Carve-Out Or No

Executive Briefing | by | July 30, 2015


Monica E. Oss
Monica E. Oss

The primary carve-out model of financing and managing behavioral health services is on the wane. In a number of states – the primary behavioral health carve-out in Medicaid has either been replaced (New Mexico and Oregon), or is in the process of being replaced (Colorado, Washington, and Louisiana) by integrating financing for behavioral health services through health plans. The recent approval of a primary behavioral health carve-out for consumers with serious mental illness (SMI) in California (see California & The Mental Health Carve-Out and California’s Mental Health Carve-Out Preserved For Five Years, But With New Performance Transparency Requirements) was one of the few exceptions to this trend.

Brian Wheelan

Why the change in financing models? This move from horizontal specialty management models to vertically-integrated financing through health plans, accountable care organizations (ACOs), and medical homes is being done purportedly to accomplish “integration” of service management for consumers. Whether or not integrated financing accomplishes integrated service management has yet to be seen. Are specialty management programs a better choice for consumers? Brian Wheelan, executive vice president and chief strategy officer for Beacon Health Options, thinks that a specialist-driven care management model is a better choice for many consumers and that policymakers have an “oversimplified” understanding of what integrated care is, and for whom it is most appropriate. In a recent Managed Care article (see Don’t Blame Carve-Outs), Mr. Wheelan states:

There’s a narrative that says, ‘Just put all your money for behavioral health and primary care in one place and you’ll magically integrate care’….No one is arguing that individuals should not be screened and treated for all their medical and behavioral health needs, but to place the blame for fragmented care squarely at the feet of so-called carve-outs is a false premise.

For him, one size doesn’t fit all, and consumers need specialty systems that are a fit with their care coordination needs. His perspective on how best to customize the delivery system by consumer needs is an interesting one with five key consumer cohorts:

  1. The most seriously mentally ill – Consumers with the most serious mental illness need to be served by specialty care because their needs are beyond the scope of primary care practices.
  2. Severe substance abuse disorders – Consumers with severe addictive disorders need care management that understands addiction treatment – and this is usually beyond the care management capabilities of primary care.
  3. Consumers with mild and moderate behavioral disorders – These consumers are best served in a primary care setting as long as PCPs don’t overly rely on psychotropic medications at the expense of effective outpatient therapies.
  4. Consumers with specific high-cost medical conditions – Consumers with serious illnesses (cancer, IBD, diabetes, pain, etc.) who need specific specialist-informed care are a good fit for specialty medical homes financed through bundled payments.
  5. Comorbid chronic physical and mental health conditions – For consumers with chronic physical health conditions and comorbid mental health conditions, effective consumer care management is possible in primary care practices, but it depends on the practice. Some are large enough to develop specialized approaches, while smaller practices will need to contract out with a behavioral health specialist.

I think we are in the “first generation” of testing integrated care coordination models – and, using analytics and practice-based evidence, I expect we will see a return to specialty management for consumer groups over the next few years. And Brian Wheelan’s perspectives are a good starting point for putting these new tools to work.

To hear more from Brian Wheelan, I hope you’ll join me on August 27 in San Diego where he opens the second day of The 2015 OPEN MINDS California Management Best Practices Institute with his keynote address, The Future Of Behavioral Health Carve-Out Models In An Integrated World.

P.S. For more on the changing status of Medicaid behavioral health financing in the states mentioned above, check out:

  1. California, see California Behavioral Health System State Profile Report
  2. Colorado, see Colorado Behavioral Health System State Profile Report
  3. Louisiana, see Louisiana Behavioral Health System State Profile Report
  4. New Mexico, see New Mexico Behavioral Health System State Profile Report
  5. Oregon, see Oregon Behavioral Health System State Profile Report
  6. Washington, see Washington Behavioral Health System State Profile Report

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