Using Medicaid to Pay for Rehab

Last Updated: October 25, 2019

Nearly 12% of adults with Medicaid have a substance use disorder.1 Medicaid may cover some or all costs associated with addiction treatment, though coverage and eligibility requirements vary by state.

If you have Medicaid and are ready to recover from an alcohol or drug use disorder, it may help pay for detoxification, therapy, maintenance medications, and other addiction treatment services.

There are always options for Medicaid patients to private pay or to use other insurance options. Please contact us to learn more.

What Is Medicaid?

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Medicaid is a state and federal health insurance program that, combined with the Children’s Health Insurance Program, serves more than 72.5 million people in the U.S.2

Low-income families, disabled adult children, and qualified pregnant women are just some groups that all states are required to cover through Medicaid. Some states offer Medicaid coverage to other groups such as independent foster care adolescents and people receiving hospice care.3 Exact rules for Medicaid eligibility vary by state.

Under the Affordable Care Act (ACA) of 2010, states had the option to expand Medicaid coverage to nearly all low-income people under the age of 65. Eligibility for children was extended to at least 133% of the federal poverty level, and states now have the option to cover adults with income levels at or below 133% of the federal poverty level.2

How Do I Find Out If I’m Eligible?

To find out whether you or a loved one qualifies for Medicaid coverage in your state, follow the instructions outlined on this page from the U.S. Department of Health and Human Services.

Will Medicaid Cover Rehab?

Following the ACA rollout, states expanded Medicaid coverage to include benefits for substance abuse and mental health.

Medicaid is operated at the state level. Each state has its own eligibility requirements and offers different levels of coverage for addiction treatment. Some states limit coverage by service, while others require prior authorization before providing coverage. Some states will only cover substance abuse services if treatment is deemed medically necessary and part of a treatment plan.

Prior to the ACA, coverage for substance abuse treatment was an optional benefit through Medicaid, and states provided only limited coverage. Following the rollout of the ACA, states expanded Medicaid coverage to include benefits for substance abuse and mental health services.4

These benefits must meet the requirements of the Mental Health Parity and Addiction Equity Act (MHPAEA). The MHPAEA is a federal law that prevents health insurance providers from offering benefits that are less favorable for substance abuse and mental health services compared with those for other medical and surgical services.5

Though Medicaid does provide coverage for substance abuse and mental health services, not all addiction treatment centers accept Medicaid as a form of payment. However, many treatment centers will perform a complimentary insurance benefits check to confirm which benefits, if any, you can receive from Medicaid for addiction treatment. You can also use this chart to see which substance abuse benefits are covered by Medicaid in your state.

States Differ in Medicaid Addiction Treatment Coverage

A 2016 study published in the journal Health Affairs used data from 2013 to 2014 to examine how each state defined Medicaid benefits for substance use disorders. Analysts found that many states failed to cover all levels of care required for effective substance abuse treatment—including medications used to treat opioid use disorder. This means that low-income populations in certain states who are on Medicaid may not have access to these services.6

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1Insurance Disclaimer: American Addiction Centers will attempt to verify your health insurance benefits and/or necessary authorizations on your behalf. Please note, this is only a quote of benefits and/or authorization. We cannot guarantee payment or verification eligibility as conveyed by your health insurance provider will be accurate and complete. Payment of benefits are subject to all terms, conditions, limitations, and exclusions of the member’s contract at time of service. Your health insurance company will only pay for services that it determines to be “reasonable and necessary.” American Addiction Centers will make every effort to have all services preauthorized by your health insurance company. If your health insurance company determines that a particular service is not reasonable and necessary, or that a particular service is not covered under your plan, your insurer will deny payment for that service and it will become your responsibility.

Which Substance Abuse and Mental Health Treatments Are Covered?

Medicaid may provide coverage for the following substance abuse and mental health treatments in your state. Before choosing an addiction treatment center, make sure the services you need are covered by Medicaid, and that the treatment center accepts Medicaid as a form of payment.


