The Innovation in Behavioral Heath Model Moves Forward

Would it have under Trump 2.0?

As a second Trump administration takes shape, concerns are mounting over the future of behavioral health progress in federal policy. The reasons include proposed steep budget cuts to the Substance Abuse and Mental Health Services Administration (SAMHSA), Medicaid work requirements that could reduce access to care for individuals with mental health and substance use disorders (MH/SUD), and new limits on 1115 Medicaid waivers that help serve these same needs.

These developments raise an interesting question: Would the Innovation in Behavioral Health (IBH) model have been greenlit during a second Trump Administration — given its rollback of social determinants funding and early termination of value-based care pilots.

Refresher: The IBH model and the states implementing it

The IBH model is a big deal.

Announced in December 2024, the IBH model is an eight-year CMS initiative that empowers specialty behavioral health providers to lead integrated care teams. These teams coordinate physical, behavioral, and health-related social needs (HSRNs) for Medicaid and Medicare enrollees with moderate to severe MH/SUD disorders.

IBH is the first-ever federal model to focus on MH/SUD disorders. It’s also the first to put specialty behavioral health providers, not primary care, at the helm of care integration — and jointly for Medicaid and Medicare populations. Both populations are more likely to use the ER and hospitals for their care, have poor health outcomes, and even die prematurely.

For many of these patients, the behavioral health setting is their true front door to the healthcare system. That’s why IBH flips the traditional script. Instead of relying on primary care, IBH makes specialty behavioral health providers the anchors of integrated care teams. These providers will screen for physical health issues and HRSNs, manage care transitions, track patient status, and partner with community organizations to address equity gaps.

And they won’t do it alone. Medicaid agencies—and their managed care partners—will be responsible for building networks, training providers, implementing new payment models, and improving data and analytics. The idea is to prepare these behavioral health systems for future value-based payment models, a CMS spokesperson told HealthLeaders.

Four states were selected for the model’s first phase: Michigan, New York, Oklahoma, and South Carolina. Each state received $7 million plus in federal grants to fund planning, data integration, and provider transformation activities between 2025 and 2032.

• Michigan will focus on both rural and urban regions, including the Upper Peninsula, using existing behavioral health clinics as its base.
• New York will target the western region in collaboration with its mental health and substance use agencies.
• Oklahoma plans to go statewide, investing in care gap alerts, EHR upgrades, and integrated referrals through its Medicaid and behavioral health agencies.
• South Carolina will build on an executive order from Governor Henry McMaster to fix a fragmented system that often fails patients with dual diagnoses.

Each state will tailor the model to local needs—but all will operate under a core set of IBH pillars: Care Integration, Care Management, Health Equity, and Health IT.

To approve the IBH model, CMS used the regulatory scaffolding of Section 1115 waivers, which give states flexibility to tailor their Medicaid programs. But as HealthLeaders has documented in multiple articles — and as KFF is tracking — 1115 waivers are now under threat.

Waiver whiplash

The Trump administration’s early moves suggest a tightening grip on waiver funding, particularly around Designated State Health Programs (DSHPs)—a financing tool that frees up state dollars to reinvest in new Medicaid initiatives.

Think of DSHPs as a bridge to innovative programs like IBH, especially when used to address the social drivers of poor behavioral health outcomes.

But under Trump 1.0, that bridge began to crumble. In 2017, CMS announced it would stop approving new or renewing 1115 demonstrations that relied on DSHP funding. At the time, the agency argued there was no “compelling case that federal DSHP funding is a prudent federal investment.”

The Biden administration reversed course. CMS rescinded the Trump-era guidance, approved DSHP funding in eight states, and used the freed-up state dollars to fund HRSN services — many of which mirror the IBH model’s goals. Importantly, CMS attached guardrails: DSHP funding could not exceed 1.5% of a state’s Medicaid spending, at least 15% of state contributions must come from non-federal sources, and any initiative must align with core Medicaid objectives like access to covered services.

These are the kinds of technical, targeted financing moves that often fly under the radar until they disappear.

Deleting demonstrations

Other recent moves from the CMS Innovation Center (CMMI) also indicate that IBH might have struggled to see the light of day.

On March 12, CMS announced it would prematurely terminate four alternative payment models (APMs) by year’s end. While three were already nearing their planned end dates, one—Making Care Primary (MCP) — was barely out of the gate. Launched in mid-2024 with a planned 10-year run, MCP was designed to help primary care providers ease into prospective payments while integrating behavioral health and specialty care.

If MCP couldn’t survive, IBH might not have either.

The other three models on the chopping block — Maryland’s Total Cost of Care, Primary Care First, and the ESRD Treatment Choices model — each tested new ways to align payment with outcomes. Their early exits raise uncomfortable questions: Is this simply CMMI continuing to streamline its strategy, or the beginning of a broader pullback on value-based care innovation?

Behavioral health innovation at risk?

On paper, CMS’s Innovation in Behavioral Health (IBH) model looks like a bipartisan win: targeted federal investment, a state-led delivery strategy, and a strong focus on outcomes for complex, high-cost Medicaid and Medicare enrollees.

But CMS’s recent moves signal more than just a change in policy. They mark a reversion to an earlier mindset — one less concerned with social needs, less experimental with payment, and more skeptical of state-level flexibility.

In this political moment, the question isn’t whether IBH model is good policy. It’s whether the model would’ve made it through the front door of a second Trump Administration.

That’s the $7-million question. Based on the Trump administration’s track record with waivers and model terminations, there’s good reason to be skeptical.