Say Ahhh! readers will recall that when we blogged about the behavioral health section of the Center for Medicare & Medicaid Services (CMS) landmark 2024 EPSDT guidance, we noted that CMS had an additional EPSDT behavioral health resource in the works — an EPSDT Behavioral Health Services Toolkit. Now, over two years later, that toolkit has finally arrived.
Last week, CMS released its State Medicaid & CHIP Toolkit for Children’s Behavioral Health Services and the Early and Periodic Screening, Diagnostic and Treatment (EPSDT) Requirements (February 2026). The 100+ page toolkit is the latest in a series of federal actions after passage of the 2022 Bipartisan Safer Communities Act focusing on state implementation of EPSDT obligations — following CMS’s 2022 informational bulletin reminding states that EPSDT requirements extend to behavioral health and the comprehensive 2024 EPSDT state health official letter.
What’s in the Toolkit?
The toolkit is organized around four main sections, each containing actionable strategies and sub-strategies for state Medicaid and CHIP agencies: (1) developing and supporting a behavioral health care delivery system that can meet a range of children’s needs; (2) promoting early intervention for children’s behavioral health conditions; (3) improving children’s access to behavioral health care through service coordination and integration; and (4) increasing the workforce capacity for children’s behavioral health services. Throughout, CMS includes state examples to demonstrate implementation approaches — a welcome expansion on top of past guidance for states looking for state models to draw from.
Reaffirming: Behavioral Health Is Covered Under EPSDT
As a threshold matter, the toolkit reiterates a point that CMS has consistently emphasized in recent years — and that bears repeating — that states are obligated to cover medically necessary mental health and substance use disorder (SUD) services along the care continuum under Medicaid’s Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit. While “behavioral health” is not identified as a stand-alone service within the Social Security Act, CMS makes clear that EPSDT provisions specifically require states to include an assessment of both physical and mental health development in EPSDT-required screenings, as well as diagnostic and treatment services to correct or ameliorate illnesses and conditions identified by those screenings. This includes mental health conditions and substance use disorders.
This reiteration matters. Despite the clarity of these requirements, children across the country continue to face significant unmet behavioral health needs. As the toolkit notes, approximately 30% of children with public health coverage reported a mental, emotional, developmental, or behavioral problem in 2021, and the prevalence of mental health conditions has been increasing.
The Behavioral Health Service Array
One notable call out from the behavioral health toolkit — building directly on language first articulated in the 2024 EPSDT guidance — is CMS’s description of the behavioral health service array that is consistent with EPSDT requirements. According to CMS, such an array includes, but is not limited to:
- Screening and assessment;
- Services to address early signs or symptoms of behavioral health conditions, with or without a diagnosis;
- Community-based services at varying levels of intensity necessary to correct or ameliorate a wide range of behavioral health acute and/or chronic conditions, including routine community-based services as well as services to meet more intensive needs;
- Services to address urgent and crisis needs; and
- Inpatient care only when medically necessary.
The toolkit provides extensive detail on each segment and highlights the range of section 1905(a) state plan benefits and other Medicaid authorities (including 1915(c) HCBS waivers, 1915(i) state plan HCBS, and section 1115 demonstrations) that states can employ to cover these services. Consistent with the 2024 guidance, CMS stresses that children should have access to behavioral health services in their communities while living at home whenever possible, and that inpatient and residential care should be reserved for situations where it is clinically indicated — not used as a default because community-based options are lacking.
Critically, CMS frames this service array as “including, but not limited to” the five categories above — and recent legal developments reinforce that states must be acting broadly. As Kimberly Lewis detailed in a recent guest blog on Say Ahhh! Health Policy Blog, recent federal court class action settlements reached in Michigan, Colorado, Iowa, and New York require the states to provide an array of behavioral health services, including services such as intensive care coordination, intensive home-based care, and mobile crisis services for children and youth with significant behavioral health needs. Taken together, the toolkit and these settlements send a clear message: states’ EPSDT obligations are just that, obligations, not aspirational goals, and a complete system of care must cover the full continuum of services.
Other Toolkit Highlights
Beyond the service array, the toolkit highlights a number of other key issues. A few examples include:
States can allow behavioral health services without a formal diagnosis. The toolkit devotes an entire strategy to encouraging states to allow behavioral health services to be provided without a formal behavioral health diagnosis. This is particularly important for young children. CMS points to several states — including Alaska, California, and Colorado — that have implemented policies allowing certain behavioral health services to be provided to children without a diagnosed condition.
Effective care coordination and case management matter. Section 3 of the toolkit addresses care coordination and case management at length, emphasizing for example that case management under EPSDT must be tailored to a child’s specific needs, with varying levels of intensity depending on the complexity of the child’s conditions. The toolkit highlights Ohio’s tiered care coordination model and encourages collaboration with local educational agencies.
Utilization controls and fair hearings must be consistent with EPSDT. The toolkit reminds states that medical necessity criteria cannot impose hard limits on the amount, duration, or scope of services under EPSDT, and that prior authorizations must be conducted on a case-by-case basis without delaying needed treatment. The toolkit encourages states to review prioritization requirements for behavioral health services and highlights New York’s prohibition on prior authorization for the first 14 days of psychiatric inpatient admissions for children under 18 is featured as a state example.
States play a role in growing workforce capacity. Section 4 of the toolkit is devoted entirely to workforce capacity, recognizing that a robust service array means little if there aren’t enough providers to deliver it. Strategies include covering providers with a range of qualifications — including qualified non-licensed professionals — to broaden the workforce across the continuum of care, reducing administrative and regulatory barriers to provider participation, establishing reimbursement rates sufficient to attract and retain behavioral health providers, supporting interstate licensure portability, and partnering with state agencies to provide financial support for prospective practitioners and reimburse for services delivered by behavioral health interns.
Post-hospitalization follow-up is critical. With Child Core Set data indicating that only 45% of children ages 6 to 17 had follow-up care within 7 days after a hospitalization for a mental illness, the toolkit urges states to monitor follow-up rates, initiate care coordination before discharge, and ensure transportation is covered so families can participate in treatment. These concerns are further underscored by a September 2025 HHS Office of Inspector General report that found most children enrolled in Medicaid did not receive timely follow-up care after a hospitalization or emergency department visit for suicidal thoughts or behaviors — with half of cases lacking any follow-up visit in the critical week after discharge.
Looking Ahead
The release of this toolkit represents an important step in CMS’s ongoing work to support states in meeting their EPSDT behavioral health obligations. With Medicaid and CHIP serving as the single largest payer of behavioral health services for children — covering about half of children nationwide — and increasing rates of depression and anxiety in youth, the need for a well-functioning behavioral health system for kids has never been more pressing.
At the same time, the toolkit arrives at an extremely challenging moment for states. With federal Medicaid cuts under HR 1 threatening to strain state budgets, it is all the more important for states to invest in prevention, early intervention and community-based behavioral health services that are both effective and cost-efficient, and to draw on the strategies and state examples in this toolkit to do so. The toolkit, alongside the 2024 EPSDT guidance and recent federal court settlements, gives states the framework and practical strategies to build the systems children need and deserve. Now is the time to use them.