OM: Influencing The Behavioral Health Carve-Out Models

BHOs Of Today, BHOs Of Tomorrow: Influencing The Behavioral Health Carve-Out Models

By Monica Oss CEO Open Minds  March 1, 2012

 

Developed by OPEN MINDS, 163 York Street, Gettysburg PA 17325, www.openminds.com.  All rights reserved. 

 

In the face of sweeping legislative change, and what seems like weekly propositions to change the role and scope of federal entitlement programs, it has become increasingly common to ask:

What are the chances of continuing the behavioral health carve-out model and what will become of the role of the behavioral health organizations (BHOs) managing those benefits?

Just so we are all on the same page, the “behavioral health carve-out model” is a financing model where some portion of behavioral health benefits (inpatient and/or outpatient and/or pharmaceuticals) are separately managed and/or financed by another organization. This carve-out model can be at different levels, including:

In the short-term, we are going to see the role of the BHO grow with the growth of enrollment in managed care plans – particularly in Medicaid. The growth in enrollment is happening due to two factors. The first is that many payers are uncertain about the cost of parity legislation and have moved to a carve-out model in order to “guarantee” their spending level on mental health and addiction treatment.

1. The payer level – referred to as the primary carve-out
2. The health plan level – referred to as a secondary carve-out

 

In markets and/or health plans where a behavioral carve-out already exists, BHOs have a number of key, and extremely influential powers over service delivery, including controlling the selection of the professionals and provider organizations in a particular delivery system; setting service payment rates; setting clinical best practice policies; and establishing the framework for the measurement of clinical quality and performance.

Different payer organizations take distinctly different approaches for the use of behavioral health carve-outs. Private employers are almost universal in their use of managed care plans, and a carve-out managed by a BHO. For Medicaid, only three states do not have some Medicaid managed care – New Hampshire, Alaska, and Wyoming.

When looking ahead at the role and influence of BHOs, we should consider their impact in both the short- and the long-term future.

 

Short-Term Role and Influence

In the short-term, we are going to see the role of the BHO grow with the growth of enrollment in managed care plans – particularly in Medicaid. The growth in enrollment is happening due to two factors. The first is that many payers are uncertain about the cost of parity legislation and have moved to a carve-out model in order to “guarantee” their spending level on mental health and addiction treatment. The second is specific to state governments. With the growth of Medicaid spending over the past three years, largely due to marked increase in the Medicaid rolls,many states are increasing their enrollment of Medicaid beneficiaries in managed care plans all members. Many are moving ‘disabled’ populations (including populations with SMI) from fee-for-service financing model to a managed care financing model. Most of these new Medicaid managed care initiatives include a behavioral health carve-out at either the primary or secondary financing level.

To manage Medicaid budgets in 2012, 24 states plan to expand their managed care programs by either expanding the geographic area under Medicaid managed care or by including more populations. States are using Medicaid managed care to control costs and to expand the use of disease and care management programs and patient-centered medical homes to coordinate care for high cost and high need populations. According to the Kaiser Family Foundation’s recent survey, Moving Ahead Amid Fiscal Challenges: A Look at Medicaid Spending, Coverage and Policy Trends Results from a 50-State Medicaid Budget Survey for State Fiscal Years 2011 and 2012, states’ strategies to expand Medicaid managed care include:

1. 14 states will expand service areas; in 2010, four states expanded service areas and in 2011, 13 states adopted this strategy.
2. 10 states will add eligibility groups; in 2010 three states added eligibility groups, and in 2011 six states adopted this strategy.
3. Six states will add mandatory enrollment groups; in 2010 five states added mandatory enrollment, and in 2011 five more states adopted this strategy.
4. Nine states will include managed long-term care; in 2010 seven states implemented managed long-term care and in 2011 four more adopted this strategy.

 

Long-Term Role and Influence

When we’re thinking about the long-term future, we should think about the entirety of the next decade. Significant changes are in the works for BHOs of the future. The evolution of accountable care organizations (ACOs) will alter the BHO involvement by increasing these organizations influence over the SMI population. In this emerging model, the BHOs will have less influence over the “behavioral health” of a broader population, but more influence over the smaller population with SMI.

This shift in the future role of BHOs is due to six market factors:

1. Rising cost of consumers with multiple chronic conditions (this high-cost consumer group is 5% of the population and represents 50+% of medical spend) are driving interest in collaborative care models for this population (see The Marketing Challenge Of The 5% & The 95% all members)
2. Consumers with SMI (and addictions) are a significant portion of this high-cost consumer group
3. The collaborative care models that have emerged (ACOs and medical homes) are based on enhanced primary care model
4. Early research shows that most traditional primary care physicians are not prepared to managed the care for consumers with SMI
5. “Health home” models for consumers with SMI are emerging within the traditional carve-out model
6. For consumers with behavioral health disorders that don’t meet the definition of “SMI,” it is likely that treatment for their disorders will be addressed by primary care professionals rather than behavioral health specialists

The most robust versions of these behavioral health carve-outs with health home models are being tested in the Medicaid systems in Missouri (Missouri Health Homes Launched January 1, 2012 all members), Rhode Island (Rhode Island Medicaid Health Homes State Plan Amendmentpremium members), Arizona, and Iowa (Arizona, Iowa Medicaid Partner With Magellan Health Services To Launch Integrated Health Home Pilot Programs all members). In Missouri and Rhode Island, the mental health carve-out with the health home model is being managed by BHOs that are provider collaboratives. In Iowa and Arizona, the mental health carve-out with the health home model is being managed by one of the proprietary, for-profit BHOs.

 

We can never be certain of what the future holds, but when it comes to behavioral health carve-out models in managed care, I would predict that we will continue to see their influence in shaping the market for those consumers that have serious mental illness for some time to come.

By Monica E. Oss, Chief Executive Officer, OPEN MINDS; 163 York Street, Gettysburg, Pennsylvania 17325-1933; Telephone 717-334-1329; Fax 717-334-0538; Web site: www.openminds.com. 

Oss, Monica E. (2012, March). BHOs Of Today, BHOs Of Tomorrow: Influencing The Behavioral Health Carve-Out Models. OPEN MINDS, The Behavioral Health & Social Service Industry Analyst.

BHOs Of Today, BHOs Of Tomorrow: Influencing The Behavioral Health Carve-Out Models