MedCity Influencers, Health Tech

Why Value-based Care Needs To Be the Standard for Behavioral Health

Compared to other areas of healthcare, behavioral health has been slow to adopt VBC models — even though they will further expand access to behavioral health services, remove barriers to care, and improve the quality of mental health and substance use care.


Traditionally, healthcare in the U.S. has been based on a fee-for-service reimbursement model, where providers are paid for each service delivered to patients. The problem with this model is that pay is tied to volume, not outcomes— in fact, providers are incentivized to perform extra testing and procedures, emphasizing treatment at the expense of prevention and wellness.

To address this misalignment in incentives, healthcare has been moving toward a value-based care (VBC) model, where pay is tied to outcomes and providers are financially rewarded to keep patients healthy. As described in the Health IT Playbook of The Office of the National Coordinator for Health Information Technology (ONC), value-based programs support better care for individuals and better health for populations at lower cost. The ONC goes on to report that VBC programs reduce the “perverse incentive” to increase volume of care, thereby making it possible to reward clinicians who:

  • Emphasize prevention and wellness

  • Focus on outcomes

  • Help patients navigate the healthcare system

  • Integrate and coordinate care

  • Invest in practice transformation, such as health information technology

VBC programs are quickly becoming the standard for physical healthcare, while behavioral health—including mental health and substance use disorder (SUD) treatment—is lagging behind the rest of healthcare.

So what’s slowing adoption? In Western medicine, physical health has traditionally been dealt with separately from behavioral health, and the entire care system has reflected that until just recently. Well-defined, traditional procedures such as surgery, treatments for various physical illnesses, and acute care have volumes of research, diagnostic codes, and documented outcomes well-suited to VBC models. Furthermore, powerful legislative, regulatory and financial incentives have led to wide adoption of VBC in traditional care.

Conversely, most behavioral health conditions and treatments lack the body of research, data tracking, outcomes and incentives needed for transitioning to VBC models. However, in the wake of Covid-19, relaxed prescribing regulations and the rapid adoption of digital health are putting pressure on behavioral health providers and payers to join the VBC movement. As that pressure mounts, so do the challenges facing payers moving to VBC models, including:

  • How to measure outcomes for behavioral health. Patients with a physical illness or injury are prescribed a procedure or treatment, and the health event is usually resolved. Behavioral health, on the other hand, can involve issues with evolving treatments spanning long periods of time with very little outcomes data. Payers and program providers need to collaborate and agree on what success looks like. A good starting point is creating a quality framework centered on behavioral health access, health outcomes and cost. One example of this is the value-based care arrangement between Blue Cross North Carolina and Quartet Health. The two organizations partnered on a program to measure quality of care, create incentives to providers for improved patient access to in-network care, and improve patient health outcomes. Another is the move to 100-percent-fees-at-risk pricing models. Under this value-based approach, a company only gets paid if it meets strict clinical, engagement, satisfaction and operational performance goals for its programs.

  • Data collection. Delivering high-quality care starts with tracking and leveraging outcomes data. Measurement-based care (MBC)—the systematic evaluation of patient symptoms to inform behavioral health treatment—is grossly underused in behavioral health, with fewer than 20% of behavioral health practitioners integrating it into their practice. Gathering and using measurable data from evidence-based assessments and  intake processes are critical for improving documentation of outcomes for patients and populations.

  • Access to high-quality care. In the wake of Covid-19 and the relaxation of telehealth and e-prescribing regulations, digital solutions for behavioral health grew exponentially, greatly expanding access to care. Increased quality through a greater emphasis on evidence-based care and ROI are gradually helping to ensure the quality of that care. Better access to quality care empowers solution providers and clinicians to track outcomes that demonstrate to payers improvement in behavioral health conditions.

From our company’s own experience providing access to quality SUD care, as well as from industry data, we understand the potential financial and wellness impact of integrated, VBC approaches to behavioral health care. This is due in large part to mental health and SUDs costs being hidden in medical claims for heart and liver disease, diabetes, cancer, chronic kidney disease and other conditions. A recent claims analysis conducted by our company for a large retail business, for example, revealed individuals diagnosed with an alcohol use disorder or opioid use disorder cost on average 335% more than those with no diagnoses.

Other recent studies supporting VBC cost savings potential include:

  • An analysis of claims data conducted by Cigna Corporation’s Evernorth for more than 275,000 patients newly diagnosed with a behavioral health condition (such as anxiety, depression, or SUD) found that treatment in an outpatient setting, such as a psychologist’s office or virtual visits, leads to fewer emergency department visits and inpatient hospitalizations.This decreases costs by up to $1,377 per person in one year and up to $3,109 per person over two years. [Editor’s Note: Evernorth is a customer of the author’s employer.]

  • 2015-2019 a CMS Transforming Clinical Practice Initiative involving a network of 275 behavioral health practices serving 258,000 medicaid patients in outpatient mental health and substance use treatment settings across New York State generated more than $204 million in cost savings. These savings were largely attributable to reductions in all-cause hospital utilization.

Employers, payers, and the federal government are all exerting pressure on the adoption of value-based care approaches to behavioral health, and the faster behavioral health moves towards value-based care, the more beneficial it will be for stakeholders. Employers facing a recessionary, high-cost healthcare environment are increasingly demanding ROI data and performance guarantees, and payers are pushing forward with demands for more accountability and solid outcomes data. At the federal level, the Centers for Medicare & Medicaid Services (CMS) is promoting its new Behavioral Health Strategy and finalizing its 2023 Physician Fee Schedule (PFS) impacting Medicare payments and behavioral health.

The CMS Behavioral Health Strategy covers multiple elements, including access to prevention and treatment services for SUDs, mental health services, crisis intervention and pain care. The strategy also enables care that is well-coordinated and effectively integrated. Among its stated goals are:

  • Strengthen equity and quality in behavioral health care, in part through improved access to high quality, affordable, person-centered behavioral health care, including through telehealth and by addressing disparities in treatment.

  • Improve access and quality of mental health care and services, including through the expansion of workforce capacity and capability related to the detection, diagnosis and management of mental disorders.

  • Improve access to SUD prevention, treatment and recovery services, in part by identifying and addressing barriers to evidence-based treatment and recovery services for better detection, diagnosis and management of such conditions.

Compared to other areas of healthcare, behavioral health has been slow to adopt VBC models — even though they will further expand access to behavioral health services, remove barriers to care, and improve the quality of mental health and substance use care.

Despite the complexities involved, establishing value-based care as the standard in behavioral health will help payers achieve the cost savings and predictability they are demanding, while giving providers and patients more flexibility in treating chronic behavioral health conditions.

Photo: Hong Li, Getty Images

Yusuf Sherwani is the CEO and Co-Founder of Pelago, the world’s first technology-enabled digital clinic for multiple substance use disorders. Together with his colleagues Maroof Ahmed and Sarim Siddiqui, Dr. Sherwani is transforming substance use support – from prevention to treatment – delivering education, management skills, and opportunities for positive change to members struggling with substance use, most commonly tobacco, alcohol or opioids.

A medical doctor by training and a technology enthusiast at heart, Yusuf is seen as an innovator operating at the intersection of healthcare, technology and design. With a medical degree from Imperial College London, Yusuf has co-authored 12 peer-reviewed studies on behavioral health and substance addictions. He was featured in Forbes’ 30 Under 30 list (2018) as well as Fast Company’s 100 Most Creative People in Business.

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