This technical assistance report provides an overview of Medicaid coverage policies for mental health and substance abuse services including all the Medicaid financing opportunities available to states to meet mental health and substance abuse treatment objectives. It contains background information on the Medicaid child and adolescent population, explains key components of the Medicaid program, and includes a status report on states' current Medicaid eligibility and service coverage policies. The report addresses the following questions: (1) "What are the characteristics and service needs of children receiving Medicaid?"; (2) "How do children become eligible for Medicaid benefits?"; (3) "What types of services can State Medicaid programs reimburse?"; (4) "How are State Medicaid programs financed and administered?"; (5) "How do States use federally mandated services to serve children?"; (6) "What optional benefits are available?"; and (7) "How might Medicaid reimbursement be improved?". Thirteen tables are appended which detail state coverage of specific procedures. Also appended are two glossaries, one covering Medicaid terms, and one abbreviations. (71 endnotes are included) (DB)