Idaho Medicaid cut selected behavioral health services for people with serious and persistent mental illness (SPMI) as part of an effort to help the state avoid a budget deficit. The programs serve nearly 5,500 people with SPMI, according to the Idaho Association Of Community Providers (IACP). The programs include assertive community treatment (ACT), high acuity residential treatment (HART), peer support, early serious mental illness (ESMI), coordinated specialty care (CSC), and half day partial hospitalization programs (PHP). Additionally, rates for intensive outpatient programs (IOP) were reduced.
The Idaho Department of Health and Welfare (IDHW) announced a 4% pay rate cut for Medicaid medical provider organizations on August 22, 2025. IDHW said the reduction would start September 1, 2025, for non-exempt fee-for-service (FFS) claims. The rate cut affected inpatient and outpatient hospital services, home- and community-based services, nursing facilities, hospice, school-based services, ambulatory surgical centers, intermediate care facilities, swing beds, some out-of-state facilities, and interim rates for federally qualified health centers.
On October 2, 2025, Magellan of Idaho, which manages the Idaho Behavioral Health Plan (IBHP), informed Medicaid provider organizations that it was cutting rates by 4% for most IBHP services by November 1, 2025, and that some services would be cut by a greater percentage. The notice, Important Magellan IBHP Fee Schedule Updates, listed the following changes: Rates for diagnosis-related group hospitals were cut by 4% effective September 1, 2025. Effective November 1, 2025, Magellan of Idaho cut rates for community-based addiction treatment at American Society of Addiction Medicine (ASAM) Criteria Levels 3.5 and 3.7 by 5%. Rates for intensive outpatient services were cut by 10%. Partial hospitalization program rates were cut by 15%.
On October 30, 2025, Magellan of Idaho notified provider organizations that effective December 1, 2025, all Behavior Modification and Consultation (BMC) services would transition to FFS Medicaid as Behavioral Intervention (BI). BI is a covered service within Children’s Habilitation Intervention Services (CHIS) and is reimbursed through Idaho Medicaid FFS, which is managed by Gainwell Technologies. In a separate notice issued the same day, Magellan notified provider organizations that also effective December 1, 2025, that the following services would no longer be available:
- Adult mental health
- Peer support
- Mileage reimbursement for professionals
- Half-day PHP
- ASAM level 2.5, half day
- All-inclusive PHP, half day
- PHP eating disorder, half day
For PHP services, the notice said no new admissions would be accepted after November 30, 2025. Members currently in a PHP program would continue receiving that level of care until it is no longer medically necessary.
On November 25, 2025, Magellan of Idaho notified provider organizations that effective January 1, 2026, Skills Training and Development (STAD) groups for adults would no longer be a billable service. STAD will remain billable for members who are 17 years and younger, and for ages 18 to 21 through the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit.
On November 26, 2025, IDHW notified Tribal representatives about the planned cuts to behavioral health services. IDHW accepted public comments through December 26, 2025. The notice stated IDHW planned to submit a Medicaid or Children’s Health Insurance Program (CHIP) state plan amendment or waiver application or amendment to cut coverage for specific behavioral health services. The state’s notice pertains to the Idaho Medicaid State Plan Basic and Enhanced Alternative Benefit Plans (ABPs), and the 1915(b) managed care waiver.
The notice listed the following service changes:
- Discontinue ACT as a unique bundled service. The bundle includes assessment, therapy, assistance with medication management, crisis treatment, co-occurring substance use disorder treatment, skills restoration, and care coordination activities through a designated multidisciplinary team of mental health professionals.
- Discontinue Mental Health Peer Support for Adults aged 21 years or older. Mental health peer support is a program providing services from a Certified Peer Support Specialist (CPSS) using lived experience and special training to assist the participants recovering from mental health concerns. This benefit will continue for participants younger than age 21.
- Discontinue Provider Mileage Reimbursement. Mileage reimbursement is compensation for any mileage accrued while attending medical and/or mental health appointments.
- Discontinue Skills Training and Development for Adults 21 Years of Age and Older. Skills Training and Development is a program to enhance personal or family relationships; alleviate work or family conflict; and adopt healthy, recovery-oriented behaviors. This benefit will continue for participants younger than age 21.
- Change of behavior modification services to transition from managed care to fee-for-service behavioral intervention under Children’s Habilitation Intervention Services (CHIS). Behavior modification and consultation (BMC) is the design, implementation, and evaluation of social and other environmental modifications to produce meaningful changes in human behavior, competencies, and confidence.
A white paper issued by the IACP on November 22, 2025, analyzed the potential outcomes of the cuts to core high-acuity behavioral health programs for people with SPMI. In SPMI Program Cuts: Statewide Fiscal Impact White Paper — Idaho 2025, IACP stated that although IDHW has proposed replacing the high acuity services with standard outpatient treatment, the change is not simply a reimbursement shift, rather it is the “functional elimination of every intensive psychiatric program in the state.” Outpatient codes for therapy, case management, community-based rehabilitation services, crisis services, and medication visits cannot fund the high frequency, multidisciplinary, in-community, or in-facility interventions needed for assertive community treatment, HART, or CSC fidelity.
The IACP estimated the likely downstream costs of eliminating these programs for people with SPMI. The cuts will “destabilize six distinct populations and shift $150 million to $180 million in new costs to the state’s hospitals, counties, emergency medical services, and child welfare programs,” the report stated. The estimate is based on Idaho-specific cost inputs for hospitals, emergency departments, emergency medical services, jail, homelessness systems, and Medicaid rates.
The six populations, which include nearly 5,500 people, do not overlap, according to the IACP report because people receiving services from one of the affected programs are not eligible for the others. The 400 people enrolled in ACT cannot participate in HART or ESMI. The 352 people participating in HART cannot participate in ACT, PHP, or IOP. ESMI is only for youth experiencing first-episode psychosis, and at the time of the report was serving about 100 youth. PHP and IOP each serve about 70 people in separate step-down populations. Peer support serves people who are not eligible for ACT, HART, or ESMI.
Two lawsuits filed to challenge the cuts were denied, according to local news reports, which allowed Magellan of Idaho to move forward with the cuts on December 1. One lawsuit was filed by four mental health clinics: Access Behavioral Health Services, Tueller Counseling Service, Riverside Recovery, and Mental Health Specialists. The other lawsuit was filed by a group of Medicaid beneficiaries with SPMI.
An announcement about the IDHW plan to cut rates by 4% was released on August 22, 2025, (accessed January 26, 2026).
The full text of SPMI Program Cuts: Statewide Fiscal Impact White Paper — Idaho 2025 was published on November 22, 2025, by the Idaho Association Of Community Providers. A free copy is available (accessed January 28, 2026).
The situation was reported in Idaho Judge Rules State Can Cut Mental Health Service That Many Warn Risks Public Safety on December 3, 2025, by News From The States and the Idaho Capital Sun (accessed January 26, 2026).
For more information, contact: AJ McWhorter, Public Information Officer, Office of the Director, Idaho Department of Health and Welfare, 450 West State Street, Boise, Idaho 83702; 888-528-5861; Email: AJ.McWhorter@dhw.idaho.gov; Website: https://healthandwelfare.idaho.gov/
March 2026 00US26EUA0004