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Brave New World: Ideas for Reinventing How Public Behavioral Health should be Organized and Financed


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Title: Brave New World: Ideas for Reinventing How Public Behavioral Health should be Organized and Financed

Brave New World Ideas for Reinventing How Public
Behavioral Health should be Organized and Financed
  • Dale Jarvis, CPA
  • NCCBH Consultant
  • MCPP Healthcare Consulting

Session Overview
  • The public behavioral health system in the United
    States is fragmented, disorganized and
    under-funded. This has led to funding inequities
    between states, a near-inability to leverage
    change at a national level, and unrealistic
    expectations at the provider organization and
    individual service provider level. In this
    session we will explore an emerging set of ideas
    for transforming the public behavioral health
    system at the region, state and federal level and
    the implications for the Michigan system. This
    will include discussion of
  • The essential ingredients of change and whats
    missing in public behavioral health
  • An Institute of Medicine-inspired change model
    for reinventing the system
  • How P4P (Pay for Performance) can support
    positive changes in the system
  • How the federal government and the State of
    Michigan can support these changes
  • How this material is relevant to your
    organization and what you can do now to prepare
    for a kinder and gentler future

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An Institute of Medicine-Inspired Change Model
Institute of Medicine
  • Id like to explore a change model presented in
    two important books from the IOM.
  • Crossing the Quality Chasm A New Health System
    for the 21st Century (2001), is an important work
    that put forth a strategy for improving health
    care overall. However, health care for mental and
    substance-use conditions has a number of
    distinctive characteristics, such as the greater
    use of coercion into treatment, separate care
    delivery systems, a less developed quality
    measurement infrastructure, and a differently
    structured marketplace.
  • Improving the Quality of Health Care for Mental
    and Substance-Use Conditions Quality Chasm
    Series (2005), builds on the first book,
    examining the differences between general health
    care and mental and substance-use conditions.
    This book addresses strategies pertaining to
    health care for both mental and substance-use
    conditions and the essential role that mental and
    substance use care plays in improving overall
    health and health care including the actions
    required of clinicians health care
    organizations health plans purchasers and
    state, local, and federal governments.

IOMs Quality Chasm Series
  • Arguably the weakest chapter of Crossing the
    Quality Chasm is chapter 8, Aligning Payment
    Policies with Quality Improvement.
  • The Mental and Substance-Use Conditions edition,
    Chapter 8, Using Marketplace Incentives to
    Leverage Needed Change provides an even weaker
    analysis of behavioral health financing and what
    to do about it.
  • This, combined with the 50 states, 50 sets of
    rules reality for public behavioral health,
    creates a significant gap between current reality
    and where we need to go.
  • Lets try and do something about that

IOM Strategy for Reinventing the System
  • The 2001 IOM report described the components of
    an effective care system, including a supportive
    payment and regulatory environment, supporting
    organizations whose main purpose in life is to,
    support high performing patient-centered teams
    that achieve the six IOM aims for improvement
    (e.g. Outcomes).

IOM Strategy for Reinventing the System
  • The Six IOM aims for improvement can be
    described as providing care that is
  • Safe avoiding injuries to patients from the care
    that is intended to help them.
  • Effective providing services based on scientific
    knowledge to all who could benefit, and
    refraining from providing services to those not
    likely to benefit.
  • Patient-centered providing care that is
    respectful of and responsive to
    individualpatient preferences, needs, and
    values, and ensuring that patient values guide
    all clinical decisions.
  • Timely reducing waits and sometimes harmful
    delays for both those who receive and those who
    give care.
  • Efficient avoiding waste, including waste of
    equipment, supplies, ideas, and energy.
  • Equitable providing care that does not vary in
    quality because of personal characteristics such
    as gender, ethnicity, geographic location, and
    socioeconomic status.

IOM Strategy for Reinventing the System
  • The IOM has identified six redesign imperatives
    that must be addressed inside the service
    delivery system in order to have care systems
    that are able to achieve the six aims.

IOM Strategy for Reinventing the System
  • Addressing these challenges requires a
    fundamental re-engineering of how most community
    mental health centers are organized and managed
    and an even more fundamental shift in how CMHCs
    are financed.
  • Id like to use the our time today to focus on
    creating a supportive payment and regulatory
    environment, making the assumption that this is a
    prerequisite for supporting improvements in the
    overall behavioral healthcare system.

