State behavioral health system reforms are facing many longstanding challenges. Among the most notable are chronic shortages and maldistribution of behavioral health providers. Following the COVID-19 pandemic, there has been a significant increase in the demand for mental health services, intensifying the strain on an already under resourced system. To address these challenges, states are adopting approaches to bolster recruitment, retention, and training of professionals to foster a culturally competent workforce that can deliver evidence-based care tailored to diverse consumer needs.
In this report, we explore diverse strategies states have implemented over the past several years to build a skilled and sustainable behavioral health workforce, including:
Key Takeaways
- Targeting financial incentives: States are addressing workforce shortages through significant investment in behavioral health services and incentivizing uptake through increased reimbursement rates and performance-based incentives to attract and retain providers.
- Expanding traditional workforce approaches: Expanding loan repayment programs remains an important tool for attracting and retaining behavioral health professionals in underserved areas. States are also investing in scholarships and grants to reduce financial barriers for students, making education more accessible and encouraging more individuals to pursue degrees in critical behavioral health professions.
- Fostering collaboration across behavioral health organizations and professions: States are fostering partnerships with academic institutions to expand the behavioral health workforce through innovative training programs; career pipelines and new provider types, such as behavioral health technicians; and evolving peer support services.
- Expanding state flexibilities through expanding scope of practice and telehealth policies:States are working to support behavioral health providers’ working at the top of their scope of practice, entering interstate compacts, and codifying telehealth services to increase access to care, particularly in underserved areas.
- Promoting diversity and equity within the behavioral health workforce: Initiatives are underway to diversify the behavioral health workforce by supporting underrepresented groups through scholarships, grants, and training.
Incentivizing Recruitment and Retention
Some states have made major investments and implemented innovative payment and delivery strategies, often in tandem with traditional workforce development approaches, to attract and retain a robust behavioral health workforce. These efforts include increasing reimbursement rates, expanding access to care, and introducing performance-based payment models to enhance service delivery and provider capacity. By doing so, states aim to address workforce shortages while improving the quality and accessibility of best practice behavioral health interventions.
Comprehensive State Investments
Some states are deploying one-time funding alongside multiyear investments to enhance their systems, driving both direct and indirect improvements in workforce capacity. Notable examples include New York and North Carolina , which have made historic multi-year investments and expanded behavioral health services (read more in the NASHP article “Behavioral Health System Modernization: Comprehensive Approaches and Cross-Cutting Tools”).
Michigan’s fiscal year (FY) 2023–2024 budgets included a $364 million investment in bolstering the state’s behavioral health services, with a particular focus on improving youth mental health services and expanding the crisis response system. The plan allocated $5 million to fund scholarships for individuals entering college to study behavioral health and pursue behavioral health careers. It provided the Michigan Crisis and Access Line, with $5 million to bolster capacity, ensuring 24/7 support and efficient care coordination to alleviate pressure on crisis workers, providers, and facilities. Additionally, it increased the number of Certified Community Behavioral Health Clinics (CCBHCs), enabling CCBHCs to provide services to anyone in need of mental health or substance use care, irrespective of their insurance coverage.
Texas lawmakers made an unprecedented $11.68 billion investment in behavioral health during 2023, a 30 percent increase from the previous session. The funding prioritized expanding state hospital capacity, enhancing children’s mental health and school safety, and increasing access to community-based services such as crisis intervention. The initiatives were driven by the Coordinated Statewide Behavioral Health Expenditure Proposal, crafted by the Statewide Behavioral Health Coordinating Council, a cross-agency legislative body responsible for aligning funding with the state’s strategic goals and ensuring a coordinated approach to behavioral health service delivery. This included $134.7 million to increase salaries at state hospitals to address staffing shortages and reduce forensic waitlists; $23.9 million for community mental health centers; $28 million for a loan repayment program for mental health professionals; and $5 million for developing and expanding forensic psychiatry fellowship programs. Emphasizing the demand to address workforce shortages and improve access to mental health services helps ensure that Texas has the capacity to meet growing behavioral health needs.
