Getting Ready for Value-Based Mental Health Care

More payers are introducing variants of value-based reimbursement and CMS has said they will shift $123 billion in Medicare spending to pay-for-value by 2018. But most data suggest that provider organizations, particularly in mental health, aren’t ready.

According to a 2015 survey of 165 health care providers by KPMG LLP, Alternative Payment Arrangements – Implications for the Finance Function, 85% of finance departments lack the “very sophisticated” capabilities needed to support capitation, bundled payments, and quality-based payments. And 13% feel their finance department is “undeveloped” for risk management and accounting for innovative payment mechanisms.1
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For most behavioral health agencies and organizations, the use of value-based reimbursement is just in the early stages. A recent OPEN MINDS survey found that 15% of behavioral health and social service organizations are in some type of value-based payment arrangement.2 For most organizations, according to the survey, this represents less than 20% of their overall revenue; in contrast with primary care and acute care where the use of pay-for-performance is higher.

A 2015 Executive Survey from HFMA, titled Value-Based Payment Readiness, surveyed 146 senior financial executives, comprising CFOs, vice presidents of finance, and finance directors, about where their organizations’ readiness is for value-based mechanisms. The study’s findings showed that only 12% currently incorporate these payments and 40% don’t believe their organizations have the capabilities to succeed at value-based payments within the next three years.

The 2014 Survey of U.S. Physicians from The Deloitte Center for Health Solutions surveyed 561 physicians to examine current levels of value-based care participation and found that 52% report having 10% or less of their compensation from value-based sources in the previous 12 months and expect this to stay the same for the next 12 months. Though the survey did not have a specific measure for “readiness”, it was found that 78% reported “contentment” with traditional salary and fee-for-service (FFS) payment arrangements.

This situation presents a challenge for payer and health plan executives who are looking for provider organizations ready for the shift to value-based reimbursement. In turn, provider organization executives face a challenge in building the required competencies. As a result, it is easy to predict that we are a long ways from a sustainable system with value-based payments. In the meantime, we can expect a turbulent transition.

A related issue that is particularly applicable to behavioral health is that the market is still struggling to establish quality standards.3 One example of early stage work in this area is a recent Cigna announcement. Facing increased costs tied to the opioid abuse crisis, the insurer is providing two years of substance abuse claims to help the American Society of Addiction Medicine test and validate existing addiction treatment performance measures.

At a recent University of Chicago’s Institute of Politics event, former Congressman Patrick Kennedy told the audience that a value-based approach to mental health services is “where the gold is,” Forbes contributor Bruce Japsen writes. “It’s not in our culture to think about this whole-person health,” Kennedy said, according to the post. “But that is where the money is. The people who get their arms around it in the business world are going to be the people who make the biggest killing in terms of healthcare.” Kennedy added that mental health often goes hand-in-hand with other chronic conditions, but coverage “carve-outs” and lack of effective quality measures impede the transition from volume to value.4

[1] Oss, Monica, “How Prepared Are Health & Human Service Provider Organizations for Value-Based Reimbursement?” Open Minds, March 12, 2016
[2] Oss, Monica, “Will Value-Based Payment Happen & Will It Work (For Us)?” Open Minds, April 19, 2016
[3] Japsen, Bruce, “Value-Based Mental Health May Be ‘Gold’ For Insurers,” Forbes, May 8, 2016
[4] Sweeney, Evan, “Value-Based Mental Health Payments Could Be Windfall for Insurers,” Monday, May 9, 2016