Chapter 3 Creating a Supportive Payment
Regulatory Environment
Talking with Actuaries
  • If you were it sit down with any of the big 3
    actuarial firms and have a conversation about how
    much of what type of general health care service
    needs to be provided to a population in a
    specific state, region or county, they would pull
    up all kinds of exciting data. This would
    include detail down to the subspecialty level,
    presented as Relative Value Units (RVU) per 1,000
    enrollees along with payments per RVU for the
    different payor types. The following table
    illustrates what you might see.

Talking with Actuaries
These figures come out of vast healthcare
databases that have been compiled over several
decades and have been refined to the point that
they can be used to develop accurate predictions
of healthcare utilization and cost. Note the
differences in demand across the three payor
Talking with Actuaries
  • If you change the conversation and start asking
    similar questions about public behavioral health
    utilization and cost you will have a very
    different experience.
  • The actuary may begin a similar conversation
    about things like penetration rates of 3 and
    2.5 visits per user per year, which you will
    quickly realize is about their commercial mental
    health database and they have little or no data
    on public sector mental health.
  • If the actuary does have public sector numbers to
    pull up, they will contain large, unexplainable
    variation across states for similar populations
    (Medicaid and indigent), and the actuary will
    either throw up their hands in frustration or
    note that the variation simply reflects reality
    utilization and cost in different systems are
    driven by dramatic differences in policy and
  • This has contributed to the huge variation in
    spending that is illustrated in the following

Status of a Supportive Payment Regulatory
Environment (per capital mental health spending
in the U.S.)
Source NASMHPD 2004 Report
Why the Variation?
  • This experience with the actuary can be traced to
    the fact that the public mental health system is
    really 50 state level systems funded by state and
    local general funds, federal block grant funds
    and the federal/state Medicaid program
    (historically driven by state level policy within
    federal parameters). States have very different
    financial and structural arrangements, and
    service modalities and definitions, for the
    purchase and delivery of public mental health
  • Within many states are regional authorities that
    have significant variation in the coverage rules,
    services provided, payment methods, and more,
    even though this is generally not looked upon
    kindly by CMS. On the West Coast alone
    California has 57 plans, Oregon 10 and Washington
  • Roughly half of the states have federal waivers
    for managed care of their Medicaid mental health
    programs. Where the state has structured the
    Medicaid program into a carve-out, much of the
    focus has been on reduction in cost, particularly
    for inpatient services. Assumptions regarding
    utilization and cost have often been built from
    commercial models or the general Medicaid
    population rather than based on serving the
    public mental health target population, generally
    identified as adults who are seriously and
    persistently mentally ill (SPMI) or
    children/youth who are seriously emotionally
    disturbed (SED).

So What?
  • The problem is that, with all of this
    variability, the public mental health system
    does not have the kind of cost and utilization
    information that has been collected over the
    years by health plans regarding the delivery of
    services to a defined population. And the
    available mental health data represent a
    historical snapshot of a system that often lacks
    access to appropriate services, has services that
    may not be as effective as newly emerging
    evidence-based practices (EBPs), and services
    that have been fragmented, with cost shifting to
    and from other payors.
  • This makes it extremely difficult for anyone to
    answer the question What would it cost to
    provide quality services in the public mental
    health system?
  • To do this we need to return to our actuary
    friends and their vast healthcare databases,
    because this issue has already been addressed in
    the general healthcare system.

How Healthcare Does it
  • When a new medication, medical device or clinical
    approach comes onto the scene, it generally
    starts out as an experimental approach and isnt
    approved for coverage by health plans. Generally
    led by Medicare, there is a process through which
    the research is reviewed and health plans adopt
    new practices for coverage and payment. While
    some practices are spelled out in benefit
    packages, specification of evolving improvements
    may also only occur at the level of the claims
    adjudication process. This cycle of formal
    approval for specification in the claims coding
    and adjudication process automatically ensures
    that the next cycle of RVUs reflect the evolving
  • For example, in the last fifteen years there have
    been many improvements in cardiac care. The
    angiogram (enabling pictures of blockages in
    coronary arteries) was succeeded by the balloon
    angioplasty (threading a balloon into the artery
    and expanding it to open a blockage), which was
    improved by placements of stents (a scaffolding
    to hold the artery open at the point of blockage)
    to the current use of drug-eluting stents (stents
    with drugs that discourage plaque from sticking).
    As these practices emerged, they have been
    approved, incorporated into practice, and their
    utilization and cost incorporated into RVUs and

