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Oregon faces backlash over push to block Medicaid payments to unaffiliated, uncertified behavioral health providers

Providers and groups say a new rule will worsen inequities and the state’s behavioral health crisis
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February 4, 2025

State officials want to stop newly graduated therapists from operating independently while serving low-income people, but their idea is sparking widespread alarm that it will harm vulnerable patients in the middle of a statewide behavioral health crisis.

Backlash against the proposed policy was taken up by the board overseeing the Oregon Health Authority on Tuesday after members of the agency’s equity committee sent a letter sharing “deep concerns” that the proposal is already creating “widespread disruption” in care— even before the changes take effect.

“We are deeply concerned that this rule change will push more providers out of the Medicaid system, further exacerbating mental health disparities in this challenging time when we face explicit attacks on equity and inclusion at the federal level,” Andi Walsh, a senior advisor at the Children’s Institute and member of the equity committee told the board. 

But supporters of the idea, including state officials, say it will improve quality of care as well as the training for counselors and social workers serving low-income members of the Oregon Health Plan, the state’s version of Medicaid. 

The debate pits employers and payers against providers, equity advocates and patients who want more freedom to choose their provider. It shows the challenges of trying to balance competing goals while providing services to the 1.4 million people provided with free coverage under the Oregon Health Plan. 

New counselors are more prone to errors in clinical judgment, potentially leading to adverse client outcomes."

The debate’s outcome could affect thousands of patients — many of them people of color, people with disabilities or LGBTQ+.

The rule change would undo a policy that’s been in place since 2016 and affect about 2,000 mental health professionals, known as “associates” who are approved by regulatory boards to provide services but do not have their license or credential yet.

Chris Bouneff, head of the Oregon chapter of the National Alliance on Mental Illness, wrote in a recent email to the group’s members that “as far as we can tell, Oregon is the only state that permits” unlicensed therapists to bill Medicaid. He added that, “This is a tricky issue for NAMI. No matter what the state does, someone loses because we have an overall workforce shortage.”

In the end, though, he wrote that NAMI had concluded that the new rule is generally “in the state's long-term interests.”

CareOregon made change first

In early December, CareOregon, the largest regional care organization contracted by the state to administer care for low-income members of the Oregon Health Plan, notified therapists and social workers that it would halt reimbursements for services provided by unlicensed mental health professionals outside of its network. 

“Starting therapy as a person of color is incredibly difficult, getting over any cultural shame or stigma around mental health, and the sense that therapy is for white people is huge. To then find a clinician of color that meets your identity, that has openings and that takes OHP, it’s like a miracle to find those intersections.”

According to CareOregon’s letter, first reported by Willamette Week, the change was intended to ensure quality of care to its members and will take effect this July. 

Asked for comment, CareOregon spokesperson wrote in an email that the new policy “solely impacts unlicensed associate providers who do not hold a contract with us, are not part of a contracted agency, or an agency (approved by) the state, which is a small subset of all associate providers serving our members.”

New state rules mirror CareOregon’s move

A week after CareOregon sent out its letter, the Oregon Health Authority announced it was pursuing new state rules that echoed the insurer’s policy. 

In a report issued by Director Sejal Hathi based in part on input from OHP contractors, the agency described how it would halt non-licensed counselors from being able to bill Medicaid while working in private practice rather than county-affiliated programs. 

Under the new rule, only hospitals, clinics or nonprofits that have approval from the authority could bill the Oregon Health Plan for services from unlicensed mental health providers. Hathi wrote that doing so would ensure that providers would be “directed toward our highest-need and highest-acuity settings in the state.” 

The rule is supported by Gov. Tina Kotek, and is intended to “create consistency and quality of services provided to Oregonians with public dollars,” health authority spokesperson Kim Lippert told The Lund Report in an email. She said the authority is working on a plan to minimize disruptions to care.

Equity committee raises concerns

The equity committee’s Jan. 27 letter to the health authority’s board states that CareOregon’s announcement  “is already causing widespread disruption in access to mental health care” for the state’s LGBTQ, disabled, immigrant, rural and non-white communities. 

Following CareOregon’s announcement, the committee held a meeting on the policy change and heard from affected providers and patients who “shared harrowing testimony about the immediate and potential long-term impacts of this policy,” according to the letter. 

"No matter what the state does, someone loses because we have an overall workforce shortage.”

Non-licensed clinicians serving CareOregon members in the Portland area, Southern Oregon, the coast and rural areas have built practices “specifically to address systemic gaps in care,” according to the letter. 

The committee heard from more than 30 people about the change. One associate told the committee he was one of only 14 Latino male therapists listed in an online index who accepts the Oregon Health Plan and speaks Spanish. Others said their clients who depend on them for gender-affirming care will face longer wait times. 

Debate hits board

On Tuesday opponents told the board overseeing the health authority that the new policy was developed without their input and would cut off care for thousands of patients, many of whom are people of color, LGBTQ or other disadvantaged groups. 

Kalpana Krishnamurthy, an associate in private practice, told the board that she is one of a handful of South Asian providers in Portland who has availability and takes the Oregon Health Plan. She said takes calls from Black, Latine, Asian, Pacific Islander and multiracial people covered by the plan.  

“Starting therapy as a person of color is incredibly difficult, getting over any cultural shame or stigma around mental health, and the sense that therapy is for white people is huge,” she said. “To then find a clinician of color that meets your identity, that has openings and that takes OHP, it’s like a miracle to find those intersections.”

But Cynthia Levesque, a counselor who runs a program in southern Oregon, told the board that the proposed change will bring needed support to professionals starting their careers while protecting the integrity of services funded with public money.

“New counselors are more prone to errors in clinical judgment, potentially leading to adverse client outcomes,” she said. 

Julia Przedworski, a trans health equity researcher and member of the committee, called for a more “deliberate and collaborative” process for any policy change. They said it should center “the voices and needs of OHP members and their behavioral health providers, not just those of the community mental health system.”

Some providers and trade groups submitted comments in support.

Heather Jefferis, executive director of trade group Oregon Council for Behavioral Health, wrote that the agency’s previous policy allowing more independence for unaffiliated, unlicensed providers “increases the risks to client safety, limits opportunities for learning by the new professional and contributes to poor retention in the profession.”

What happens next

In Tuesday’s meeting, members of the state board acknowledged the concerns and complexity around the issue.

​Peter Starkey, the leader of a behavioral health support group and board member, said that the  health authority needed to be intentional in meeting its goal of eliminating health equities by 2030, while “not doing more harm in the process.” 

Another board member, Rosemarie Hemmings, a longtime licensed clinical social worker who owns a group mental health practice that focuses on providing cultural and linguistic care, criticized the agency for issuing what she characterized as a unilateral top-down decision without getting input, and suggested the board send the agency a letter urging it to slow things down.

Brenda Johnson, CEO of southern Oregon clinic La Clinica and board member, asked if there was “a path in between” each side. 

Clare Pierce-Wrobel, a high-level manager at the agency, said the new policy will go through “a rigorous public vetting process” that could be refined along the way to respond to concerns from the public.


You can reach Jake Thomas at [email protected] or at @jthomasreports on X.

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