Evidence-Based Supported Employment and Medicaid

By Scott Holladay

March 2013

The goal of evidence-based supported employment is to place individuals with serious mental illness in real, competitive jobs. This evidence–based practice (EBP) is highly effective, resulting in competitive employment at nearly three times the rate of other vocational services.[1] Studies comparing supported employment with day treatment have shown similar results.[2] Despite this strong evidence, the practice has been slow to take hold, but 17 states are now using Medicaid to expand its availability. As a major payer for behavioral health services, Medicaid support is crucial to implementation of EBPs.


Evidence-based supported employment, also known as Individual Placement and Support, is a more rigorous model than the service offered by many providers. Individuals determine their own readiness for employment, their preferences are respected, and individualized job searches begin quickly. Behavioral health treatment and employment services are integrated. These principles are described in Substance Abuse and Mental Health Services Administration’s (SAMHSA’s) supported employment toolkit.


For example, a program might find a job for an individual who hears voices and prefers to work alone. Placing him in a night-shift job meets both his needs and his new employer’s need. After placement he receives job coaching to learn his tasks, and counseling to help him manage his symptoms. Benefits counseling helps him make informed choices about his earnings, benefits, and Medicaid. Long-term supports help him control his symptoms and keep his job, or find a new one.


An extensive body of research on supported employment stretches back over two decades, including randomized, controlled trials and quasi-experimental studies.[3],[4] Participants are more likely to get jobs, work more hours, earn more, and stay employed longer than those using other vocational services.[5] Researchers have also found that competitive employment results in higher rates of improvement in symptoms and self-esteem than minimal work, sheltered employment, or no work.[6] This evidence led SAMHSA to designate supported employment as one of 8 behavioral health EBPs.


In addition to improving outcomes, expanding access to supported employment can help states comply with the ADA integration mandate, and implement employment first policies – making employment the priority for disability services – which some states have adopted through legislation or executive orders.


A survey by NASHP in partnership with Abt Associates identified 17 state Medicaid programs which cover supported employment for individuals with serious mental illness. The survey responses show that Medicaid is playing a role in expanding access, using various options available to states:


  • Some states braid services. Medicaid pays for behavioral treatment, and vocational rehabilitation pays for job placement and training. Other public funds may also be used. This approach requires a high level of collaboration and formal agreements.
  • Other states use Medicaid home and community-based service (HCBS) waivers or the HCBS State Plan option to cover supported employment as a habilitative service.
  • Managed care and demonstration waivers can also be used to cover supported employment and other EBPs.


Maryland is often cited as an example of braiding Medicaid, vocational rehabilitation, and state-funded services to make all components of the EBP available. Arizona provides all Medicaid services under a demonstration waiver, and used the waiver’s flexibility to add employment supports to the definition of rehabilitative services. Wisconsin expanded access to supported employment by covering it through the Medicaid State Plan HCBS option.


States report that successful implementation includes contractual requirements, training, monitoring fidelity to the model, measuring and paying for outcomes, and partnerships. Arizona, Maryland, and Wisconsin report good partnerships with vocational rehabilitation, and Kansas and Wisconsin partner with universities to provide training and technical assistance.


NASHP was part of a team led by Abt, which examined Medicaid’s role in financing behavioral health EBPs. A preliminary report and resources from this work are available on the NASHP website. Links to additional findings will be added as they become available.

[1] Gary R. Bond, Robert E. Drake, and Deborah R. Becker, “An update on randomized controlled trials of evidence-based supported employment,” Psychiatric Rehabilitation Journal 31, no. 4 (Spring 2008): 280-90.

[2] Gary R. Bond, “Supported employment: evidence for an evidence-based practice,” Psychiatric Rehabilitation Journal, 27, no. 4 (Spring 2004): 345-59.

[3] Bond, Drake, and Becker, op. cit.

[4] Bond, op. cit.

[5] Gary R. Bond, Kikuko Campbell, and Robert E. Drake, “Standardizing measures in four domains of employment outcomes for individual placement and support.” Psychiatric Services 63, no.8 (August 2012): 751-7.

[6] Gary R. Bond, Sandra G. Resnick, Robert E. Drake, Haiyi Xie, Gregory J. McHugo and Richard R. Bebout,  “Does competitive employment improve nonvocational outcomes for people with severe mental illness?” Journal of Consulting and Clinical Psychology, 69, no.3 (2001): 489-501.



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