More New Mexicans on Medicaid are using more behavioral health services more often, and that’s driven up costs for the state. From 2023 to 2025, managed care organizations like Blue Cross Blue Shield and Presbyterian charged for an additional $230 million dollars in behavioral health services. That’s an increase of about 47%, every dollar of which was paid for by the state’s Medicaid program.
Lawmakers heard about the increase last week during a Legislative Finance Committee meeting.
Mike Goodlaw, LFC program evaluator, presented to lawmakers about trends in behavioral health from 2023 through 2025
He said the biggest increases over the two-year period were in autism services and substance use disorder treatments, which increased by 88% and 82% respectively. That’s even though the overall number of people enrolled in Medicaid managed care programs decreased by about 65,000 per year over that same period.
Goodlaw put it simply.
“There are fewer Medicaid enrollees using more behavioral health care services at higher costs,” he said.
Allana Dancis, acting Medicaid director for the Health Care Authority, says it started with raising Medicaid reimbursement rates for providers, which attracted more providers. Then they saw an increase in the number of visits per member.
“It really had this kind of catalytic effect on just more utilization,” Dancis said, “which we see as the outcome, the goal — that more people are getting the services that they need.”
The state’s Medicaid reimbursement rates are now amongst the highest in the nation. For example, the LFC reports “New Mexico reimburses outpatient family psychotherapy rates at 50% higher than Medicare and up to 363% higher than those in neighboring states.”
Minority Whip, Sen. Pat Woods (R-Curry), pointed out with payments so high New Mexico might attract more than the average health care provider, but also possibly people looking to abuse the system or profit.
“If we're offering more money than anybody else,” Woods said, “well, it could be a chance for someone to pay off their home a little quicker.”
Goodlaw said the state has safeguards in place to prevent fraud, such as software that monitors for abnormalities like suspicious prescription patterns, and they have investigative staff to look into potential issues.
While detractors could see the higher spending as a bad sign, Dancis said the goal is to get more people into treatment. State Senator Linda Trujillo (D-Santa Fe) pointed out it’s difficult to track positive outcomes.
“You can't measure what doesn't happen. So you can't measure that a suicide didn't happen. You can't measure that a family is more stable,” she said. “There's a lot of positive outcomes from mental health treatments being available more readily and more often that we can't measure.”
The state has put a spotlight on behavioral health in recent years, increasing funding to about a billion dollars recurring annually, and by developing and reforming services across the state.
Support for this coverage comes from the W.K. Kellogg Foundation.