Payment Delivery and Reimbursement Enhancements
States are continuing to implement rate increases for behavioral health services to enhance service delivery, reflecting a consistent focus over the past three years. As detailed in KFF’s 2023–2024 Medicaid budget survey, around 32 states in FY 2023 raised rates for behavioral health services, followed by 34 states in FY 2024, with 26 states planning further increases in FY 2025. Notable examples include Iowa, Maine, Montana, and Vermont, which aim to increase access to behavioral health services through these adjustments.
Iowa
In November 2023, following legislative appropriations, the Iowa Department of Health and Human Services increased reimbursement rates in Medicaid, effective July 1, 2023, for psychologists, clinical social workers, and behavioral health providers such as licensed marital and family therapists, licensed mental health counselors, and certified alcohol and drug counselors. The increase was part of a $10 million allocation, which included $7 million for mental health services and $3 million specifically for substance use disorder (SUD) providers. Notably, following the increased rates, there was a significant uptake of SUD services by Medicaid beneficiaries, defined by a 96.5 percent increase in billing for certain SUD procedure codes (H0015 and H0035).
Maine
Building on a $230 million investment in the FY 2022–2023 biennium budget, the Maine Department of Health and Human Services made a behavioral health investment of $237 million, including significant rate increases through MaineCare, the state’s Medicaid program, as part of Maine’s rate reform system developed in partnership with the legislature and partners. Effective January 1, 2023, MaineCare payment rates were updated for over 115 discrete services, ranging from 6.6 percent to 72.3 percent increases in five areas of policy: targeted case management, community support services, rehabilitative and community support, behavioral health services, and behavioral health home services.
Alongside rate updates, as part of its Comprehensive Behavioral Health Plan for Maine, MaineCare transitioned assertive community treatment for adults and home and community treatment services to alternative payment models through performance-based provisions, enhancing care delivery and billing flexibility. The shift provided increased administrative and billing flexibility to providers so they can better meet the needs of individuals, while simultaneously promoting accountability for quality of care by tying a portion of payments to performance.
Montana
In 2023, the Montana legislature approved legislation to fund a $339 million provider rate increase package for 2024 and 2025, with a $135 million allocation for FY 2024 and $204 million for FY 2025. The initiative aimed to increase provider reimbursement for behavioral health services and improve service delivery for Medicaid beneficiaries. The investment stems from the 2022 provider rate study, commissioned by the Montana Department of Public Health and Human Services to develop benchmark wage recommendations across 17 direct-care positions and four supervisory roles to stabilize and strengthen adult behavioral health, children’s mental health, developmental disabilities, and senior and long-term care programs. The recommendations led to an average base rate increase of 17.8 percent in FY 2024 and additional funds planned for FY 2025. By aligning reimbursement rates with study recommendations, Montana exemplifies a data-drive approach to ensure enhanced access to quality care for beneficiaries while addressing workforce sustainability.
Vermont
Vermont established a mental health care rate increase to standardize Medicaid payments for children and adult mental health services as part of a shift toward a value-based payment approach. Effective July 1, 2024, all participating providers received at least a base rate of $750 per member per month for each member served, promoting the sustainability of services and encouraging provider participation. Additionally, $1.1 million was redistributed based on caseload, service intensity, and quality of services based on value-based payment measures. Payments are distributed to providers based on a scoring system, and those under the Department of Mental Health receive a 3 percent payment increase from allocated state funds.
Examples of Service Delivery Models for Enhanced Reimbursement Flexibility
A variety of service delivery models can create more access and engage a high-quality workforce in delivering evidence-based practices through additional reimbursement flexibilities.
- Medicaid CCBHC Demonstration Program: Certified Community Behavioral Health Clinics (CCBHCs) are reimbursed via a prospective payment system, which provides cost-based reimbursement for the nine required CCBHC services. Through the demonstration, funding is given to participating states to establish or expand CCBHCs and evaluate their impact on the delivery of behavioral health services.Providers who become CCBHCs can strengthen the behavioral health workforce by offering enhanced training, recruitment, and retention efforts, ensuring staff are equipped to deliver comprehensive, evidence-based care.
- Psychiatric Collaborative Care Model (CoCM): This integrated care intervention for behavioral health provides additional billing and coverage opportunities through Medicaid, Medicare, and commercial payers. The adoption of Medicaid reimbursement for CoCM enables health care providers to enhance their skills, infrastructure, and service delivery capabilities, ultimately improving access to care and the quality of behavioral health services.
