The Landscape Of Behavioral Health Carve-Ins

Executive Briefing | by | September 2, 2015


Athena Mandros
Athena Mandros

One of the biggest changes in the past five years, in the name of “integration,” has been the demise of primary behavioral health carve-outs in Medicaid. There are six states that are currently planning to end their Medicaid primary behavioral health carve-outs. By definition, the primary carve-out is the exclusion of behavioral health services from the physical health plan’s capitation rate. Behavioral health services are instead paid fee-for-service (FFS) by the state or managed by a managed behavioral health organization in some type of capitated arrangement.

This shift in policy and financing is a result of a number of changes. The first is the shift towards care coordination and the need to find new ways to facilitate this shift. The second is the advancements in science (technology, pharmaceuticals, etc.) that have allowed non-mental health specialists to manage behavioral health care.

This doesn’t mean that we will not have carve-out behavioral health plans. But these carve-outs will be “secondary” carve-outs – at the health plan level (where a health plan that is at-risk for behavioral and physical health services subcontract out behavioral health services to another organization). The reason carve-outs will continue are many. Brian Wheelan, executive vice president and chief strategy officer for Beacon Health Options makes a good case for the rationale for continuing “specialty” care (see Carve-Out Or No). And the Association for Behavioral Health and Wellness (ABHW) just released a white paper with some great examples of specialty carve-out collaboration within health plans (see Healthcare Integration In The Era Of The Affordable Care Act). The Medicaid Health Plans of America best practice guideline document also has a lot of great examples of how to leverage the behavioral health carve-out (see 2014-2015 MHPA Best Practices Compendium).

Here are six examples of changes in state Medicaid policy that are moving behavioral health care coordination to new models.

Colorado – On July 1, 2017, Colorado plans to integrate behavioral health and physical health services for Medicaid Accountable Care Collaborative beneficiaries under one administrative entity in each region of the state. Currently, behavioral health services are the responsibility of the capitated behavioral health organizations (BHOs) and physical health services are the responsibility of the managed FFS Regional Care Coordination Organizations (RCCOs). The new model will continue to reimburse behavioral health services at a capitated rate, while physical health services will be reimbursed using a managed FFS model. Over the five-year contract, the physical health service payment structure will be changed to better align with behavioral health payments. Colorado plans to release an RFP for the new administrative entities in the fall of 2016. (For more see Colorado Medicaid To End Behavioral Health Carve-Out.)

Iowa – On January 1, 2016, Iowa plans to integrate physical health, mental health, and long-term services and supports (LTSS) through three MCOs, which were awarded contracts on August 17, 2015. Currently behavioral health services are managed through a separate contract with the prepaid inpatient health plan (PIHP), Magellan and physical health services are provided through MCOs. (For more see Iowa Selects Amerigroup, AmeriHealth Caritas, UnitedHealthcare & WellCare For Medicaid Integrated Physical & Behavioral Health Contracts.)

Louisiana – On December 1, 2015, Louisiana plans to integrate specialty behavioral health and physical health services through the already operating Bayou Health MCOs. Currently, specialty behavioral health services are delivered through the PIHP, Magellan. The choice to integrate behavioral health services with physical health services came as a bit of a surprise because Louisiana released an RFP to continue the behavioral health contract, but after receiving the bids decided to carve-in behavioral health services to the MCOs already operating in the state. (For more see Louisiana To End Medicaid Behavioral Health Carve-Out By December 2015.)

Nebraska – On July 1, 2017, Nebraska plans to integrate behavioral health, physical health, and pharmacy through MCOs. Currently, behavioral health services are managed through a separate contract with the PIHP, Magellan. Nebraska is still in the preliminary planning stages of the carve-in and will release an RFP for integrated services with more details towards the end of 2015. (For more see Nebraska Medicaid To End Behavioral Health Carve-Out, Effective July 1, 2017.)

New York – By July 1, 2016, New York plans to integrate specialty behavioral health services with its current physical health MCOs and offer behavioral health, physical health, and LTSS to the SMI population through newly designated Health Action and Recovery Plans (HARPs). Currently, specialty behavioral health services for all Medicaid beneficiaries and all behavioral health services provided to individuals receiving supplemental security income (SSI) are provided by the FFS delivery system. MCOs in New York City will begin delivering integrated services in October 2015 and will begin delivering integrated services in the rest of the state by July 2016. (For more see New York Medicaid Releases RFQ For Adult Behavioral Health Benefit Plans Outside New York City.)

Washington – By 2020, Washington plans to integrate mental health, addiction treatment services, and physical health services through MCOs. Currently, regional service networks (RSNs) receive a capitated rate to deliver mental health services and addiction treatment services are delivered FFS by the counties. Physical health services are the responsibility of regionally operated MCOs. By April 1, 2016, the physical health and behavioral health purchasing regions will be aligned and two early adopter counties, Clark and Skamania, will begin offering integrated services through MCOs. An RFP for the integrated MCOs was released on August 6 and responses are due by September 30. (For more see Washington State To Move Medicaid Addiction Treatment To Managed Care & Carve-In Mental Health Services).

Scientist Louis Pasteur said, “Fortune favors the prepared mind.” If you’re an executive of an organization providing behavioral health services in one of these (or the other) states that are eliminating the primary carve-out, this change in policy means a change in strategy.  Is your team ready? For more on helping your organization navigate the changing market, join us at The 2015 OPEN MINDS Executive Leadership Retreat for OPEN MINDS CEO Monica E. Oss’ keynote session, What’s Your Leadership Strategy? The Challenges Of Leadership In A Time Of Innovation.


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