Funding Strategies for Substance Use Disorder Programs

A key strategy for sustaining rural substance use disorder (SUD) programs is securing funding to support implementation. Rural SUD programs can plan for financial sustainability by seeking payment and reimbursement for services and billing private and public medical insurance providers.

Medicaid/Medicare

Medicaid coverage for SUD treatment and recovery services varies by state, particularly for services such as recovery support, residential treatment, and peer-delivered care. However, under the SUPPORT Act of 2018, all state Medicaid programs are required to cover medications for opioid use disorder (MOUD). This includes coverage of all forms of Food and Drug Administration (FDA)-approved medications for OUD — such as methadone, buprenorphine, and naltrexone — as well as associated counseling and behavioral therapies. States may still apply utilization management tools like prior authorizations before covering certain medications.

Program planners should confirm whether staff are eligible to bill for services under Medicaid. For example, some states may allow reimbursement for services provided by community health workers but may impose certain training or credentialing requirements.

Medicare coverage for SUD includes a range of inpatient and outpatient treatment options. Rural communities using telehealth to offer SUD treatment or recovery services should be aware of Medicare policies for coverage of telehealth services.

Private Insurance

Private insurers also commonly cover SUD treatment options. The federal government requires health insurance plans that participate on the Marketplace to cover essential mental and behavioral health services, including counseling, inpatient services, and SUD treatment.

Value-based Payments

Both public and private payers, but especially Medicare and Medicaid, are moving toward value-based payments that incentivize providers to increase the quality of care, decrease healthcare costs, and improve health outcomes. Providers may be rewarded for attaining certain targets related to SUD treatment and recovery, such as increased screenings for SUD and referrals to treatment. In 2018, the Alliance for Recovery-Centered Addiction Health Services piloted the Addiction Recovery Medical Home model, in which providers shared savings associated with higher-quality care for patients in SUD treatment and recovery.

Resources to Learn More

Exploring Value-Based Payment to Encourage Substance Use Disorder Treatment in Primary Care
Document
Examines how Value-Based Payment (VBP) models can improve access to, and integration of, substance use disorder treatment in primary care settings. Provides insights and recommendations for implementing these VBP models effectively.
Author(s): Schulman, M., O'Brien, J., Pierre-Wright, M., & Thomas-Henkel, C.
Organization(s): Center for Health Care Strategies, Technical Assistance Collaborative
Date: 6/2018

Medicaid Coverage of Medications to Reverse Opioid Overdose and Treat Alcohol and Opioid Use Disorders
Document
Provides an overview of Medicaid coverage and access to medications for treating substance use disorders such as alcohol use disorder and opioid use disorder. Shares examples of innovative strategies used to improve access to medications for substance use disorder treatment.
Organization(s): Substance Abuse and Mental Health Services Administration, Center for Financing Reform and Innovation
Date: 2/2024