Detox is the first stage of addiction treatment and helps you safely withdraw from drugs and alcohol in a controlled, supervised medical setting. Detox often precedes medication maintenance and behavioral therapy at an addiction treatment center.7

Inpatient and Short-Term and Long-Term Residential Care

Many inpatient and residential care programs provide medical care and substance rehabilitation—including group and individual therapy, 12-step meetings, and other recovery activities—24 hours per day in a highly structured setting. Short-term programs last between 3 and 6 weeks and are followed by outpatient therapy. Long-term programs last for between 6 and 12 months and focus on resocializing patients as they prepare to re-enter their communities. These programs may offer ancillary services such as employment training.8

Outpatient (Group, Individual, Intensive)

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Outpatient services provide a range of therapies in group and individual settings, including psychoeducation, skills development, cognitive behavioral therapy, and support groups. Patients do not live at the treatment facility while they are involved in these programs. However, American Addiction Centers provides room and board to clients in its partial hospitalization and intensive outpatient programs who do not live in the local area.

Intensive outpatient services offer at least 9 hours of therapy per week in sets of three 3-hour sessions, and some studies have found them to be similar to residential and inpatient programs in both services and effectiveness.9  

Partial hospitalization programs (PHPs) provide care for people who need a more comprehensive level of treatment than standard or intensive outpatient. These programs consist of around 20 hours a week of treatment and may include vocational and educational counseling, family therapy, medically supervised use of medications, and treatment of co-occurring disorders. IOPs may also offer these services, but the time commitment of a PHP is greater.10


Screenings identify whether patients currently have or are developing problems with substance abuse. Screenings also help match patients with treatments that can benefit their unique needs in terms of recovery from substance abuse.11

Counseling and Therapy

Behavioral counseling and therapy are used to engage patients in their addiction treatment and help them reframe thoughts, attitudes, and behaviors surrounding substance abuse. Cognitive behavioral therapy, contingency management, community reinforcement, and motivational enhancement are just some of the therapies and counseling approaches used in substance abuse treatment.12

Roughly 6 in 10 people with an illicit substance use disorder also suffer from a mental health disorder.

Opioid Maintenance and Craving Medications

Methadone and buprenorphine are opioid medications that help decrease cravings and alleviate withdrawal symptoms from other opioids such as heroin. Naltrexone is used to decrease the risk of relapse by blocking the effects of other opioids; naltrexone may be administered after successful withdrawal management and detox completion.13

These treatment medications are often combined with behavioral therapies.

Mental Health Services

Roughly 6 in 10 people with an illicit substance use disorder also suffer from a mental health disorder. People who have co-occurring mental illnesses can benefit from receiving mental health services combined with addiction treatment.14

Call American Addiction Centers at (888) 966-8152 for more information about our treatment services covered by Medicaid.


[1]. Medicaid. Substance Use Disorders.

[2]. Medicaid. Eligibility.

[3]. Medicaid. List of Medicaid Eligibility Groups.

[4]. Boozang, P., Bachrach, D., and Detty, A. (2014) Coverage and Delivery of Adult Substance Abuse  Services in Medicaid Managed Care. Centers for Medicare & Medicaid Services.

[5]. Centers for Medicare and Medicaid Services. Mental Health Parity and Addiction Equity Act (MHPAEA).

[6]. Grogan, C.M. et al. (2016). Survey Highlights Differences In Medicaid Coverage For Substance Use Treatment And Opioid Use Disorder Medications. Health Affairs, 35(12), 2289–2296.

[7]. National Institute on Drug Abuse. (2017). Frequently Asked Questions.

[8]. National Institute on Drug Abuse. (2018). Types of Treatment Programs.

[9]. McCarty, D. et al. (2014). Substance Abuse Intensive Outpatient Programs: Assessing the Evidence. Psychiatric Services, 65(6), 718–726.

[10]. The University of Arizona: MethOIDE. Treatment Settings.

[11]. SAMHSA. (2009). Substance Abuse Treatment: Addressing the Specific Needs of Women.

[12]. National Institute on Drug Abuse. (2018). Behavioral Therapies.

[13]. National Institute on Drug Abuse. (2016). Effective Treatments for Opioid Addiction.

[14]. National Institute on Drug Abuse. (2018). How do other mental disorders coexisting with drug addiction affect drug addiction treatment?





Last Updated on October 25, 2019
About the editor
Dan Wagener
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Dan Wagener is a Senior Web Content Editor at American Addiction Centers.

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