- Innovation in Behavioral Health (IBH) Model: In collaboration with the Centers for Medicare and Medicaid Services Innovation Center, state Medicaid agencies in Michigan, New York, Oklahoma, and South Carolina were selected to develop alternative payment methods (APMs) to meet the needs of their providers, while receiving Medicare payments to reinforce the APM design.
Oregon
The Oregon Health Authority (OHA) has implemented a tiered model through its coordinated care organizations (CCOs), the state’s regional managed care entities. As of 2023, outpatient behavioral health providers who derive over 50 percent of their revenue from Medicaid are eligible for a 30 percent increase in reimbursement compared to 2022 CCO reimbursement. Additionally, providers treating people with co-occurring disorders receive an additional payment increase based on the state fee schedule of 10 percent, up to 20 percent more for qualified mental health professionals, and 15 percent more for residential treatment services. Also, effective 2023, OHA mandated that CCOs maintain a minimum fee schedule for services that include residential SUD, applied behavioral health analysis, mobile crisis response, and mental health children wraparound services, ensuring that providers are reimbursed at or above Medicaid fee-for-service rates.
This tiered payment model, extended into 2024, aims to strengthen the behavioral health workforce serving high volumes of Medicaid patients, helping providers attract and retain skilled professionals while improving access to quality care.
Washington
Washington allocated funding for its 2023–2025 budget to increase behavioral health provider rates for both non-hospital inpatient and outpatient services. Starting in January 2024, Washington requires managed care organizations (MCOs) to increase rates by 15 percent for these services, including specialized programs like WISe (Wraparound with Intensive Services), New Journeys, and opioid treatment programs. Washington’s approach emphasizes that the increased payments are directed at community-based providers, excluding hospital inpatient services, and requires MCOs to pass these increases directly to the providers. Additionally, applied behavioral analysis services also received a 20 percent increase in the fee-for-service schedule, with MCOs required to pay no less than the updated rates, ensuring adequate reimbursement for these critical services. The initiative is designed to enhance workforce sustainability, expand access to care, and improve service quality across the state, particularly in rural areas where shortages are more pronounced.
State Approaches to Linking Managed Care Payments to Behavioral Health Performance
Use the NASHP state strategy resource to explore the approaches of three states that are leveraging managed care payment models that incentivize improvements in behavioral health performance. Strategies include tying capitation rates and withholds to key equity and quality measures and health equity goals.
- New Hampshire: New Hampshire withholds 2 percent of capitation rates from managed care organizations (MCOs), linking payment to performance on specific behavioral health measures. Unused funds are pooled and redistributed as bonuses for high-performing MCOs meeting behavioral health and other quality goals.
- Minnesota: Minnesota ties MCO incentive payments to performance on behavioral health and health equity measures, including follow-up for mental illness and substance use treatment, with a focus on reducing disparities in care across racial and ethnic groups.
- Colorado: Colorado’s Medicaid program incentivizes MCOs to meet a high medical loss ratio (MLR) by achieving performance goals, including improving behavioral health outcomes such as substance use treatment engagement, with a lower MLR offering financial retention opportunities for MCOs.
Traditional Workforce Development Strategies to Address Shortages and Maldistributions in the Workforce
Loan Repayment Programs
Loan repayment programs are a well-established strategy to develop and address workforce maldistributions that have been expanded to include behavioral health providers. These programs can be layered with other workforce development approaches.
States are leveraging their loan repayment programs to attract the behavioral health workforce to health professional shortage areas. Michigan and Pennsylvania target behavioral health providers within underserved communities to increase access to mental health and substance use services, by offering substantial loan repayment incentives for behavioral health clinicians such as psychiatrists, psychologists, social workers, and counselors, ensuring comprehensive care delivery in shortage areas. In Georgia, the Behavioral Health Provider Student Loan Repayment Program provides loan repayment assistance to providers ranging from $10,000 to $150,000 dependent on provider type for full-time practice in a four-year term contract to provide behavioral health services to Medicaid recipients.
