Strengthening Medicaid for Serious Mental Illness Act

This bill, the Strengthening Medicaid for Serious Mental Illness Act, would create a new optional state plan amendment under Medicaid (Title XIX) that allows states to fund intensive community-based services for adults with serious mental illness (SMI). Beginning January 1, 2026, states could offer a package of services—not including room and board—to eligible adults (21 and older) with income at or below 150% of the federal poverty level. If a state implements these services and meets certain quality and administrative requirements, the federal government would increase the state’s Medicaid funding (the Federal Medical Assistance Percentage, or FMAP) for the services provided in each quarter. The size of the FMAP boost depends on how many of the eligible service categories the state offers, with a formula that can add up to substantial additional federal money but not exceed 100% for any quarter. The bill also emphasizes delivering care in the most integrated setting, ensuring data collection on access and outcomes, and supporting planning grants to help states develop these programs. The bill aims to reduce unnecessary hospitalizations and institutionalization by expanding community-based, recovery-oriented services (such as assertive outreach, crisis response, housing support, and employment assistance) and by promoting continuity of care as individuals age out of youth-focused Medicaid protections. It also references established standards (e.g., Housing First, TMACT/IPS) to guide service quality and requires ongoing data reporting to Congress.