How Healthcare Does it
  • However, what the health care system has also
    discovered is that coverage of evidence-based
    practices alone does not ensure that they are
    always consistently used. For example, Medicare
    is tracking whether hospitals are implementing
    what research shows makes a big difference in
    outcomes for patients arriving with a heart
    attack.--provision of aspirin and a beta blocker.
  • The first report in the New England Journal of
    Medicine a year ago showed variability among
    states in delivering the appropriate therapy
    (from 97 of the time to 85 of the time) and
    among hospitals (from 100 of the time to 50 of
    the time). While assuring payment is a necessary
    condition to the delivery of research based care,
    it may not be sufficient.
  • We also know from the health care system that
    some procedures, while covered, may be subject to
    over-utilization. We should be mindful from these
    examples of what infrastructure will be required
    over time to grapple with these same issues in
    mental health care.

Public Mental Healths Dilemma
  • Public mental health system stakeholders are
    caught in the conundrum of being unable to use
    historical actuarial data because, unlike general
    healthcare, the information rarely describes a
    system that has been using modern practices to
    meet the true needs of the population. Indeed,
    somewhere in the 50 states table shown above is a
    yet-to-be-drawn line that separates states into
    two groups those that may have enough money to
    meet basic mental healthcare needs, and those
    that do not.
  • For those states that may have sufficient
    funding, there hasnt been adequate analysis to
    determine whether the states are utilizing their
    resources in the most effective manner, nor an
    analysis of what services should be ramped down
    as recovery-oriented, evidence-based services are
    ramped up. The following charts illustrate the

Public Mental Healths Dilemma
The pie charts describe expenditures for four
urban Medicaid mental health plans in Washington
State. Acute care includes crisis services,
state hospital and community inpatient.
Non-acute care includes outpatient, residential
and other direct services.
  • Even though the Medicaid capitation rates are
    somewhat similar in the four counties, Pierce and
    Spokane are having an extremely difficult time
    maintaining persons with serious mental disorders
    in the community because the amount of funding
    going to acute care results in an under-funding
    the non-acute care system. Do any of us think
    that we should we use the data from those two
    counties to set the RVUs for psychiatric
    inpatient and outpatient care?

Stop Whining and Do Something
This diagram lists eight steps in a process for
transforming the public behavioral health system
at the region, state and federal level. Note The
last icon represents the fact that this process
will require multiple change cycles.
Population-Based Planning
  • A data-driven approach to behavioral health
    planning is quite consistent with Actuarial
    Science and includes answering the following
  • What are the target populations, what is the
    projected prevalence of mental illness in those
    groups, and how many people ought to be
    receiving service in a given year? How do these
    projections compare with the numbers of people
    served in the last three years?
  • Based on research and experience in this and
    other states, what services do clients need and
    how much of each type of service do they need?
    How do these projections compare with the service
    utilization over the course of the last three
  • What service capacity does the mental health
    system have in place to meet these needs? How
    well does capacity match with demand? What
    excesses and gaps exist by clinician type and
    service type?
  • What is the cost of meeting the projected demand
    (e.g. how much money should the state be
    spending on public mental health)? How do these
    projections compare with actual expenditures over
    the last three years?
  • These question add detail to the first three
    steps in the process. Some examples follow.

How Many People
Mental Health prevalence for a 3-County Region in
rural Washington State.
How Many People
Substance Abuse Prevalence Forecast for a
mid-sized California County.
How Many People
Key Point We must adopt and begin using a
standardized method for projecting how many
persons require publicly funded behavioral health
services in a given year.
Gap Analysis for a 5-County Region in Northwest
Washington State.
How Much Service
  • More and more systems are using the LOCUS to
    develop Level of Care Systems. It is a national
    tool, with adult and child/youth versions,
    developed by the American Association of
    Community Psychiatrists to guide assessment,
    level of care placement decisions, continued stay
    criteria, and quality monitoring. It also allows
    system planners to understand how many low,
    medium and high need clients are in the system.
  • Until the public behavioral health system adopts
    methods for identifying the acuity of persons
    with serious mental disorders, There will be no
    basis for projecting how much service should be
  • In many ways this is not unlike the DRG system
    used in hospitals and the Johns Hopkins
    University ACG Case-Mix System now being use in
    the medical outpatient world.