The Massachusetts League of Community Health Centers, in partnership with the state’s Executive Office of Health and Human Services, administers the Expanded Behavioral Health Student Loan Repayment Program, backed by over $83 million in funding. Behavioral health providers, including medical doctors, psychologists, licensed alcohol and drug counselors, licensed independent clinical social workers, psychiatric nurse practitioners, and licensed mental health counselors, who commit to serving up to four years in eligible settings, such as community health centers and inpatient psychiatric hospitals, can receive up to $300,000 in student loan repayment. The program, part of the Healey-Driscoll administration’s Massachusetts (MA) Repay initiative, alleviates the financial burden of educational debt while ensuring that behavioral health professionals are available in underserved areas.
In addition, the state is re-releasing over $21 million in remaining funds from previous MA Repay initiatives, which target child/adolescent psychiatrists, primary care professionals, and substance use treatment providers. As of March 2024, more than $117 million had been awarded to over 2,300 providers serving 175 communities, further strengthening the state’s behavioral health workforce and expanding access to quality care.
Reducing Financial Burden and Increasing Accessibility for Students
A key aspect of loan repayment is to alleviate the financial burden for individuals entering or continuing education in the targeted workforce. States such as Arizona, New Jersey, and Washington have made direct investments in grant and scholarship awards for individuals pursuing behavioral health degrees to attract and retain a range of behavioral health professionals. By offering financial incentives, states are not only attracting new professionals to the field but also retaining experienced practitioners, improving access to behavioral health services for underserved populations.
States are also allocating payments for training, retention, recruitment, and network benefits. For example, the Oregon Health Authority established the United We Heal Medicaid payment program, which provides supplemental Medicaid assistance payments to eligible behavioral health providers to pay the costs of apprenticeship and training programs. The program enables providers to offer additional apprenticeship and training opportunities to develop workforce skills and improve the quality of care in the state’s behavioral health system.
Collaboration with Behavioral Health Professions
States are building stronger collaborative relationships with higher education, health care, and community organizations to align programming and improve workforce development.
Building a Workforce Pipeline through State-Academic Partnerships
States are expanding academic partnerships to increase the supply of the behavioral health workforce, with a focus on strengthening related degree pathways. Some examples are:
- Missouri: Building on its success, Missouri is expanding its robust Associate of Applied Science in Behavioral Health Support program, collaboratively designed by leaders from state agencies, community colleges, and the mental health sector, to prepare students for immediate workforce readiness upon graduation. With seven designated programs already in place and plans to extend, the initiative continues to address critical gaps in the behavioral health workforce while equipping graduates with practical skills in crisis intervention, evidence-based treatments, and ethical practice.
- New York initiated a partnership with the Office of Addiction Services and Supports, Office of Mental Health (OMH), Department of Health Certified programs, and the State University of New York (SUNY) to encourage individuals to obtain credentials such as Credentialed Alcoholism and Substance Abuse Counselor or Credentialed Prevention Professional or a bachelor’s degree in addiction studies. The initiative is designed to help individuals enter or advance their careers in the addiction services profession, addressing the need for qualified addiction counselors. Leveraging this collaboration, OMH and SUNY launched the SUNY/OMH Mental Health Scholarship Pipeline Program, which includes paid part-time internships to support community college students pursuing careers in mental health.
- In South Carolina, the state education partnership focuses on sponsoring coursework and supervised fieldwork for individuals interested in becoming board-certified behavior analysts.
These partnerships highlight the importance of developing and continuing upskilling of behavioral health professionals to address the growing need for a trained workforce.
To drive more data-informed policymaking, states are funding behavioral health workforce centers, typically with academic partners, such as those in Nebraska, Illinois, Florida, and Ohio. Behavioral health workforce centers are surveying the workforce landscape to focus investments on recruitment, training, and retention of professionals while addressing systemic barriers and building behavioral health capacity. Florida’s Center for Behavioral Health Workforce has taken a three-pronged approach to enhance workforce training that includes the New Training, Education, and Clinicals in Health (TEACH) Funding Program. TEACH provides additional support for provider organizations to become training sites to assist the state’s Medicaid program and improve accessibility for underserved populations. The program provides improved educational experience to mental health and behavioral health centers, benefiting participating providers through the offset of administrative costs and revenue loss associated with training licensed mental health professionals.
Innovative Training Programs
To improve the availability of behavioral health professionals, many states are working across agencies to create training pipelines that provide support, experience, and embedded supervision. For example:
- New Hampshire: The New Hampshire Department of Health and Human Services (DHHS) in partnership with New England College now offers a Bachelor of Arts in Community Mental Health program that combines traditional learning with paid ($20 an hour) immersive working experiences, or co-ops, at mental health facilities that contract with DHHS.
