As the opioid crisis in the United States continues to deepen—with opioid overdoses claiming 42,000 lives in 20161—policymakers, providers, advocates and other stakeholders are seeking out all available resources in an attempt to fight back. However, despite these efforts, the crisis continues to grow. Overdose deaths increased by 28% in 2016 over the previous year.2 Over the past decade, prescription opioid misuse and heroin use have doubled, the national rate of opioid-related emergency department visits nearly doubled,3 and opioid-related inpatient stays increased by almost two-thirds.4

The Medicaid program has proven to be one of the most critical tools in the fight against the opioid crisis by serving as a major source of coverage and payment for substance use disorder (SUD) services across all states. Today, Medicaid covers more than a third of the more than 2 million individuals with an opioid use disorder (OUD) across the country5 and is the predominant source of federal funding for SUD prevention and treatment in many states.6 Leveraging these federal resources, state Medicaid programs have a variety of strategies at their disposal to tailor programs to meet the needs of individuals suffering from OUD in their states, including Medicaid expansion and other, more targeted strategies. This brief highlights Medicaid’s role as a linchpin in the fight against the opioid crisis, in terms of the scale of resources directed by Medicaid toward preventing and treating OUDs and the specific prevention and treatment strategies available to states through the program.

This summary was adapted from two briefs produced by Manatt Health for State Health and Value Strategies, a program supported by the Robert Wood Johnson Foundation. The first, Medicaid: States’ Most Powerful Tool to Combat the Opioid Crisis, was released in July 2016, and the second, Medicaid: The Linchpin in State Strategies to Prevent and Address Opioid Use Disorders, was released in March 2018.

Medicaid Spending on OUD Prevention and Treatment

The federal government uses a number of different channels to support states in responding to the opioid crisis, but Medicaid is by far the most significant and impactful. Medicaid is the largest source of comprehensive coverage for individuals with an OUD, providing access to prevention, treatment and recovery services as well as the full array of physical and behavioral health services to treat co-occurring conditions.7 In federal fiscal year (FFY) 2013, Medicaid spent $9.4 billion in federal and state dollars on comprehensive healthcare services for 636,000 individuals with an OUD.8 Since this time, enrollment of, and spending on, individuals with OUD has undoubtedly increased significantly as a result of Medicaid expansion, and newly eligible adults now represent a majority of Medicaid enrollees with an OUD in many expansion states.9 In comparison, the entire SUD treatment and prevention budget of the Substance Abuse and Mental Health Services Administration (SAMHSA) totaled $2.9 billion in FFY 2017, with approximately $549 million targeted at the opioid epidemic specifically.10

Medicaid Strategies to Combat the Opioid Epidemic

Perhaps the strongest tool that states have at their disposal in the fight against the opioid crisis is Medicaid expansion, which allows states to expand Medicaid coverage to all individuals with incomes up to 138% of the federal poverty level (FPL) while receiving an enhanced federal matching rate for newly eligible adults. This is the most straightforward way for states to extend coverage of comprehensive healthcare services, including a wide range of SUD treatment services, to the greatest number of adults possible—including justice-involved populations at very high risk of addiction. While some have suggested that Medicaid expansion has fueled the opioid epidemic, there is strong evidence to the contrary: Medicaid does not facilitate access to dangerous nonprescription opioids (e.g., heroin and illegally made fentanyl) that account for a large proportion of the recent growth in overdose deaths;11 significant upticks in overdose death rates began prior to expansion; and overdose death rates grew less in counties with the largest gains in Medicaid and other coverage under the Affordable Care Act (ACA) from 2010 to 2015.12

Beyond expansion, state Medicaid programs have a range of additional tools at their disposal to prevent and treat OUDs. These range from modest, but meaningful, strategies for SUD prevention and treatment to more innovative and transformative changes to the way that Medicaid pays for and delivers SUD services. Broadly, these can be accomplished using either state plan authority or Section 1115 waiver authority.

State Plan Strategies

Using the straightforward mechanism of state plan amendments (SPAs), state Medicaid agencies can enhance coverage and benefits, provide robust care management services through the Medicaid Health Home benefit, and leverage Medicaid’s purchasing power to promote best practices by providers and plans. Specifically, states may:

  • Implement prior authorization requirements, institute quantity limits and strengthen utilization review criteria for opioid prescriptions;13
  • Improve timely access to medications used in medication-assisted treatment (MAT) by eliminating or modifying prior authorization requirements and reviewing prescription drug policies;14
  • Add all forms of naloxone and other evidence-based medications for opioid overdose to their preferred drug lists;15
  • Expand Medicaid’s access to and use of the state’s prescription drug monitoring program (PDMP).16

In addition, state Medicaid programs have the opportunity to implement Health Homes to provide robust care management services to individuals with chronic conditions, including individuals with SUDs, while receiving a 90% federal match for the first two years of an individual’s enrollment. States have undertaken a number of initiatives using Health Homes, including providing intensive care management and coordination for individuals with an OUD and provider and workforce education on evidence-based treatment.

Demonstration Waiver Strategies

Section 1115 demonstration waivers give states a pathway to undertake more far-reaching transformations of their SUD delivery systems, draw down additional federal funding to support reform efforts, and hold providers accountable for meeting clinical quality and performance measures related to SUD prevention and treatment.

Federal guidance released in November 2017 urges more states to use this authority to address the opioid crisis specifically.20 A centerpiece of this guidance is encouraging states to apply for waivers of the “IMD exclusion.” This policy has generally prohibited federal financial participation for Medicaid services delivered to individuals residing at institutions for mental diseases (IMDs), and historically has limited the ability of states to provide the full spectrum of care to individuals with SUDs. As of 2013–14, 21 states covered no short- or long-term residential SUD treatment.21 At the time of publication, 10 states22 have received a waiver of the IMD exclusion for SUD services, and 11 states’ applications23 are under review.

Beyond waiving the IMD exclusion, states have used waivers to pursue a number of other innovative strategies aimed at expanding coverage and improving care delivery for individuals with SUDs and other behavioral health conditions.24 Strategies include:

  • Expanding Medicaid eligibility to targeted individuals with SUDs. Utah, which has not expanded its Medicaid program under the ACA, extended full Medicaid coverage to childless adults ages 19–64 with incomes less than or equal to 5% of FPL who are chronically homeless or in need of SUD or mental health treatment (including justice-involved populations).25
  • Offering enhanced benefits to individuals with SUDs, such as peer recovery supports, SUD-focused targeted case management or nonmedical transportation. For example, California added coverage of recovery services as part of its Drug Medi-Cal Organized Delivery System Pilot Program under its 1115 waiver. These services include outpatient counseling services, recovery monitoring, peer-to-peer assistance and linkages to a variety of social supports.26
  • Establishing integrated delivery networks of physical health, behavioral health and social service providers through various payment and delivery system reform initiatives. For example, New Hampshire has established regional integrated delivery networks to improve the continuum of care for Medicaid beneficiaries with SUDs. These networks include primary care providers, SUD providers, community mental health centers, peer health workers, hospitals, community health centers and community-based organizations.


States are grappling day to day with the vast and deadly public health crisis created by the opioid epidemic. As the largest source of comprehensive coverage for individuals with OUD and one of the principal funding sources for the delivery of SUD-related care, Medicaid is the most powerful vehicle available to states to prevent and treat opioid addiction. Through federal flexibility, states can create strategies that meet their specific needs and augment other efforts underway. While the greatest opportunity to address this crisis exists in those states that have elected to expand Medicaid, regardless of expansion status, Medicaid is foundational for states to battle opioid addiction and mortality.