Nursing facilities serve residents with a range of behavioral health needs — from mild depression, substance use, and anxiety to serious mental illness (SMI) and dementia with co-occurring psychiatric conditions. Up to 90 percent of nursing facility residents have a mental health condition, but barriers such as insufficient staff training, poor coordination with community providers, and inadequate referral systems make providing behavioral health services difficult.
States are exploring a range of new and existing policy tools to enhance workforce training, expand access to behavioral health services, and improve quality measures. Strengthening collaboration across behavioral health and aging state agencies and initiatives can improve care coordination and support community-based alternatives. This brief highlights examples of state strategies that can inform efforts to strengthen cross-agency collaboration and improve behavioral health care in nursing facilities.
Strengthening the Workforce
Money Follows the Person
The Money Follows the Person (MFP) program provides states with flexible funding to support the transition of individuals from institutional settings to community-based living. Several states have leveraged this flexibility to strengthen the knowledge and capacity of the workforce that supports these transitions. They include:
- Texas used MFP funds to pilot transition specialists who support people with serious mental illness moving out of nursing facilities. The program strengthens ties between managed care and community mental health providers and includes statewide training led by a university center, offering resources such as webinars, modules, and provider forums.
- Iowa used MFP funds to invest in training programs aimed at enhancing the quality of care and services available to individuals transitioning from institutions.
- New Jersey used MFP administrative funds to create Olmstead Resource Teams that include behavioral health professionals and other specialists to support individuals with intellectual and developmental disabilities. Although funding for the Olmstead Resource Teams was discontinued, the initiative — which was renamed the DDD Resource Team — was continued through the New Jersey Division of Developmental Disabilities and is still funded by state dollars. The initiative resulted in a wide range of resources, safety bulletins, and training courses for providers. New Jersey further augments its training efforts with four MFP education and advocacy coordinators housed within its Long-Term Care Ombudsman office who provide training to nursing facilities staff. The training focuses on helping staff and residents understand the transition process through resident council meetings and resident rights bingo games.
Maximizing Current Resources for Impact
State aging agencies, in collaboration with behavioral health and Medicaid agencies, can use existing policy levers to expand behavioral health services and workforce capacity in nursing facilities. While some of these efforts may not be designed specifically for SMI, they strengthen the overall infrastructure for behavioral health care in nursing facilities, benefiting residents with a range of needs.
- Embedding behavioral health into multisector plans for aging (MPAs): More states are implementing MPAs to coordinate and prioritize the state’s goals and initiatives to address the aging population. While not specific to behavioral health in nursing homes, states such as Vermont and Colorado have incorporated behavioral health objectives into their plans — bringing attention to the need for stronger collaboration among behavioral health, aging, and long-term services and supports. These efforts lay important groundwork for potential alignment with nursing facilities in the future.
- Innovation through incubator projects: Cross-agency collaboration can identify existing funding opportunities to pilot programs that test innovative approaches to integrating behavioral health in nursing facilities. Delaware’s Division of Substance Abuse and Mental Health, in partnership with the Division of Services for Aging and Adults with Physical Disabilities, is piloting peer support in a state-run long-term care facility for residents meeting PASRR Level 2 criteria. This initiative aims to strengthen the peer workforce’s capacity to support older adults with mental health needs and develop a replicable model for broader implementation.
- Leverage higher education partnerships: Collaborating with universities can expand workforce training programs focused on dementia-related behavioral health challenges. For example, Oregon’s Health Authority funded a Center of Excellence for Behavioral Health & Aging at Portland State University and Oregon Health & Science University to advance training, research, and workforce development in aging behavioral health.
- Expand successful workforce training initiatives: States can integrate existing state-funded education and training programs such as Mental Health First Aid for Older Adults, into nursing facility staff development programs.
- Promote and incentivize use of free training and technical assistance for nursing facilities: Encourage nursing facilities to utilize the Center of Excellence for Behavioral Health in Nursing Facilities for no-cost training, continuing education credits, technical assistance, and resources to support behavioral health care. State officials can support uptake by promoting the resource, integrating it into quality improvement initiatives, and offering incentives for facility participation.
Civil Monetary Penalty (CMP) Funds
Civil Money Penalty (CMP) funds are collected by the Centers for Medicare & Medicaid Services (CMS) when nursing facilities are found to be out of compliance with federal requirements. These funds can then be reinvested by states, with CMS approval, to support projects that enhance the quality of care in nursing facilities.
States often use CMP funds for initiatives such as training on safe medication management and non-pharmaceutical interventions, particularly for residents with Alzheimer’s disease and dementia. While CMP funds cannot be used for projects directly focused on mental health or substance use disorders, these CMP quality improvement initiatives can benefit residents with co-occurring conditions by promoting person-centered care approaches. In 2024, Kentucky received CMS approval for CMP funds to address social isolation and provide dementia training that includes behavior management techniques to prevent and de-escalate distress behaviors without relying on medications.
Strengthening Cross-Agency Collaboration
Maximizing policy options to support behavioral health care for nursing facilities residents requires strong collaboration among state aging, Medicaid, and behavioral health agencies. Cross-agency efforts can improve coordination between nursing facilities and community providers — such as Certified Community Behavioral Health Clinics — to ensure residents receive needed behavioral health services.