- Florida: Florida has established Behavioral Health Teaching Hospitals aimed to incentivize entry into behavioral health professions, expand and modernize the workforce through training in integrated care, and support long-term voluntary services as well as involuntary civil commitment. The hospitals will also advance behavioral health research and foster statewide public-private partnerships while serving as training hubs to prepare a modernized workforce.
Behavioral Health Certification and Credentialing
States are introducing new behavioral health professions to expand the direct services workforce, including licensed and unlicensed providers. Utah enacted legislation that requires the Office of Professional Licensure Review (OPLR) under the Department of Commerce to conduct a comprehensive review of licensure requirements and occupations across various professions. While the OPLR is tasked with evaluating multiple fields, behavioral health was selected as a priority area for workforce development.
In the 2024 legislative session, Utah policymakers, guided by OPLR recommendations, focused on reforming supervision and training by improving supervision quality and expanding capacity, reducing burdensome continuing education requirements, and offering alternative licensure pathways to recruit and retain Utah’s workforce. The state also implemented new provider options, including creating entry-level behavioral health technicians, allowing psychologists to prescribe, and providing master’s level addiction counselors a licensing pathway, to improve service delivery and access to care.
Many states, such as Alaska, Colorado, and Washington, have established new behavioral health provider types such as behavioral health aides and behavioral health support specialists, with reimbursement mechanisms through Medicaid fee-for-service and other state-funded programs to ensure these roles are financially supported and integrated into the health care system. Other examples of new provider types include:
- Arizona: behavioral health technician and behavioral health paraprofessional
- Utah: behavioral health coach and behavioral health technician
- Virginia: behavioral health technician and behavioral health technician assistant
In Arizona, a career-ladder model allows entry-level behavioral health paraprofessionals (BHPPs) to progress to behavioral health technicians (BHTs) and behavioral health professionals (BHPs) through experience and education. Arizona’s unique licensing flexibilities enable BHPPs to gain supervised experience in supportive roles and permits BHTs to provide clinical services under structured oversight of BHPs within accredited health care facilities, including biweekly check-ins that can occur remotely. These policies support a streamlined pathway for individuals with lived experience to advance in behavioral health roles through leveraging licensing flexibilities to integrate diverse skills to meet growing care demands.
Peer Support Specialist
States across the country recognize the opportunity to meaningfully expand access to behavioral health interventions via peer support specialists and are supporting the workforce growth as part of comprehensive workforce development strategies. Over 49 states and territories cover peer specialists’ services in Medicaid, with 38 states offering Medicaid reimbursement for both substance use and mental health support services. Evolving state policies include new certification programs, credentialing standards, and expanding peer support roles.
Many states, such as California, Vermont, and Washington are expanding their behavioral health workforce by establishing certification programs for peer support specialists and credentialing standards for roles with lived experience, such as recovery specialists. Georgia serves as a leader in this area, offering a system that supports both standard and advanced-level peer roles, creating education-based compensation within these non-traditional roles. The state has implemented a robust two-tiered reimbursement system for standard-level peer specialists, offering additional compensation to those with bachelor’s degrees, promoting retention through aligning market-based compensation with education level.
Ohio has introduced two new types of certified peer specialists—certified youth peer supporters and certified family peer supporters—to assist in navigating treatment and recovery support services for youth and families. In Illinois, the CRSS Success Program supports students with lived experience of mental health or substance use recovery to successfully complete all requirements necessary to obtain either the certified recovery support specialist (CRSS) or certified peer recovery specialist certification and enter the workforce. The initiatives recognize the expertise of individuals with lived experience and expand career opportunities in the field.
Some states, such as Florida and Virginia, have expanded the presence of peer support specialists in specific settings. The Virginia Department of Corrections, in partnership with the Department of Behavioral Health and Development Services (DBHDS), implemented a 72-hour Peer Recovery Specialist Group to train incarcerated individuals with experience with mental health challenges and substance use disorders through evidence-based services to improve wellness and assist in reducing recidivism. This complements the DBHDS services authority to hire rehabilitated peer recovery specialists with prior convictions related to substance use or mental illness.
