Medicaid pilots aim to integrate physical, behavioral health

A doctor treating a patient with diabetes has no idea that his patient is also being treated for schizophrenia. Likewise, the patient's psychiatrist doesn't know he's treating a diabetic. As a result, the care received by the patient is not optimal and could even be harmful.

With this all-too-common, uncoordinated scenario in mind, some state Medicaid programs are taking steps to integrate physical and behavioral health care. This has become a top priority of the "Rethinking Care Program" (RCP), a national initiative of the Hamilton, NJ-based Center for Health Care Strategies (CHCS) that is testing better approaches to care for Medicaid's highest-need, highest-cost beneficiaries.

"Of the beneficiaries who have mental illness or a substance abuse disorder, many also have chronic physical problems such as cardiovascular disease or diabetes," says Allison Hamblin, CHCS' director of complex populations. "We are particularly concerned about the need for effective integration of physical and behavioral health care services in Medicaid, given the particularly high prevalence of these conditions among beneficiaries."

One of the Medicaid health plans that CHCS works with recently analyzed its own claims data in multiple states. It found that the addition of one behavioral health condition-for example, a diagnosis of major depression-does three things. It doubles medical expenditures for physical health conditions, it doubles the ED visit rate, and it doubles the hospitalization rate.

"We think the data is representative of the landscape. There is no reason to think that it is any different anywhere else in Medicaid," says Ms. Hamblin. "Across the gamut, the problem is of major magnitude."

Interest is growing

Ms. Hamblin says that limited models exist today for coordinating physical and behavioral health. In many states, behavioral health is carved out from physical health management, and even when it is carved in, effective integration is not guaranteed.

"Irrespective of carve-outs and carve-ins," says Ms. Hamblin, "there are very few places today where behavioral health and physical health coordination is going really well."

Although a number of states are making an effort to work within their current system, Ms. Hamblin says "there are tremendous barriers out there, from a financial and systems delivery perspective, to effectively integrate care. However, we are hearing more and more interest in this issue from states. We have not seen any slowdown, despite states being overwhelmed with budget issues."

Pennsylvania, says Ms. Hamblin, is a "great example of this. They still have not passed their state budget, but so far they have been successful in protecting their money toward their pilot programs to integrate physical and behavioral health services." This is because integration of behavioral and physical health has become such a critical priority for states that it's seen as a key to controlling the rate of growth of spending for the state over time.

Although many states are struggling with this particular issue and have recognized the problems within their system, the problem is difficult to fix. According to Ms. Hamblin, "It's safe to say there is no state that has fully figured out how to integrate physical health and behavioral health systemwide, although a growing number are piloting innovative approaches. Some are within the constraints of current systems, and others are in the context of broader reforms."

System-level approach

Last year, CHCS surveyed about a dozen states to determine what they were doing to coordinate physical and behavioral health care. "From that effort, we got a fairly consistent sense that most states are moving toward some type of system, or at least thinking about their options, for how to organize and coordinate their systems of care for specific populations," says Ms. Hamblin. "There is also a trend out there of moving away from fee-for-service behavioral health."

Ms. Hamblin says the "gold standard is a system that truly integrates care for populations with physical and behavioral health needs." One example of that is a system that aligns financial incentives and financial accountability.

"One of the many barriers to effective integration right now is that there is no alignment between payers and providers, given how the systems are operating and financed," says Ms. Hamblin. "There is no shared accountability for outcomes. States have become really good purchasers in so many ways, but contract requirements and performance standards in the area of physical health and behavioral health integration have not been sufficiently addressed to date."

States really need to "up the ante in terms of what they are requiring from their contractors to support integrated care," says Ms. Hamblin.

"Obviously 'medical home' is the buzzword out there. But we truly believe for complex populations with such a high prevalence of co-occurring conditions, these need to be accountable for both the behavioral and physical health sides of the equation," says Ms. Hamblin.

In addition to aligned incentives and accountability, promising coordination approaches include information exchange across both systems and providers, use of a "navigator" to help coordinate care across systems, pharmacy management programs, and co-location strategies, among others.

Behavioral health first?

Efforts such as having behavioral health providers at large community clinics to treat depression more effectively in the primary care setting have been around for several years. While there still is a lot of interest in this type of effort, a small number of "early adopter" states are taking a system-level approach.

