Medicaid psychotherapy spending hit $6.68 billion, up 156% in seven years

Medicaid spending on core psychotherapy services reached $6.68 billion in 2024, up 156% from 2018, according to Behavioral Health Business’s analysis of CMS data.1 bhbusiness.com

The composition matters more than the headline. Growth came largely from increases in average payment per service, and to a lesser degree from more provider entities billing those codes. Patient volume rose too, slightly ahead of new provider growth — meaning incumbents took on more patients rather than the market simply widening.1 bhbusiness.com

Rate-driven growth and volume-driven growth are different risks. Volume growth is defensible on need. Rate growth invites the question of whether the rate was right, and it is the version that draws utilization review.

What a psychotherapy hour is worth federally

For reference, here is what Medicare pays nationally in 2026 for the same core codes, pulled from the CMS fee schedule:2 cms.gov

National unadjusted, conversion factor 33.4009. Medicare, not Medicaid — see methodology.

Medicaid rates sit below these almost everywhere, and vary by state more than any other payer class. The federal figures are useful as an anchor, not as a benchmark: a state paying 60% of Medicare for 90837 and a state paying 95% are both common, and both are inside the $6.68 billion.

The access problem sitting underneath

Separate HHS Office of Inspector General research found that only a slim majority of behavioral health providers are able and willing to offer timely access to Medicaid patients, with pediatric populations facing the worst of it.3 oig.hhs.gov

Those two findings belong together. Spending more than doubled while access stayed constrained. That combination is what a state Medicaid director sees when deciding whether the next rate action is an increase or a review.

Who is actually getting paid

Of the twenty organizations paid the most across the seven-year period, only five are for-profit: Sagent Behavioral Health (formerly Nystrom & Associates), Transformations Care Network, Thrive Behavioral Health, Advanced Behavioral Health and BTST Services.1 bhbusiness.com

Fifteen of the top twenty are non-profits. That is the part of behavioral health almost nobody covers financially, and it is where the majority of Medicaid psychotherapy dollars land.

What to do with this

If you bill Medicaid psychotherapy at volume, three things follow.

Know your rate as a percentage of Medicare. Most commercial and many Medicaid managed care contracts are expressed that way. If you cannot state that number for your top five codes, you cannot tell whether a proposed rate change is a cut.

Expect documentation pressure before rate pressure. Utilization review is cheaper for a payer than renegotiating a fee schedule, and it arrives first.

Watch the 90834 to 90837 split. Rate-driven spending growth on a time-defined code pair is precisely the pattern that triggers a payer audit of session length documentation.