Scope of Practice Changes
States are expanding the scope of practice for various behavioral health providers to optimize care approaches and extend workforce capacity. This includes granting additional responsibilities, certifications, or licensures to existing professionals and creating new categories of providers. Examples include:
- Colorado amended the mental health professionals’ practice requirements for licensure, registration, and certification by removing the examination requirement to obtain a license in social work. Updates also remove licensing barriers by allowing eligibility for expired registrations for reapplication, with the requirement to complete continuing professional development and educational hours.
- Hawaii established provisional or associate-level licensure requirements for marriage and family therapists, mental health counselors, and psychologists. It authorizes psychologist license applicants who possess a provisional license to sit for the licensing examination before completing certain supervised experience requirements.
- Utah created a new prescribing psychologist certification to assist upskilled psychologists to prescribe selective serotonin reuptake inhibitors and develop future pathways to add other prescribing privileges over time.
Expanding Telehealth Services
The COVID-19 public health emergency allowed for a broad expansion of telehealth, temporarily removing geographic and site restrictions, enabling providers to offer services to patients at home and allowing a range of providers to serve as distant sites. Many states are implementing permanent telehealth solutions to expand behavioral health access, particularly in rural and underserved areas, with 36 states introducing licensure exceptions and 20 establishing telehealth registration processes. For example, states have enacted legislation that mandates insurers provide equal coverage for telemedicine services for mental health and substance use as they do for in-person telemedicine services. This mandate enhances access to essential care.
Idaho enacted the Telehealth Access Act through legislation that adds to existing law to provide coverage for mental and behavioral health care from a mental or behavioral health provider not licensed in Idaho. To compliment this, Idaho also established that any managed care plans under contract with the Department of Mental Health under the medical assistance program shall provide for coverage of mental health and substance use disorder treatment or services delivered as behavioral telehealth services.
Many states have also taken initiatives to implement portability of professional licensing and capacity to expand access to behavioral health services. In 2023, Arkansas, Virginia, Wyoming, and 11 other states joined the Counseling Compact to increase public access, allow use of telehealth technology, and streamline licensing across multiple states. In December 2024, Washington, DC, became the 38th state/district to ratify the Counseling Compact. In addition to the Counseling Compact, states are actively pursuing membership in the Social Work Licensure Compact, which will further enhance behavioral health workforce mobility and improve access to critical services across state lines.
Promoting Diversity in the Behavioral Health Workforce
The current behavioral health workforce may not adequately represent the demographic composition of the population it supports, potentially affecting the accessibility and delivery of culturally competent care. To improve access to behavioral health services, some states have developed programs focused on supporting behavioral health professionals who reflect the population they are serving. In Rhode Island, the Executive Office of Health and Human Services and Rhode Island Office of the Postsecondary Commissioner established the Health Professional Equity Initiative, which provides targeted investments and supports home- and community-based services paraprofessionals such as social workers through provisions such as last-dollar tuition assistance and wraparound supports, including cost related to transportation, child care, supplies, fees, and more, to improve the diversity of the workforce.
States are also directly supporting diversity of providers who provide care to underserved populations through training and developing the state’s behavioral health system. In Wisconsin, Gov. Tony Evers and the Department of Health Services awarded $1 million in grant funds to 10 organizations to build out a behavioral health workforce focused on supporting diversity and cultural competency. Minnesota provides grant funds to support mental health providers of color and those from underrepresented communities, helping them qualify as supervisors, and offers free training to less-experienced practitioners. These initiatives are designed to foster a more inclusive and effective behavioral health workforce.
Conclusion
The collective efforts across states to address the critical shortage of behavioral health workforce professionals emphasize the importance of developing a multifaceted approach to solving this complex issue. Through strategic investments in education, training, credentialing, expansions of scope, and more, states are laying the foundation for a more robust and diverse behavioral health workforce.
* Trends are organized according to the five categories highlighted in the report “State Strategies to Recruit and Retain the Behavioral Health Workforce.”
This publication is supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under the National Organizations of State and Local Officials as part of a three-year award. The information, content, and conclusions are those of the author(s) and do not necessarily represent the official views of, nor an endorsement, by HRSA, HHS, or the U.S. Government. For more information, please visit HRSA.gov.
