By Kate Seltzer
The Virginian-Pilot
RICHMOND, Va. — The budget that recently took effect in Virginia includes provisions that mean Medicaid will no longer reimburse providers for certain behavioral health services.
Subject to federal approval, the Department of Medical Assistance Services, which administers Medicaid at the state level, will no longer pay for a service called community stabilization. And the agency will shorten the availability of mobile crisis response from eight hours per incident to four.
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When someone is experiencing a behavioral or mental health crisis, they can call 988 and get connected to a call center that provides 24-hour crisis counseling over the phone. If there’s an immediate threat to health and safety, that might require response for EMS or police.
But mobile crisis response is an alternative, where professionals come to the person in crisis and offer on-scene evaluation, treatment and intervention.
One step down from mobile crisis response is community stabilization — that’s what happens in the aftermath of a behavioral or mental health crisis. It’s not an emergency response, but the goal is to avoid hospitalization by providing in-home or community-based crisis services and counseling.
The changes to access to crisis services for Medicaid patients could mean more hospitalizations, and they will impact how providers are able to be reimbursed for that care. If fewer private entities are willing or able to treat Medicaid patients, community service boards could face a rising demand to step in and help.
“Typically community service boards function in the capacity to provide indigent care or unreimbursed care, because private entities don’t typically do that work,” said Brandon Rogers, executive director of the Western Tidewater Community Services Board, which serves as a regional hub for crisis services across the region.
“By not having that as a covered service for Medicaid recipients, we’re likely to see more service referrals to the CSBs to support care that isn’t being paid for (with Medicaid).”
In fiscal 2026, which ended in June, DMAS paid out about $223 million for mobile crisis response for Medicaid members. About 22,000 Medicaid users received the service, which cost an average of roughly $10,000. Of that group, 52% of patients were Black and 44% were white. About half of the patients had depressive disorders as their primary diagnosis; 21% had bipolar and related disorders, 18% had schizophrenia and other disorders, and 16% had trauma and stressor-related disorders.
Likewise, DMAS paid out about $95 million for Medicaid members for community stabilization services. About 12,000 people received those services, averaging about $7,700 per member. Most of the Medicaid patients who received the services were Black, and the majority of the primary diagnoses prompting a response were depressive disorders, followed by bipolar and related disorders and schizophrenia and other psychotic disorders.
In total, the changes in the state budget would save about $300 million in spending.
State Sen. Creigh Deeds, D- Charlottesville, campaigned for years for better access to behavioral health services after his son, in the midst of a mental health crisis, stabbed him before taking his own life. Deeds was unable to secure a bed for his son the day before the tragedy.
Deeds said cuts at the federal level, including to Medicaid, had lawmakers concerned.
“We’ll get through it, but it’s going to be tough,” he said. “It’s going to make everything tight.”
And, the legislature was concerned about significant instances of fraud. Between 2022 and 2026, a the operator of a mental health agency based in Richmond is alleged to have fraudulently billed Medicaid for more than $49.6 million for community stabilization and mobile crisis response services.
“I don’t think the clientele is to be blamed for what’s going on, but there are some things that we’ve been concerned about that has caused us to reexamine some of those programs,” Deeds said.
He said reducing access points to behavioral health care is a concern but that lawmakers have to be smart about how they spend that money.
“That means that when we smell money that’s going out the door — not to provide services to people that need help, but that is perhaps being spent in other ways — we’ve got to examine it,” he said. “We’ve got to tighten up, and we’ve got to make sure we’re spending in the right places. I’m worried, but I think that we have to make sure that we have spending under control, too.”
The budget changes shouldn’t interfere with the quality of care, Rogers with the Western Tidewater Community Services Board said. That is, mobile crisis responders shouldn’t bail on someone in crisis at the four-hour mark just because that person is a Medicaid recipient.
But it will be harder for responders to get reimbursed for that work. And if there are fewer routes for care in the wake of a mental health crisis, that could strain an already overloaded hospital system.
The Department of Behavioral Health and Developmental Services maintains a dashboard of the current occupancy rate at department state hospitals for children and adults. As of Monday, those hospitals were 99.3% full statewide for adults, and 100% full for children.
Private psychiatric units can provide additional capacity, but state hospitals are required to admit people if another bed can’t be located after eight hours in cases where a temporary detention order is recommended, Rogers said.
“When the state hospital census reaches such critical levels, safely admitting individuals in need of treatment can be delayed, making community-based services like community stabilization and mobile crisis response all the more necessary to provide proactive alternatives to inpatient care,” he said.
Rogers said it feels like a step backward in terms of the work the state has done in the past several years to expand community supports and reduce hospitalizations.
“There’s going to be an ambulance that comes to your door if you’re having a heart attack,” Rogers said. “If you’re suicidal, and in need of urgent behavioral health intervention, we’re right now made up of a mix of private and public resources to come and respond to your door. There’s not that same level of parity in behavioral health, but there is a similar level of risk to life and safety.”
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