plans. Learn how.

Summary of ARP's behavioral health funding streams

Community Mental Health and Substance Abuse Block Grants

Behavioral health workforce recruitment and training

Local community-based needs

Value-based crisis services




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