Manatt on Medicaid: State Strategies for Integrating Physical and Behavioral Health Services in a Changing Medicaid Environment

Authors: Deborah Bachrach, Partner, Manatt, Phelps & Phillips, LLP | Stephanie Anthony, Director, Manatt Health Solutions | Andrew Detty, Senior Analyst, Manatt Health Solutions

Editor’s Note: States across the country are embracing integrated care delivery models as part of their efforts to deliver high-quality, cost-effective care to Medicaid beneficiaries with comorbid physical and behavioral health needs. The Medicaid expansion authorized by the Affordable Care Act brings greater import to these efforts, as millions of previously uninsured low-income adults, many at increased risk for behavioral health conditions, gain coverage. State efforts to ensure that Medicaid beneficiaries have access to integrated care, however, are hindered by a fragmented behavioral health system that is administered and regulated by multiple state agencies and levels of government, as well as by purchasing models that segregate behavioral health services from other Medicaid-covered services. In a new report for The Commonwealth Fund, summarized below, Manatt Health draws on a review of the literature—as well as interviews with consumers, providers, payers, and policymakers—to explore strategies states are deploying to address or eliminate system-level barriers to integrated care. Click to download a free PDF of the full article.

Medicaid plays a central role in financing mental health and substance use disorder (SUD) services, accounting for 26 percent of all spending on behavioral health services in this country.¹ Medicaid beneficiaries with behavioral health conditions are among the program’s most medically complex and costly. Healthcare costs for beneficiaries with comorbid chronic conditions and mental illness are 60 percent to 75 percent higher than for those with chronic conditions but without mental illness. Costs for those who also have a substance abuse disorder are nearly three times higher.²  

Against this background, it is not surprising that nearly all states have efforts underway to improve health outcomes and cost management for beneficiaries with comorbid physical and behavioral health conditions. Medicaid expansion brings greater urgency to states’ efforts to purchase high-quality, cost-effective, integrated care for beneficiaries needing both physical and behavioral healthcare services. States’ efforts often are hindered, however, by:

• A fragmented physical and behavioral health system that is administered, regulated and financed by multiple state agencies and levels of government;
• Purchasing models that segregate behavioral health services from other Medicaid-covered services; and
• The absence of a cohesive provider community sharing aligned incentives.

Core Attributes of Integrated Care Delivery

States across the country are embracing integrated care delivery as part of their efforts to deliver high-quality, cost-effective care to Medicaid beneficiaries with behavioral health needs. Features key to effective integrated care delivery include:

• Accountability for the whole person. A single provider, care team or healthcare entity is responsible for coordinating or delivering the full spectrum of physical and behavioral health services and, when applicable, long-term supports and social services.
• Aligned financial incentives. State purchasing models, payment policies and contracting requirements for Medicaid physical and behavioral health services are aligned.
• Information sharing. Providers have the health information technology to exchange information in nearly real time on patient conditions, care and outcomes with other providers, patients and their families, managed care entities, and states. State privacy rules enable information sharing to the maximum possible extent.
• “Up-to-date” state licensing, credentialing and billing rules. State licensing, credentialing and billing rules support best practices, enabling providers to employ, deploy and be reimbursed for the professionals, paraprofessionals and services required to meet the medical, behavioral health and social needs of Medicaid patients.
• Cross-system understanding. Behavioral health and physical health providers are trained in each other’s fields to minimize lack of trust, understanding or communication resulting from cultural gaps between the two systems. Individuals with comorbid conditions are treated with respect and compassion, regardless of care setting.

Administrative Strategies

Most states vest responsibility for Medicaid physical health, mental health and SUD services in separate agencies, each with different missions, leadership, expertise and constituencies. This fragmented administration often leads to misaligned purchasing strategies, as well as conflicting and redundant regulation of physical and behavioral health providers.

Consolidating the agencies responsible for physical health, mental health and SUD services can help, though it can be politically and structurally difficult to implement. As a result, it is more common for states to consolidate behavioral health purchasing, contracting and rate-setting in their Medicaid agency and retain licensing and clinical policy in the behavioral health agencies. When even that level of consolidation is not feasible, states rely on informal collaborations to rationalize strategies across agencies. Informal collaborations are the most tenuous, as they depend on personal relationships among agency leadership and staff.

Purchasing Strategies

Medicaid managed care is the preferred delivery model in most states. Few states, however, currently offer integrated benefits in managed care, with most creating separate reimbursement streams for at least some behavioral health services. These “carve-out” arrangements continue despite mounting evidence that they create barriers to care coordination and information sharing. Cognizant of these issues, states are adopting financial alignment and care coordination policies that create linkages across providers and systems. At the same time, states are increasingly implementing fully integrated managed care approaches, in some cases targeted to individuals with serious mental illness.

Regulatory Strategies

State regulations governing licensure and certification, billing, and health information exchange also can impede integrated care delivery. With authority over Medicaid physical and behavioral services vested in separate agencies or offices, state regulation of these sectors is rarely cohesive and frequently redundant or contradictory.

Today, states are streamlining their licensing rules and creating credentialing programs for nontraditional providers, such as community health workers and peer counselors, who increasingly play a role in integrated care models. States also are revising their Medicaid same-day visit policies and establishing billing codes for emerging treatments.

Finally, slower rates of information technology adoption among behavioral health providers, along with state and federal constraints on sharing behavioral health data, can obstruct integrated care delivery. State strategies to support greater information exchange include technical assistance; funding for electronic health record implementation; policy guidance; streamlined privacy standards; and standardized, multiprovider consent forms.

Looking Ahead

Medicaid has long been the dominant payer for behavioral health services, and Medicaid beneficiaries with comorbid physical and behavioral health conditions are among the program’s most medically complex and costly. Despite the critical role Medicaid plays in providing coverage and care to these especially needy patients, state administrative, purchasing and regulatory structures have not kept pace with best practices in the field.

There is a large body of evidence showing that patients fare best when their physical and behavioral health needs are addressed in tandem. There is no single pathway through which all states will be able to achieve integrated behavioral and physical healthcare. The best strategy or combination of strategies will depend on a state’s political and healthcare environment. Regardless of the approach, however, states will succeed only if they put a cohesive framework in place that enables providers to deliver integrated care to Medicaid patients with comorbid physical and behavioral health needs.

_{¹Truven Health Analytics, National Expenditures for Mental Health Services and Substance Abuse Treatment, 1986-2009, No. SMA-13-4740 (Rockville: Substance Abuse and Mental Health Services Administration, April 2013), accessed March 26, 2014, http://store.samhsa.gov/shin/content//SMA13-4740/SMA13-4740.pdf.
 
² C. Boyd, B. Leff, C. Weiss et al., Clarifying Multimorbidity Patterns to Improve Targeting and Delivery of Clinical Services for Medicaid Populations (Hamilton: Center for Health Care Strategies, Inc., Dec. 2010), accessed March 26, 2014, http://www.chcs.org/usr_doc/clarifying_multimorbidity_patterns.pdf}