Medicaid Bill Offers 90% Federal Match for States Increasing Behavioral Health Spending Above 2019 Levels

The aptly named Medicaid Bump Act is essentially a giant federal incentive program designed to get states to spend more money on mental health and substance abuse services through their Medicaid programs. If you care about access to therapy or addiction treatment, this bill is a big deal because it directly changes the financial math for state governments.

The 90% Incentive: Making Mental Health Spending Cheaper

Here’s the core mechanism: If a state increases its spending on Medicaid behavioral health services compared to what it spent in the first quarter of 2019 (January through March), the federal government will cover 90% of that increase in spending (Sec. 2). Normally, the federal match rate is lower, so this 90% rate is a massive financial carrot. Think of it like a limited-time sale where the federal government is picking up nine out of every ten dollars a state newly invests in mental health care.

This is designed to boost services for the 85 million Americans currently covered by Medicaid. For example, if a state spent $10 million in Q1 2019 and now spends $15 million, the $5 million difference would be matched at 90%, meaning the federal government covers $4.5 million of that new spending. This makes it much easier for states to expand coverage, increase provider networks, or start new programs.

The Fine Print: No Swapping State Money for Federal

To prevent states from simply pocketing the federal money and pulling back their own funds, the bill includes a strict “supplement, not supplant” rule (Sec. 2). States must use these new federal funds to add to their existing state spending levels, specifically those in place as of April 1, 2021. You can’t just replace state dollars with federal dollars; you have to spend more overall.

Furthermore, the state must use the funds to actually improve services. This means raising how much they pay providers—a huge deal for therapists and clinics struggling with low Medicaid reimbursement rates—or taking steps to lower staff turnover. This is crucial because if provider rates go up, it means more doctors and therapists might actually accept Medicaid, which translates directly into better access and shorter wait times for people needing care.

The Accountability Check

The bill also builds in a mandatory annual check-up to ensure this new money is actually making a difference. The Secretary of Health and Human Services (HHS) must issue an annual report to Congress detailing exactly what payment rates each state is using for behavioral health services under Medicaid (Sec. 3). They also have to explain how those rates were calculated and provide data on how often people are actually using these services. This level of mandated transparency is important for accountability, giving Congress and the public a clear view of whether states are using the 90% match to make meaningful improvements or just shuffling funds.

One thing to watch: The bill leaves the exact definition of “behavioral health services” up to the HHS Secretary to define in guidance within 180 days of the bill becoming law (Sec. 2). Until that guidance is issued, there’s a slight ambiguity about which specific programs or services will qualify for that sweet 90% match. However, the overall goal is clear: use federal incentives to push state Medicaid programs to significantly step up their game in mental health care.