Key Point We must adopt and begin using a
standardized Level of Care System with every
individual that is served in the public
behavioral health system.
How Much Service
The mental health system in Portland Oregon
completed a clinical design, identified what
services should be available to persons with
SMI/SED as well as other Medicaid enrollees
needing mental health treatment, and projected
demand based on historical use, research, and
projected utilization at each level. This slide
projects use for non-SMI/SED persons.
How Much Service
This slide projects need for persons with
SMI/SED in Portland Oregon.
How Much Service
This slide projects substance abuse service need
for the mid-sized California County.
Chapter 4 Financial Design Considerations
Financing the New System
  • The current set of options for behavioral
    healthcare financing in the U.S. are stuck in one
    of the alternative universes know as managed-care
    or pre-managed care.
  • Although there continue to be debates about the
    pros and cons of sub-capitation, case rates and
  • CMS has weighed in, telling us that, for all
    intents and purposes, they now set Medicaid
    capitation rates by counting and pricing the
    number of Medicaid services to Medicaid
  • The rest of the healthcare world has all but
    abandoned non-fee-for-service payment mechanisms
    at the provider level.
  • And budget-based approaches to financing care
    have too few accountability mechanisms unless
    they are made to look and feel like fee-for
  • What is missing from the behavioral health
    financing discussion are well-articulated new

Healthcare Financing
  • Current payment methods do not adequately
    encourage or support the provision of quality
    health care All payments methods affect behavior
    and quality. For example, fee-for-service
    payment methods raise questions about potential
    overuse of services. On the other hand,
    capitation and per case payment methods raise
    questions about potential underuse Too little
    attention has been paid to the careful analysis
    and alignment of payment incentives with quality
  • (Crossing the Quality Chasm, page 17.)

Mental Health/Substance Use Treatment Financing
  • Recommendation 8-2. State government procurement
    processes should be reoriented to give the most
    weight to the quality of care to be provided by
  • A substantial proportion of public M/SU treatment
    services are purchased through government grants
    to local providers. These providers are
    frequently private nonprofit organizations that
    serve the population of a particular
    geographically defined catchment area, and are
    typically well-established organizations having
    long-standing relationships with state and local
    governments. Services are most commonly purchased
    through a system of grants. The grants are
    awarded subject to the providers meeting
    licensing standards and achieving specified
    service levels. Funding is frequently set at
    levels that result in patient queues - indicating
    excess demand for services. There are few
    quality-of-care standards forming a basis for
    accountability for these organizations. Moreover,
    pressures from excess demand create incentives
    for local providers to expand the volume of
    treatment even if doing so results in reduced
  • Recommendation 8-3. Government and private
    purchasers should use M/SU health care quality
    measures (including measures of the coordination
    of health care for mental, substance-use, and
    general health conditions) in procurement and
    accountability processes.
  • (Improving the Quality of Health Care for Mental
    and Substance-Use Conditions Quality Chasm
    Series pages 316-317.)

Healthcare Financing
  • In light of these concerns, several important
    projects have been underway in healthcare that
    have direct applicability to behavioral
    healthcare financing.
  • Two fall under the rubric of Pay for Performance
    (P4P) one in the California commercial
    insurance system the other in the Medicare
  • Under these systems, providers are paid through
    the existing payment system and are offered
    bonuses for performance.
  • P4P bonuses are often related to quality and
  • Quality is currently being measured through a set
    of process measures, which will be described
  • Efficiency (a euphemism for cost) is measured
    through comparisons with peers.
  • Both sets of measures require risk adjustment so
    that Provider X, who has very ill patients, is
    properly compared with Provider Y, who has very
    healthy patients.
  • This approach has the potential in behavioral
    health to combine a fee-for-service reimbursement
    system with a P4P system where bonuses are paid
    for reducing cost and improving quality.
  • Lets look at they two systems and then talk about
    a BH financing model.

