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Medicaid Insurance Coverage for Drug and Alcohol Treatment

Medicaid was first developed by the federal government in 1965 in combination with Medicare to provide medical relief to specific populations in the United States. Unlike Medicare, which is funded and operated entirely at the federal level, Medicaid is a joint federal-state program. The program is aimed at providing medical care and support to low-income individuals and families.

Medicaid law and benefits has changed at various times over the decades since this program was first created. With the passing of the Affordable Care Act, Medicaid was expanded to cover a greater number of people across the country. In 2018, Medicaid was providing benefits for 97 million low-income Americans.

Because states operate their own Medicaid programs, the guidelines and coverage can vary by location. The location of Medicaid state headquarters also varies based on where you live. The official headquarters for the U.S. Centers for Medicare & Medicaid Services is in Baltimore, Maryland.

Who Accepts Medicaid Insurance?

Not every provider will accept Medicaid insurance. However, Medicaid is a federal program that is widely recognized and accepted throughout all states. If you have coverage through Medicaid, you should be able to choose from multiple addiction treatment programs, depending on your location and other factors.

You can find out what treatment programs accept your Medicaid insurance by contacting various treatment programs directly or by contacting a Medicaid representative for guidance.

Medicaid Health Insurance Plans

Unlike other health insurance companies, Medicaid does not offer the standard plan structures (HMO, PPO, POS, etc.). Below is some basic information about the provisions of Medicaid plans. However, it is important to note that Medicaid operates differently in different states, and this information is generalized. For example, in California it is referenced as medical, in Massachusetts it is referenced as MassHealth. 

Primary Care Providers

Patients who have coverage from Medicaid are typically assigned a primary care provider. This doctor will be responsible for directing the patient’s care and making any necessary referrals. Medicaid may assign this doctor without input from the patient. However, patients can often request a different primary care provider if desired.


If you have insurance through Medicaid, many services you receive will require you to obtain a referral from your primary care provider. These stipulations vary by state, but referrals are generally required for:

  • Outpatient hospital services
  • Diagnostic tests
  • Clinic services
  • Scheduled admissions to a hospital
  • Home health care services

Referrals are not generally required for addiction treatment services or up to ten mental health care sessions.

Out-of-Pocket Costs

Depending on the way the state has structured the Medicaid program, your income and other factors, you may have out-of-pocket expenses with Medicaid coverage. You may owe a deductible, which is an amount you must pay out-of-pocket each year before Medicaid begins to cover your healthcare expenses. You may also owe copayments or coinsurance, which will apply when you receive covered services. A copayment is a flat fee you will owe when receiving a given service, while coinsurance is calculated as a percentage of the total cost of a given service.

Unlike other types of insurance plans, Medicaid is not available through employers. It is offered to individuals and families that meet program requirements, which are usually based on income and access to other financial resources.

Can Medicaid Pay for Substance Abuse Treatment?

Yes, Medicaid will typically pay for the cost of your addiction treatment program. The exact amount that will be covered, as well as the programs you can choose from, will depend on your state. Other factors, such as your income, may also play a role in determining the specifics of your coverage from Medicaid. In addition, it is important to make sure that you choose an addiction treatment program that accepts Medicaid benefits in order to maximize your coverage and minimize your out-of-pocket expense.

In some cases, Medicaid may cover the full cost of your addiction treatment. This is especially likely if you have low income. However, in other cases, you may owe a portion of the expenses. To ensure that you receive the maximum coverage from Medicaid without any surprises, be sure to verify that the program you choose will be covered by Medicaid and that no referral is required before you begin treatment.

Does Medicaid Require Preauthorization for Addiction Treatment?

Preauthorization, also called “prior authorization,” is a process that insurers sometimes use to verify that a specific service or course of treatment is medically necessary. If preauthorization is required but not completed, the insurer may refuse to cover the patient’s expenses. This can lead to unexpected bills and financial hardship.

Medicaid requires prior authorization for some services. When prior authorization is required, the primary care provider will contact Medicaid directly, either in writing or by phone. Medicaid must then make a decision and report the decision to the primary care provider. This process usually takes no more than 14 days and will be completed more quickly in the event of an emergency.

Prior authorization is typically required only when you also need a referral, so you may not need prior authorization to receive addiction treatment services. However, it is always a good idea to talk to a representative from Medicaid to make sure prior authorization will not be necessary in your case.

Find Your Addiction Treatment Coverage and Cost

If you are struggling with a substance use disorder, getting professional addiction treatment is the first step on the road to making a successful recovery and rebuilding your life. However, it is always a good idea to find out how much you will pay out-of-pocket for treatment before you begin the process. If you have coverage from Medicaid, your out-of-pocket costs may be lower than those paid by most other patients.

Estimating your own addiction treatment coverage and costs can be a challenge. Fortunately, you can simplify the process by using our addiction treatment insurance coverage tool.

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If you come across any information that you might believe is inaccurate, please contact us right away. 

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