07/30/2026

Ohio Department of Medicaid Previews Behavioral Health Rule Changes for Long-Term Care Settings

The Ohio Department of Medicaid (ODM) has outlined proposed changes to behavioral health services provided in nursing facilities and assisted living settings as part of its broader effort to strengthen Medicaid program integrity. The department said it has seen a significant increase in billing for certain behavioral health services and is proposing rule changes intended to address potential fraud, waste, abuse, and duplicative services.

The proposed rules, which are expected to be released for public comment in October with a target implementation date of January 1, 2027, would make several significant changes affecting providers serving residents in long-term care settings.

Among the changes ODM discussed:

• Therapeutic Behavioral Services (TBS) provided in nursing facilities would require prior authorization beginning with the first day of service.
• Psychosocial Rehabilitation (PSR) would no longer be reimbursable in nursing facilities because ODM believes the service is intended to help individuals maintain independent living in community settings.
• Behavioral health nursing services also would no longer be reimbursable in nursing facilities, with ODM citing concerns that these services may duplicate nursing care already provided by the facility.
• ODM is proposing clearer definitions for TBS and PSR to distinguish each service's intended purpose and expected outcomes.

During the webinar, department staff emphasized that Medicaid behavioral health services must be medically necessary and tied to individualized treatment plans. They also reiterated that recreational activities, entertainment, routine socialization, snacks, meal breaks, and similar activities are not Medicaid-covered behavioral health services.

ODM indicated the proposed rules are part of a broader review of behavioral health services across the Medicaid program and said providers will have an opportunity to submit comments once the formal rule package is released this fall.

LeadingAge Ohio is monitoring these proposals closely. If your organization serves a significant behavioral health population in a nursing facility or assisted living setting, we encourage you to contact us. We want to better understand how these proposed changes could affect resident care, operations, and access to needed behavioral health services as the rulemaking process moves forward. 

ODM’s slide deck presentation from the webinar can be found here.