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Integrating Physical and Behavioral Health State Strategies in a Changing Medicaid Environment. Patient Centered Primary Care Collaborative Special Interest Group on Behavioral Health. Deborah Bachrach September 17, 2014.

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Integrating Physical and Behavioral Health

State Strategies in a Changing Medicaid Environment

Patient Centered Primary Care CollaborativeSpecial Interest Group on Behavioral Health

Deborah Bachrach

September 17, 2014


The work presented here was funded by the Commonwealth Fund and is drawn from a paper entitled State Strategies for Integrating Physical and Behavioral Health Services in a Changing Medicaid Environment available at

advancing integrated care in medicaid
Advancing Integrated Care in Medicaid
  • Medicaid is the dominant payer for behavioral health (BH)
    • Accounts for 26% of all spending on behavioral health
  • Medicaid’s role is increasing, especially in expansion states
  • Medicaid enrollees with co-morbid physical health (PH) and BH conditions are high need and high cost
  • States are rethinking delivery and payment for BH services

Integrated care!

core attributes of integrated care delivery
Core Attributes of Integrated Care Delivery
    • Accountability for the whole person
    • Aligned financial incentives
    • Information sharing
  • Up to date licensing, credentialing and billing rules
  • Cross-system understanding
  • Integration of social services
impediments to integrated care
Impediments to Integrated Care
  • Siloed administration of physical health, mental health and substance abuse services
  • Disjointed purchasing policies
  • Separate payment policies
  • Regulatory and licensing requirements
  • Constraints on information sharing
  • Limited infrastructure of many BH providers

Medicaid Infrastructure



Substance Use Disorder Providers

Long Term Care Providers

Physical Health Providers

Mental Health Providers

Contracting, Financing and Funds Management

Systems of Care / Intermediaries

Substance Use Disorder System

Long Term Care System

Mental Health System

Physical Health System

Contracting, Financing and Funds Management


Physical Health Administration

Mental Health Administration

Substance Use Disorder Administration

Long Term Care Administration

medicaid bh and ph administration are split in many states

In 2010, 48 states had separate Medicaid and mental health agencies

In 20 of those states, mental health and substance use disorder (SUD) were in separate agencies

Many states run Medicaid BH operations through local, county, or regional agencies

Medicaid BH and PH Administration are Split in Many States

Sources:T. C. Lutterman, A. Berhane, R. Shaw et al. (2011). Funding and Characteristics of State Mental Health Agencies, 2010.

National Association of Medicaid Directors. (February 2014). State Medicaid Operations Survey: Second Annual Survey of Medicaid Directors.

separate bh administration impedes integrated care
SeparateBH Administration Impedes Integrated Care
  • Siloed state agencies institutionalize separation of PH and BH at the provider level
  • MH and SUD agencies have their own constituencies who have maintained the separation of the PH and BH systems. “It prioritizes the institution over the patient.”
  • Misaligned vision and policy across state agencies do not promote integrated care
  • State agencies demonstrate “too little unity of purpose and vision.”
  • “I don’t know that lawmakers think about integration.”
state strategies for advancing integrated care delivery
State Strategies for Advancing Integrated Care Delivery
  • Eliminate silos through agency consolidation and reorganization
  • Unifies agencies’ missions and policies
  • Extremely challenging due to differences in vision, mission, and constituencies
  • Establish less formal structures for collaboration between separate state agencies (e.g., steering committees, joint procurement development, joint oversight)
  • Requires least administrative upheaval
  • Most dependent on personalities and relationships among agency leadership
  • Maintain separate agencies, but consolidate contract oversight
  • Consolidates administrative and financial accountability
  • Facilitates regulatory alignment, clear policy direction and guidance, access to comprehensive data
  • Agencies may lack expertise in services for which they are newly responsible
most medicaid managed care states carve out bh services

36states covered 26 million beneficiaries under contracts with Medicaid MCOs in 2010

9 states provide an integrated PH and BH benefit through MCOs

1 state plans to provide an integrated PH and BH benefit through MCOs

The remaining 26 states provide carved-out BH benefits through risk-based BHOs, administrative service organizations (ASOs), or fee-for-service (FFS) Medicaid

Most Medicaid Managed Care States Carve Out BH Services

Sources:The Kaiser Commission on Medicaid and the Uninsured. (2011). A Profile of Medicaid Managed Care Programs in 2010.

Internal Center for Health Care Strategies analyses.