- In New Jersey, where both divisions fall under the same Department of Human Services, collaboration is more streamlined, allowing for coordinated efforts to enhance the quality of care.
- The Oklahoma Department of Mental Health and Substance Abuse Services established an Aging Services Division to collaborate with partners on system-wide behavioral health support for older adults. The division works closely with Oklahoma Human Services, Community Living, Aging and Protective Services on the implementation of the state’s Multisector Plan on Aging.
Strengthening these formal partnerships at the state level can lead to more coordinated, person-centered care that bridges the gap between nursing facilities and the community-based resources that support mental health.
Expanding Access to Behavioral Health Services
Tele-behavioral health (TBH) and Consultation Models
Tele-behavioral health (TBH) and consultation models provide a collaborative approach to treatment, medical education, and care management that can significantly improve access to behavioral health services in nursing facilities. These models enable clinicians to provide expert-level care to residents, regardless of their location, and allow nursing facility staff to consult with specialized professionals without the need for patients to travel.
Multiple states, including California, Colorado, New Mexico, and Oregon, have used Medicaid funding to implement Project ECHO, a model that connects nursing facility staff with behavioral health specialists through video conferencing and mentoring.
Additionally, TBH has proven to be a key strategy in improving access to behavioral health services and can be more widely integrated into nursing facilities. For example, the University of Vermont Medical Center’s nursing home telepsychiatry program demonstrated improved access to services and significant cost savings.
In Nebraska, the Department of Health and Human Services developed a “Continuum of Care Manual for Mental Health and Substance Use Disorders” that includes guidelines for delivering services via telehealth and phone-in outpatient programs. A paper exploring barriers and best practices highlights that the University of Nebraska’s psychiatry department provides services in 70 nursing and assisted living facilities. Telehealth models help residents receive the care they need, reducing the logistical challenges and costs associated with travel to medical practices.
Quality Improvement and Incentive-Based Payment Models
All states collect measures assessing antipsychotic medication use among nursing facility residents. Most states use a combination of Healthcare Effectiveness Data and Information Set (HEDIS) measures and at least one of the CMS core measure sets. States can go deeper into Section D: Mood and Section E: Behaviors within the Minimum Data Set 3.0, a standardized assessment tool used in nursing facilities to evaluate residents’ physical, mental, and psychosocial functioning — regardless of whether a formal clinical diagnosis has been made. As part of Medicaid managed care contracting, states can incorporate specialized quality measures to evaluate how plans deliver behavioral health services to high-need populations in nursing facilities.
Incentive-Based Payments
An estimated 42 states adjust fee-for-service nursing facility payment rates based on residents’ acuity or level of need. MACPAC’s 2019 state policy compendium, “States’ Medicaid Fee-for-Service Nursing Facility Payment Policies,” includes information on rate adjustments for nursing facilities caring for residents with mental health or cognitive impairments. These adjustments, often referred to as add-ons, are intended for facilities serving people with conditions such as traumatic brain injuries, dementia, and Alzheimer’s disease. Here are a few examples:
- In Wisconsin, skilled nursing facilities can receive an additional $24.87 per resident per day for providing specialized psychiatric rehabilitative services to residents identified as having a mental illness through a Level II PASRR screening.
- In Delaware, nursing facilities may receive an additional 10 percent of the primary care rate component for patients who frequently exhibit disruptive psychosocial behaviors, as classified by the Delaware Department of Health and Social Services.
- Wyoming offers an add-on reimbursement rate for “extraordinary care clients,” who are residents who require psychiatric care due to significant behavioral health needs. This includes individuals who cannot be safely cared for in a standard nursing facility without additional staffing or special accommodations.
Data-Driven Strategies to Inform Behavioral Health Policy in Nursing Facilities
States can leverage existing data sources — such as Preadmission Screening and Resident Review (PASRR) evaluations of individuals seeking admission to Medicaid-certified nursing facilities and Certification and Survey Provider Enhanced Reports (CASPER) quality-of-care reports based on data collected from patient records — to identify areas for improvement and inform policy. A few questions states can consider in enhancing data use in policy discussions include:
- How are PASRR data currently reported and informing behavioral health and long-term care policies?
- What barriers exist in collecting, sharing, or analyzing behavioral health data related to nursing facility residents?
- How can PASRR data and CASPER reports be integrated with Medicaid and quality improvement initiatives to drive better outcomes?
States have a range of policy levers to strengthen behavioral health care in nursing facilities, including investments in training, payment reforms, telehealth expansion, and quality incentives. To achieve sustained improvements, cross-agency collaboration is essential for aligning behavioral health, Medicaid, and aging initiatives.
Technical Assistance Resources for States
- SAMHSA Center of Excellence for Behavioral Health in Nursing Facilities — Through a partnership with the Substance Abuse and Mental Health Services Administration (SAMHSA) and the Centers for Medicare and Medicaid Services, the Center provides free training, technical assistance, and continuing medical education credits for certified Medicaid and Medicaid nursing facility staff.
- E4 Center of Excellence for Behavioral Health Disparities in Aging — The center equips providers with evidence-based frameworks for addressing behavioral health needs in older adults.
Acknowledgments
NASHP would like to express our gratitude to West Health for its support and partnership of NASHP’s Nursing Home Learning Collaborative.
