How States Can Use Federal Funding for Crisis Services

Over the past decade or so—but especially since the start of the COVID-19 pandemic—states have worked to develop and expand behavioral health crisis response systems. Because people experiencing a behavioral health crisis require urgent intervention and support, states need resources and tools to ensure people receive appropriate care.

Guidance from the Substance Abuse and Mental Health Services Administration (SAMHSA) identified three foundational elements to an integrated crisis care system: someone to call, someone to respond, and a safe place for help. While state and local (county/municipal) budgets support aspects of this infrastructure, states can leverage federal funding to launch, expand, and strengthen key crisis response programs, such as mobile crisis units, crisis transportation, crisis receiving and stabilization facilities, and crisis respite or residential services.¹ To help states understand how federal funds can support behavioral health services, a team of leading researchers in behavioral health crisis response recently released a report that analyzed how states and the District of Columbia used nine federal funding mechanisms to expand crisis systems from 2014 through 2024. Their findings identify key patterns and highlight opportunities policymakers can consider when developing solutions to meet the needs of their own jurisdictions.

The report makes clear that states cannot build sustainable crisis systems without a solid funding strategy, yet many may be overlooking federal resources already at their disposal. This analysis highlights the funding streams available to support crisis services (see Table 1) and underscores a central lesson: lasting systems depend on coordinated federal, state, and local investments. The full report provides details on how states have innovated, and the map (below) identifies where each funding mechanism has been used across the country.

States may be missing out on key federal funding streams

Five of the nine identified funding streams stem from Medicaid. Because states vary widely in how they leverage these funds for crisis services, they could be leaving money on the table. Maximizing Medicaid billing and reimbursement for crisis services could unlock critical resources for building behavioral health crisis systems.

• State plan amendments (SPAs) are a dominant mechanism for crisis services expansion. Since 2014, 38 states have made 115 Medicaid SPAs to support crisis response programs. Alabama and California made mobile crisis teams a statewide Medicaid benefit, while Kentucky, Nevada, and Oklahoma added crisis transportation billing codes. Crisis transportation can be costly when provided by ambulance and traumatizing when law enforcement is the only option for bringing someone to a hospital or stabilization unit. Allowing reimbursement for specialized behavioral health transport can free up time and key resources from other critical public safety and health agencies. As another example, one of Georgia’s SPAs introduced crisis stabilization coverage, offering a residential alternative to psychiatric hospitalization or detoxification.
• Section 1115 demonstration waivers allow states to bypass specific federal Medicaid rules in order to test innovations. States can use 1115 waivers for a variety of purposes, such as social supports—including food (Massachusetts Flexible Services Program), and family planning-related services to women (Florida Family Planning Waiver Program)—or for accessing healthcare coverage prior to release from prison. The waiver period is temporary, so it is critical that states transition covered services into a state plan amendment to ensure long-term sustainability. For example, Massachusetts’ 1115 demonstration waiver covered 24/7 mobile crisis services,   formalized as Mobile Crisis Intervention in the Medicaid State Plan in 2023, ensuring continued coverage of services.

Strategic use of funds creates sustainable crisis systems

The long-term success of crisis systems depends on braided funding that combines federal, state, and local dollars rather than relying on a single funding source. Strategically using specific federal funding streams across the continuum can fill gaps, allow for innovation, and increase the likelihood that programs will be sustained.

• Planning grants from the Centers for Medicare & Medicaid Services are most useful for system design and startup planning. Twenty states received 12-month grants, providing financial support to state Medicaid agencies to assess the needs of their communities for the creation of mobile crisis services, and later prepare applications for SPAs, waivers, or demonstrations.² While these grants are not a permanent funding source, they enable jurisdictions to expand key crisis services while building the case for continued investment in implementation, evaluation, and sustainability efforts.
• SAMHSA Mental Health Block Grants are flexible grants that can fill gaps and provide coverage for uninsured individuals. In 2024, Washington used this funding to provide consistent statewide crisis intervention training for behavioral health professionals, mobile crisis teams, and dispatchers. These block grants require a 5% set aside for funding crisis services, which creates a dedicated, though modest, source of crisis response funding.
• The Bureau of Justice Assistance Byrne State Crisis Intervention Program (SCIP) grants provide a justice-related funding stream that can support court-based behavioral health deflection programs. Pennsylvania used these funds to establish a Crisis Intervention Team Training and Technical Assistance Center to provide training, improve data and reporting, and strengthen partnerships between law enforcement and mental health providers.
• Certified Community Behavioral Health Clinics (CCBHCs) are a major vehicle for sustaining crisis services. With demonstration funding from SAMHSA, CCBHCs can be a “one-stop shop,” offering a broad scope of services and providing outreach to underserved groups. Minnesota, Missouri, Nevada, and Oklahoma have been approved for CCBHC Medicaid SPAs, ensuring that coverage will continue.

As states navigate the complex behavioral health funding landscape, coordinated action and partnership among behavioral health providers, community responders, law enforcement, courts, and the state Medicaid agency will be essential. No single funding stream, agency, or sector can sustain a crisis system alone.

These relationships will be essential especially as H.R. 1, the federal budget reconciliation law passed last July, takes effect and significantly reshapes Medicaid funding and its administration. Policymakers will be forced to make strategic decisions, realigning resources, identifying and closing service gaps, and leveraging available funding streams to support their residents. The stakes are  high: ensuring that every person experiencing a behavioral health crisis receives the right response, at the right time, in the right setting requires a shared commitment across all levels of government and community partners.

Hillary Gore provides technical assistance and policy analysis for The Pew Charitable Trusts, where Connie Utada manages efforts to advance effective behavioral health crisis response systems through policy reform.

Endnotes

1. The report narrows its analysis to investment in two of the three foundational elements (someone to respond and a safe place for help). It did not examine the first element, which would include 988 call centers, as that is the focus of other ongoing research. The analysis also excluded services such as broader outpatient crisis counseling, crisis intervention embedded in existing treatment programs, as well as nonfederal sources of funding, such as state general funds, local funding, foundation support, and private insurance.
2. The 20 states are Alabama, California, Colorado, Delaware, Kentucky, Maryland, Massachusetts, Maine, Missouri, Montana, North Carolina, New Mexico, Nevada, Oklahoma, Oregon, Pennsylvania, Utah, Vermont, Wisconsin, West Virginia.