Californias P4P Project
  • The California P4P project hit the streets in
    2002, which was a testing year. Plans included
  • Aetna (California)
  • Blue Cross of California
  • Blue Shield of California
  • CIGNA HealthCare of California
  • Health Net (California)
  • PacifiCare (California)
  • Totaling 7 million HMO enrollees, 215 medical
    groups and 45,000 doctors

Californias P4P Project
  • Vision
  • The achievement of breakthrough improvement in
    healthcare performance.
  • Central Goal
  • The overall goal of Pay for Performance (P4P) is
    to significantly improve physician group
    performance in quality of health care and patient
    experience through public recognition and
    financial reward.
  • Core Principles
  • Collaboration (with purchasers, health plans,
    physician groups and consumers)
  • Measurement (clinical quality, patient
    experience, and infrastructure to support patient
  • Reward (financial incentives tied to performance
    results significant and sustained to justify
    investment in system reengineering)
  • Accountability (including a public scorecard of
    physician group performance for consumers and
    providers in order to make informed choices.
  • (Source IHAs February 2006 Five Year Report)

Californias P4P Project
  • P4P First Year - Measurement Set
  • Clinical Quality (50 weighting)
  • Preventive care breast cancer screening,
    cervical cancer screening, childhood
  • Chronic care asthma (medication), diabetes
    (testing), heart disease (cholesterol management)
  • Patient Experience (40 weighting)
  • Communication with doctor timely access to care
    specialty care and overall ratings of care
  • Investment and Adoption of IT to support patient
    care (10 weighting)
  • Point of care and population management (disease
    registries, electronic medical records, physician
    and provider reminders)

Californias P4P Project
  • Clinical Measures can be captured from health
    plan information systems. About ½ are preventive
    measures and the other ½ are chronic care
    management measures. These are process measures
    versus outcome measures e.g. cervical and
    breast cancer screening has been proven to reduce
    cost and mortality related to these diseases
    they are not being scored on actually reducing
    cervical or breast cancer.

Californias P4P Project
  • Sample Report Card for Los Angeles County,

Californias P4P Project
  • Patient Experience Measures are captured through
    the Consumer Assessment Survey (CAS). This slide
    lists the measures and provides a snapshot of the
    doctor-patient communication items. Payment
    formulas vary by plan, but are generally based on
    scores (e.g. 100 for being at the 75th
    percentile or higher, 50 for being between 50th
    and 74th percentile).

Californias P4P Project
  • Sample Report Card for San Diego County,
    Communicating with Patients.

Californias P4P Project
  • Provider Groups are rewarded if they invest in
    specific technologies that have been determined
    to improve the quality of care. This information
    is based on self-reporting.

Californias P4P Project
  • Adoption of IT systems for purposes such as
    building patient registries for at-risk or
    chronically ill patients and use of electronic
    decision support systems at the point of care
    offer potential improvements in the quality of
    care. The physician groups who received full
    credit on the IT measures had average clinical
    scores that were nine percentage points higher
    than physician groups who showed no evidence of
    IT adoption.
  • (Source IHAs February 2006 Five Year Report,
    Page 17)

Californias P4P Project
  • Core Principle
  • Reward
  • Financial incentives tied to performance
  • Significant and sustained to justify investment
    in system reengineering.

Medicare Inpatient P4P
  • A Medicare pay-for-performance pilot program that
    rewards hospitals based on quality has "steadily
    improved the quality of patient care," according
    to the latest results from the three-year
    program, the New York Times reports (Abelson, New
    York Times, 1/25). The demonstration project,
    which launched in October 2003, includes about
    260 hospitals in 38 states (Kaiser Daily Health
    Policy Report, 6/22/06). Under the program,
    hospitals can earn bonuses if they rank among the
    top 20 in providing specified treatments in at
    least one of five areas of patient care joint
    replacement, coronary artery bypass graft, heart
    attack, heart failure and pneumonia. According to
    the data, participating hospitals overall
    experienced nearly 1,300 fewer deaths in treating
    heart attack patients, and they generally have
    scored higher on quality measures than other U.S.
    hospitals. CMS officials on Friday will announce
    performance bonuses of 8.7 million to 115
    hospitals that were the top performers based on
    30 quality measures in the second year of the
    project. Premier, a not-for-profit hospital
    alliance, is managing the program. CMS and
    Premier have begun discussions about whether to
    extend the project as "Congress has also asked
    Medicare to look into developing a new payment
    system that would put more emphasis on rewarding
    the best care," the Times reports. (Medical News
    Today, 1/29/07)
  • Medicares pilot program has used a design that
    rewards the top 20 regardless of how well the
    other 80 are doing. Hospital payments should
    focus on encouraging hospitals to make
    significant strides in improving care, and should
    not be based on rankings. The hospitals say they
    are now clustered so closely at the top that it
    is increasingly hard to qualify for extra
    payments, even if their results continue to
    improve. (NY Times, 1/25/07)

