Secure Financial Support for Behavioral Health Services

A critical component of transitioning to an integrated primary (or other ambulatory) care practice is financial sustainability. Integrating behavioral health into ambulatory care can add value and lead to improved population health and more cost effective care. However, it is only practical if your setting has the financial means to introduce needed behavioral health expertise and sustain the model. It is important to understand your funding streams and the anticipated value that the chosen model will bring to the target population. With sufficient avenues of financial support, you can work toward a sustainable model that enhances the health and behavioral health outcomes for the patients you serve.

As AHRQ’s Guidebook of Professional Practices for Behavioral Health and Primary Care Integration (pg. 39) (PDF - 1.25 MB) suggests, there are many creative strategies to financially support integration. These approaches rely on local leadership, tolerance for risk, and a vision to succeed in the face of adversity. Financing integration may also depend on variables outside a practice’s control, such as state regulations or the structure of payment systems. Shifting from a fee-for-service system to a global budget, per member per month (PMPM) capitation, or another form of value-based payment can provide increased opportunities to sustain team-based integrated care. While proceeding through this section of the Playbook, it may be helpful to think about how your organization will finance integration both within the current payment structure and with emerging future payment systems in mind.

Determining the best way to make integrated behavioral health care financially sustainable can be challenging. It is essential that someone with financial expertise is available to your implementation team to actively participate in the implementation efforts. Here we provide factors to understand and consider.

North Star

Sustainable financing is in place for functions necessary to integrate value-added behavioral health into the ambulatory care setting.

How Do You Do It?

Determine Your Payer Mix

The first step is to look at your payer mix and target patient population by each payer. As you start implementation, your target population for the first iteration of integration may be selected based on which patients’ care is reimbursed by which payer.

Further, the rules for how behavioral health services are reimbursed in medical settings vary from State to State. It is important to understand the rules in your setting as you begin to work on integration.

Identify Your Patient Case Mix

Create a table that lists the number of patients by payer source and conduct basic analytics to see if there are significant differences in patient characteristics and payment adequacy in light of case mix. A simple approach to case mix is to create a 2-by-2 matrix of age group (i.e., adult or youth) and disability status (i.e., disabled or non-disabled) by payer.

Case mix can also be approached in a more sophisticated way if you have the data available. For example, you can look at the cost of care over time for different diagnostic groups, but the simple “disabled or not disabled” approach is a reasonable proxy.

You may also want to consider whether your organization has the management systems in place to take on any level of risk for the cost of care.

Useful Resource(s) for developing a funding plan based on your patient mix

Identify Which Payment Methodologies Your Payers Use

You may want to reach out to your payers to learn more about what approaches they use. Be aware that many payers are either testing or systematically moving from basic fee-for-service (FFS) to alternative reimbursement methods. Some of those methods only involve supplemental payments—for example, additional payments for meeting quality targets or for providing care coordination—in addition to the basic FFS payment. There are also withholds or penalties for “never” procedures (i.e., mistakes that should never happen) or for high short-term readmission rates.

Other methods include innovative value-based strategies that are intended to provide accountability and flexibility in treatment approach while lowering cost. Examples of value-based strategies include global budgets, bundled payments, warrantied payments, and condition-based payments. Contact your payers and see what they are doing in the area of payment model innovations.

How Others Are Doing It

Several organizations’ approaches to integrating behavioral health and how each organization funded their integration efforts are compiled in a Quality Matters report.

Gain Awareness of Behavioral Health Carve-Outs and Carve-Ins

Some States and some other payers still use “carve-out” strategies in which payment for behavioral health care is administered by an independent behavioral health management vendor, separately from payments for general health care, for at least some defined groups of people. A variant on this is the “carve-in” in which a separate unit within the managed care organization addresses behavioral health care under a budget for behavioral health services only. Either “carved-in” or “carved-out” approaches can make it difficult to provide integrated care because they create obstacles to coordination and whole-person approaches.

Develop your plans with awareness that “carve-in” and “carve-out” payment makes in more challenging to provide integrated, whole-person care. To the extent your organization—or membership organizations to which you belong—has influence, encourage payers to move toward single combined budgets that pay for all medical and behavioral health services. At the same time, strive to ensure that the quality measures to which you are held accountable include behavioral health outcomes as well as medical outcomes. An environment that includes combined budgets and balanced outcome measures makes it easier to develop and sustain behavioral health integration.

Understand the Costs of Your Service Model

If you are considering a change from the first service reimbursement to global budgeting or some form of capitation, it will be important to understand the costs of delivering care under your planned integrated care model. Do you know what payment rate or global budget would be needed to sustain your planned service models?

These are complex but very challenging issues that can determine the sustainability of your efforts to integrate behavioral health and primary care and even the viability of your current organization.

Depending on the challenges your particular organization faces, you may consider the possibility of merging with other provider organizations or positioning yourself to be acquired by another organization that is larger and better capitalized. These are long-term strategy considerations that may be worthy of serious thought and investigation.

Sharing your thoughts and experiences with others in the community—both your local community and the online Community)—can help generate ideas and solutions to problems.

Consider Additional Factors That Influence Financing

Regardless of the particular payment models used, a number of factors can influence the financing of integration, including:

  • Whether enough patients are being referred to the integrated behavioral health provider;
    • This includes both reaching into the target population to make a difference in population health outcomes and ensuring that the behavioral health provider is busy enough to make a difference in billings or global revenue.
  • Whether enough patients are arriving for scheduled visits;
    • This requires sufficient enrollment and a low no-show rate.
  • Whether the organization is being paid for billed services;
    • Some integrated practices will have opportunities to be paid in more global ways other than traditional fee-for-service billing.

Monitoring these processes is vital so you can identify threats to sustainability early and adjust processes to deal with them.

Useful Resource(s) for overcoming barriers to financing integrated ambulatory care

Monitor Cost Savings

Savings achieved by integrating behavioral health and primary care are likely to come from reduced expenditures for institutional care in settings such as hospitals, emergency departments, and nursing homes. In general, expenditures for primary care and behavioral health outpatient care are likely to increase moderately even as total health care spending decreases because of reduced institutional care expenditures.

If your organization does not provide expensive institutional services and is not responsible for paying for them, you probably don’t have the data to know whether your interventions result in savings. Therefore, you should negotiate with payers who carry that responsibility to obtain data or reports about those services. Some payers will give you the data and help you develop the capability to use it. Others may keep the data but provide reports. In some way, you’ll need data to determine what effect your interventions have on costs and other outcomes.

What Not To Do

  • Don’t dive into integration without a plan for financing its functions.
  • Don’t limit your financial approach to only fee-for-services billing. Payers are testing alternative reimbursement methods, and there may be creative approaches such as subsidies from other parts of the system to help achieve financial sustainability.
  • Don’t maximize billing at the expense of medical and behavioral health outcomes. Even on a tight budget, don’t hire an inexpensive behavioral health professional without defined outcome goals.


Cost Assessment of Collaborative Healthcare Presentation

These slides, presented at the 2014 Collaborative Family Healthcare Association annual conference, review the CoACH Tool for determining the estimated incremental expenditure of integrating behavioral health in primary care settings.
University of Colorado, Denver