Notes: Focus on specialty mental health services. Includes announced reforms as of February 2014. Includes District of Columbia.

separate financing impedes integrated care
Separate Financing Impedes Integrated Care
  • Carve-outs incentivize cost-shifting and create barriers to information sharing and service coordination
  • “I can’t remember the last time I heard from [a] mental health [provider]. We don’t get any communication.”
  • “When everyone is responsible [for coordinating care across separately funded systems], no one is responsible.”
  • Separate funding streams reinforce political divisions and culture gaps among the providers dependent on each stream
  • Bridging gaps requires payment streams that fund an integrated program focused on the patient’s best interest, not one entity or another.
  • Changes to existing carve-outs “could bring a lot of political blowback.”
state strategies for advancing integrated care delivery1
State Strategies for Advancing Integrated Care Delivery
  • In carve-out states, implement contractual requirements for care coordination, aligned PH and BH quality metrics, and Health Homes to coordinate care across siloed systems
  • Provides interim step toward fully integrated purchasing
  • Health Homes offer dedicated funding stream for coordination of care across systems
  • Coordination requirements in contracts are difficult to enforce in absence of integrated purchasing
  • Financial incentives to shift costs between systems remain in place
  • Carve PH and BHservices into MCOs
  • Aligns incentives to address the full spectrum of beneficiaries’ PH and BH needs
  • Centralizes accountability for cost, quality of care, and outcomes in a single entity
  • MCOs have limited experience contracting with BH service providers, and vice versa
  • Raises concerns over maintaining adequate funding for BH services and plans’ ability to serve highest need individuals
state strategies for advancing integrated care delivery2
State Strategies for Advancing Integrated Care Delivery
  • Protect BH funding in managed care through rate guarantees, BH medical loss ratios (MLRs), and limits on risk-based subcontracting for BH services
  • Ensures continued availability of funding to meet beneficiary BHand PH needs
  • Eases transitions for BH providers new to managed care contracting
  • May prevent managed care plans from entering into innovative payment arrangements with providers
  • Address needs of SMI/SUDpopulations by establishing special needs products within existing MCOsor carving PH services into BHOs
  • Provides a specialized service system attentive to the needs of people with serious BH conditions
  • Allows states to target social determinants of health through specialized entities
  • Risks a stigmatizing effect due to creation of separate systems of care
  • Risks beneficiary churn between systems as severity of BH conditions fluctuates
regulatory and licensing hurdles

Regulatory requirements can impede co-location

Credentialing rules do not recognize nontraditional providers

Same day billing rules may discourage delivery of physical and behavioral health care

No billing codes for emerging treatments

Limits on data exchange

Regulatory and Licensing Hurdles
regulatory requirements impede integration
Regulatory Requirements Impede Integration
  • Separate licensing requirements for PH, MH, and SUD service providers directly discourage co-location of services
  • Existing licensing requirements are duplicative, necessitating separate licenses, redundant reporting, separate structures, separate hallways, and separate bathrooms for co-located services.
  • Regulations, billing codes, technology and culture discourage provider innovation
  • BHprovider attempts to adopt new technologies and evidence-based practices are “restricted or constricted” by existing regulations.
  • “No matter what system you’re talking about – mental health, alcohol and drug services, housing – each has its own laws, regulations, eligibility criteria, and data reporting systems, and none of them are congruent.”
state strategies for advancing integrated care delivery3
State Strategies for Advancing Integrated Care Delivery
  • Revise licensing requirements to ease co-location of PH and BH services
  • Reduces redundant or incongruent requirements for PH and BH providers
  • Redirects provider efforts and funding from administration to patient care and coordination
  • Ineffective if unresponsive to full range of provider arrangements
  • Challenging where PH and BH licensing is under separate agencies
  • Address privacy constraints and clarify standards for the exchange of BHinformation


  • Addresses provider misconceptions and legal ambiguities around privacy laws
  • Addresses obstacles to obtaining patient consent
  • Must be balanced with privacy protections for people with BH conditions

To promote integration, many states have begun allowing providers to bill for PH and BH services provided to a patient on the same day; these services can be provided in primary care or BH settings, by one or more providers

additional state strategies

Developing alternatives to inpatient and institutional SUD and BH services

Providing TA to SUD and BH providers and financial support for IT investment particularly for providers with limited experience with Medicaid or health insurance

Integrating long term services and supports

Coordinating with and Integrating social services and housing supports

Bridging Medicaid and corrections to support individuals coming out of prison

Additional State Strategies

The Federal Government is Supporting

State Integration Efforts



Deborah Bachrach

PartnerManatt, Phelps & Phillips, LLP

(212) 790-4594