Medicaid's Role in Fighting the Opioid Epidemic

A boy standing by a sink, opening a bottle of pills.

This brief is one in a series of seven on key Medicaid issues for state policymakers. The series is designed to assist new state leaders in understanding the Medicaid program and their role in using it to improve the health of their states’ residents and communities.

The Issue

In 2017, deaths due to opioid-related overdoses totaled nearly 50,000, surpassing other leading causes of accidental deaths, and even deaths due to HIV/AIDS at its peak in 1995. While opioid addiction and death rates vary state to state, the opioid mortality rate continues to climb in most states. The profound health, economic and social consequences of substance use disorders (SUDs), including opioid use disorders (OUDs), require significant, sustained investment in coverage and treatment—and Medicaid is the key platform from which states are tackling the SUD crisis.

Why It’s Important

Medicaid is the largest source of coverage and funding for substance use prevention and treatment nationally. Medicaid covers nearly 40 percent of adults with an OUD and 17 percent of adults experiencing any type of SUD. Even before the Affordable Care Act’s Medicaid expansion, Medicaid spent three times more ($9.4 billion) on services for people with OUD than SAMHSA’s 2017 budget for SUD overall ($2.9 billion). Medicaid’s substantial dollars provide access to prevention, treatment and recovery services for those with addiction, and just as important, fund comprehensive coverage for a broad spectrum of physical and behavioral health services to treat co-occurring conditions for people with addiction disorders. States have significant opportunity to strengthen their responses to the substance use crisis by leveraging their Medicaid programs.

Considerations for State Policymakers

States are implementing a number of Medicaid strategies to prevent and treat SUD, and support long-term recovery. New state policymakers should assess current state policy to determine if these strategies are being or should be pursued:

Pursue Relief From the Institutions for Mental Diseases (IMD) Exclusion for SUD Treatment. In July 2015 and November 2017, CMS issued guidance inviting states to apply for 1115 demonstrations that would waive the IMD exclusion—the historical prohibition on using federal Medicaid funds to pay for treatment delivered to individuals ages 21 to 64 residing in institutions with 16 or more beds—for individuals receiving SUD services. This policy is intended to expand access to residential treatment and withdrawal management services and states can consider pursuing this strategy to provide the full continuum of SUD care. To date, 17 states have obtained IMD exclusion waivers. A provision in October 2018 federal opioid legislation, the SUPPORT Act, permits states to pursue a Medicaid State Plan option to obtain federal Medicaid funds for SUD services provided in an IMD up to 30 days per year.

Expand Medication-Assisted Therapy (MAT). MAT is an evidence-based, highly effective treatment option for individuals with OUDs and many states are seeking to expand it through strategies like encouraging physicians and extenders to obtain Drug Addiction Treatment Act of 2000 (DATA 2000) waivers to prescribe medications used for MAT outside of designated opioid treatment programs. The SUPPORT Act increases flexibility for MAT by increasing the number of patients for whom qualified providers can prescribe or dispense MAT; eliminating existing time limits for physician extenders to become qualifying prescribers; and authorizing additional providers to become waivered. States can also improve MAT access in other ways, including enhanced reimbursement to physicians who provide the service.

Leverage Medicaid Managed Care Contract Requirements. States with Medicaid managed care delivery systems can require their health plan contractors to implement strategies and practices that address SUD/OUD (see Medicaid Brief #7, Medicaid Managed Care: Increasing Expectations
and Accountability
, for more information). Some of these strategies are now mandates under the SUPPORT Act, including requiring managed care organizations to:

  • Provide a full continuum of behavioral health services;
  • Ease or eliminate prior authorization requirements for MAT and other services;
  • Ensure providers comply with Prescription Drug Monitoring Program requirementsand opioid prescription limits; and
  • Require plans to offer non-opioid alternatives to pain management.

Innovate (Including by Appropriating Other State Innovations). States are using their Medicaid State Plan authority, 1115 waivers, and managed care contracts to pursue other innovative reforms. Notable examples include:

  • Vermont’s Hub and Spoke Model, in which opioid treatment “Hub” programs offer all elements of MAT and “Spoke” primary care or family medicine providers provide less intensive types of team-based treatment, counseling, and care management.
  • West Virginia’s Neonatal Abstinence State Plan Amendment program, which funds withdrawal symptom treatment in babies exposed to opioids before birth.
  • Ohio’s Pre-release Care Coordination Program, to provide care management during the discharge process for incarcerated people with high health needs, including SUD.


State Medicaid programs are the bedrock of state efforts to fight the still-raging opioid epidemic, and the substance use crisis overall. Examples of impactful state strategies that use Medicaid’s funding and infrastructure abound and are becoming models for all-payer efforts to combat addiction.

For additional information on how states can get the most out of their Medicaid managed care programs, please refer to the resources included in the downloadable PDF.


About Manatt Health

Manatt Health is an interdisciplinary policy and business advisory division of Manatt, Phelps & Phillips, LLP, one of the nation’s premier law and consulting firms. Manatt Health helps clients develop and implement strategies to address their greatest challenges, improve performance, and position themselves for long-term sustainability and growth. For more information, visit