Acadia CMO, Behavioral Stakeholders: Payment Reform Necessary to Improve SMI Treatment

People with severe mental illnesses (SMIs) often end up homeless, hospitalized or incarcerated. To change that, federal and commercial payers need to reimagine the way they reimburse for the treatment of SMIs, behavioral health stakeholders say. 

“Our mental health care payment system is really not geared toward people with serious mental illness,” psychiatrist and documentarian Kenneth Rosenberg said. “If you are seriously ill and not compliant, the model that we have really doesn’t apply. We actually need a reimbursement plan and program that applies to people who are really sick, not just when they’re in the hospital, but on an outpatient basis.”

Rosenberg made those comments during a recent panel discussion with Acadia Healthcare (Nasdaq: ACHC). Acadia Chief Medical Officer Michael Genovese co-led the conversation with Rosenberg, who recently released the PBS documentary Bedlam, which follows the lives of Los Angeles-based SMI patients over the course of five years.


Kevin Sevarino, president of the American Academy of Addiction Psychiatry (AAAP), and Patrick Kennedy, a former U.S. representative and mental health advocate, also joined the discussion, which was streamed Oct. 8 on Facebook Live.

While each participant brought different perspectives to the table, the consensus on the payer front was this: To best serve patients and optimize costs, behavioral health reimbursement should focus long-term results, rather than service delivery in the short-term.

“We need to move away from a procedure-based system that only looks at the outcome on what I billed for that day,” Sevarino said. “[Instead,] look at, if I treated this psychosis earlier, five years down the line, what’s the cost to society that I treated it?”


In other words, value-based care, rather than procedure-based reimbursement, is key to patient success and cost savings. But as the reimbursement system exists today, behavioral health’s ultimate value isn’t always recognized by payers. 

In fact, payers often deny coverage for professionally recommended behavioral health treatments because they don’t consider them medically necessary in the moment. Meanwhile, when services are approved, they’re reimbursed at notoriously low rates, especially when compared to medical care.

One psychiatrist in the audience of the panel discussion put it this way: “Finding intensive treatment covered by insurance is a source of frustration.”

Acadia’s Genovese commiserated, noting that those payer challenges don’t really exist in physical medicine. 

“That is something that seems relatively unique to psychiatry,” he said. “Sometimes we are either limited by an outside party in what we can provide as care, or we are sometimes forced outside of the insurance system altogether because it’s impossible to render the type of care that we think is appropriate.”

Part of the problem is advocacy, or lack thereof, Genovese and Kennedy explained during the panel.

While clinicians and psychiatrists often do a good job fighting for their patients, they’re less tenacious on the policy front. But to maximize reimburse, both are necessary, Kennedy explained.

“The mental health community and psychiatry do not do a good job advocating within the American Medical Association to ensure that they get proper value points for the delivery of their care the way surgeons and hospitalists [do,]” Kennedy said. “[Physical health advocates] go through the AMA, and then push through CMS higher reimbursement because they have a better lobby arm.”

It’s worth noting, however, that physical health outcomes are often easier to illustrate and quicker to obtain. Plus, they lend themselves better to the existent procedure-based reimbursement system.

Still, Kennedy said the behavioral health industry can take steps to strive for improved, less “anemic” reimbursement rates. Chiefly among those is better conveying long-term treatment value, while also getting creative.

“We could come up with new financing mechanisms,” Kennedy said. “If you want to get the ROI over time, then maybe you pool the dollars from payers, including the government, on a capitated basis based upon their percentage in the marketplace. Say, ‘We’re all going to benefit if these people are healthier and less disabled.’ … If you set aside a pool of prevention money, much like we often do with kids … for well baby care and inoculations, it seems to me, we could then incentivize the system.”

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