Medicare Inpatient P4P
  • Why is this important?
  • The heart is a muscle that gets oxygen through
    blood vessels. Sometimes blood clots can block
    these blood vessels, and the heart cant get
    enough oxygen. This can cause a heart attack.
    Chewing an aspirin as soon as symptoms of a heart
    attack begin may help reduce the severity of the
    attack. This chart shows the percent of heart
    attack patients who were given (or took) aspirin
    within 24 hours of arrival at the hospital.

Medicare Outpatient P4P
  • A new pay-for-performance experiment in four
    states may be a precursor of Congress's intent to
    implement such a quality-control program
    throughout the Medicare system.
  • The Medicare program will launch a three-year
    pilot pay-for-performance, or P4P, program next
    year to encourage physicians who treat
    chronically ill patients to adhere to specific
    quality-control guidelines.
  • The demonstration project will compensate
    physicians based on the quality of care they
    provide to Medicare beneficiaries with chronic
    conditions in 800 small- or medium-sized
    practices in Arkansas, California, Massachusetts,
    and Utah.
  • During the first year, physicians will be paid
    for reporting data on quality measures. In
    subsequent years, the program will offer
    physicians annual performance-based bonuses of
    10,000 per clinician and up to 50,000 per
    medical practice.
  • The program will continue to pay physician groups
    on a fee-for-service basis, but participating
    physicians will submit annual data on up to 26
    "quality measures" on the care of patients with
    diabetes, congestive heart failure, and coronary
    artery disease, as well as the provision of
    preventive health services, such as immunizations
    and cancer screenings, to high-risk patients with
    a range of chronic diseases. Mental illnesses are
    not among the conditions in the program,
    according to the Centers for Medicare and
    Medicaid Services (CMS), which administers

Chapter 5 Putting the Pieces Together - A
Proposal for a new Design for Financing Public
Behavioral Healthcare
Behavioral Health Financing Model
  • Each state, region and local setting has a unique
    mix of financial challenges that must be
    understood in order to match their behavioral
    health clinical design to currently available and
    potential funding sources.
  • The National Council is beginning to develop a
    set of behavioral health financing
    recommendations that are relevant to most states
    and regions.
  • This chapter presents a preliminary look at these

Behavioral Health Financing Model
  • Recommendation 1 The Substance Abuse Mental
    Health Services Administration (SAMHSA) and the
    Centers for Medicare and Medicaid Services (CMS)
    should institute a joint project to supporta
    redesign of the public behavioral health system,
    modeled on the Institute of Medicines Change
    Model. This work should include
  • Updating the final methodology for estimating
    the prevalence of serious mental illness and
    serious emotional disturbance to include a
    component for estimating the demand for public
    behavioral health services.
  • Developing a set of cost models to accompany the
    evidence-based practice work that has already
    been completed. These cost models should include
    3 components the cost of implementing each EBP,
    the annual cost of providing these services, and
    the potential cost offsets.
  • Developing a set of regulatory changes that would
    better facilitate blended funding of behavioral
    health services including Medicaid, Medicare,
    SAMHSA and other federal programs.
  • Analyzing the different healthcare reimbursement
    methods in relation to their alignment (or not)
    with current CMS regulations.
  • Recommending Pay for Performance mechanisms that
    could be piloted by state Medicaid programs.

Behavioral Health Financing Model
  • Recommendation 2 Every State, using the
    resources provided in Recommendation 1, should
    project the cost of meeting the behavioral health
    needs of citizens that require publicly funded
    behavioral health care. This should include
    analysis of
  • What are the target populations, what is the
    projected prevalence of mental illness in those
    groups, and how many people ought to be
    receiving service in a given year?
  • Based on research and experience in this and
    other states, what services do clients need and
    how much of each type of service do they need?
  • What is the cost of meeting the projected demand?
  • We understand that in the absence of standardized
    acuity-based level of care systems and limited
    work in the costing of evidence-based practices,
    States will have to estimate projected
    utilization levels and cost.

