Kentucky Medicaid officials report rising behavioral-health spending, flag surge in peer-support billing

Commissioner Lisa Lee of the Department for Medicaid Services told the Kentucky Legislature’s Budget Review Subcommittee on Health and Family Services on Feb. 12 that behavioral-health provider enrollment and managed-care spending have increased substantially in recent years, and the agency is instituting new monitoring and limits after a marked rise in peer-support billing.

DMS serves about 1,400,000 Medicaid members statewide, Lee said, and about 90% of members are served through managed care organizations. "Medicaid is the largest payer of behavioral health services in the state," Lee said, noting that managed-care behavioral-health spending was just over $2 billion in 2023 and rose to $2.3 billion in 2024. She said a little more than $1 billion of the 2024 total was for substance-use disorder services.

The department told the committee that the number of providers billing for behavioral health services has grown from about 4,500 in 2019 to nearly 8,000 in 2024. Lee said part of that growth followed the 2014 expansion of behavioral-health coverage and an expansion in the types of provider categories eligible to enroll, such as licensed professional clinical counselors and licensed marriage and family therapists.

Committee members pressed DMS for more detail on specific billing trends and controls. Representative (Vice Chair) Williams…