"They are scaling their efforts and going systemwide, with a particular focus on some of the more complex populations," reports Ms. Hamblin. "A recognition is emerging that with the really complex subsets of the Medicaid population, behavioral health may be their primary need."

Of New York State's 25,000 disabled Medicaid beneficiaries with severe and persistent mental illness, 60% have at least one chronic medical condition, and 29% have two or more. However, the health care costs of these individuals account for just 27% of their Medicaid expenditures, with the remaining 73% for behavioral services and pharmaceutical benefits, according to "Medicaid Managed Care for Persons with Severe Mental Illness: Challenges and Implications," a 2007 report from the United Hospital Fund's Medicaid Institute in New York City. Other states are finding similar numbers, as they analyze their own claims data.

"Given data like these," says Ms. Hamblin, "there is growing recognition that integrated care is not nice to have, but rather, a must have."

Incentives are aligned

One "early adopter" state is Pennsylvania, which is integrating physical and behavioral health services for adults with serious mental illness and physical health comorbidities with two regional Rethinking Care Program pilot projects. The pilots will each enroll up to 3,500 beneficiaries, and both will pair a physical health managed care organization (MCO) with a county behavioral health MCO.

Stefani Pashman, special assistant to the Secretary of Public Welfare, says CHCS approached the state in 2007 about the Rethinking Care initiative. In seeking to identify a population that presented a big opportunity for improving care and saving money, individuals with serious mental health and physical issues immediately came to mind.

"Both conditions can exacerbate the other, but we didn't have good systems in place to deal with that. We have struggled a lot with this internally," says Ms. Pashman. "When we started pulling data on patients, we realized that the lack of communication in many cases was making them even sicker. They were deteriorating rather than being helped."

The state holds a risk-based contract with a physical health MCO. For behavioral health, in most cases the state contracts with the county, which in turn contracts with the behavioral health plan. This approach makes integration "even more challenging," says Ms. Pashman. "The state directly contracts with the physical health plan. For behavioral health services, the managed care contract runs through our counties, so we give each county the money and then the county subcontracts with the behavioral health plan. So, as you can imagine, that would make it a little tricky to coordinate."

Despite this challenge, Ms. Pashman says her state's Medicaid program "has a really robust benefits package. We do some of the best behavioral health managed care in the country, but we've never been great at getting all the people to talk to each other in a coordinated way. It's always been sort of ad hoc. A case rises to the top, so people sit down and have a case conference with the behavioral health and physical health sides. But there was really no systematic approach for providers to share care information."

Two pilots developed

Two pilots were developed, one in Allegheny County, which includes Pittsburgh, with UPMC Health Plan as the contractor for the physical health side, and Community Care Behavioral Health. The other pilot involves three counties, with Keystone Mercy Health Plan as the physical health contractor and Magellan as the behavioral health contractor. Both had a go-live date of July 2009 and will go through June 2011.

Both pilots have a "shared savings pool" with incentive funds put on the table by the state, to be given out based on specific measures. For the first year, four process measures will be used, and outcomes measures will be added for the second year. The physical and behavioral health sides are jointly incentivized.

One-year evaluation

At the one-year mark, a decision will be made as to whether the physical and behavioral health partners earned their incentive payments for the first year payout. At that point, a broad analysis of overall costs will be done, to determine if ED visits and hospitalizations decreased as expected. At the end of year two, a more comprehensive evaluation will be done, including interviews and case studies. "At that point, in addition to the data analysis done for the purposes of the payout, we will really get on the ground and look at every part of the project," says Ms. Pashman.

Expected outcomes include patients being stabilized on their medications, reduced hospitalizations, reduced use of the ER, and stronger relationships with the patient's medical home, whether a primary care practitioner, a psychiatrist, or psychologist.

"They are in this together. If they want the money, they have to work together," says Ms. Pashman. "From what I understand, that is one of the more innovative pieces of this. This is the first time that physical health and behavioral health systems and the contractors are incentivized together with specific measures."

Ms. Pashman says ultimately, she wants to see strong relationships forged between the physical and behavioral health providers so that care coordination is "just second nature. It needs to be built into the system and happen with regularity."

Contact Ms. Hamblin at (609) 528-8400 or and Ms. Pashman at (412) 770-9846 or