Behavioral Health Financing Model
  • Recommendation 3 Every State should complete a
    gap analysis between available resources (funding
    and workforce) and the projected demand for
    publicly funded behavioral health services.
  • This is the same requirement CMS makes for
    Medicaid health plans under the BBA
  • 42 CFR 438.207(b) Documentation of adequate
    capacity and services The contract must require
    that the entity submit documentation to the
    State to demonstrate, in a format specified by
    the State, that it
  • (1) Offers an appropriate range of preventive,
    primary care and specialty services that is
    adequate for the anticipated number of enrollees
    for the service area.
  • (2) Maintains a network of providers that is
    sufficient in number, mix, and geographic
    distribution to meet the needs of the anticipated
    number of enrollees in the service area.
  • This analysis should by stratified by geographic
    region, age group, and payor sources (e.g.
    Medicaid, Medicare, Dual Eligibles,

Behavioral Health Financing Model
  • Recommendation 4 Every State should complete an
    assessment of the use of evidence-based and
    promising practices in the public behavioral
    health system, including what it will cost to
    close any gaps that exist.
  • The purpose of this recommendation is to enhance
    the quality of the cost recommendation, which
    requires evaluating
  • The deployment of evidence-based services that
    are being provided with fidelity.
  • The deployment of evidence-based services that
    are being provided below fidelity.
  • Populations and service areas that would benefit
    from the use of evidence-based services provided
    with fidelity.
  • Changes in the type and quantity of services that
    would be needed to improve the effectiveness of
    the system.
  • The projected costs of making the changes
    described above.
  • The cost offsets that would be realized.

Behavioral Health Financing Model
  • Recommendation 5 Every State should complete an
    assessment of the infrastructure gaps that hinder
    the provision of effective and efficient care.
  • This assessment should include an analysis of
    gaps and costs to fill those gaps related to
  • Redesigning/re-engineering care processes
  • Effective use of information technologies
  • Workforce development including knowledge and
    skills management
  • Developing of effective teams
  • Coordinating care across patient conditions,
    services and settings over time
  • Use of performance and outcome measurement for
    continuous quality improvement and accountability
  • (You many note that these are the 6 redesign
    imperatives from Crossing the Quality Chasm.)

Behavioral Health Financing Model
  • Recommendation 6 Every State should complete an
    assessment of the reimbursement systems used in
    the state and how they should be changed to
    comply with federal laws/regulations and support
    effective and efficient care.
  • Core elements of an effective reimbursement
    system that should be considered include
  • Capacity-based funding for services that require
    fire department like coverage such as crisis
  • Fee-for-service type methods where funding
    follows clients based on client need, paired with
    an acuity-based level of care system.
  • Pay for Performance mechanisms to support
    reengineering efforts and the development of
    needed infrastructure that will increase the
    quality of care (and is not covered through other
    payment mechanisms).
  • Pay for Performance mechanisms to reward provider
    organizations that are able to reduce the cost of
    care through improved quality (and would
    otherwise result in reduced revenue).

Behavioral Health Financing Model
  • Recommendation 7 Each State should translate
    their work in Recommendations 2 6 into a long
    range Behavioral Health Financing Plan with a
    multi-year implementation strategy that aligns
    with elements 4 8 of the Change Model. The 50
    state plans should be compiled and use to support
    state and federal legislation for improving the
    system while closing funding gaps that exist.

Behavioral Health Financing Model
  • Recommendation 8 SAMHSA should work with the
    States to develop a clearinghouse of Behavioral
    Health Financing Plans including
  • State-level demand and cost forecasting models.
  • Funding and workforce gap analyses.
  • Strategies for expanding the use of
    evidence-based practices.
  • Further refinements in the cost analysis of
    evidence-based practices.
  • Infrastructure gap assessments.
  • Reimbursement designs.
  • Pay for Performance strategies.

Next Steps
  • My next steps include working with the National
    Council for Community Behavioral Health to refine
    these recommendations and move them forward in
    the public policy arena.
  • I would invite each of you ponder this talk and
    email me with comments about the relevance of
    these ideas for your State and suggestions for
    what should be added and changed in these
    materials. (

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