Why Pennsylvania’s Behavioral Health Medicaid Carve-Out Could Be a Model for Integrated Care Nationwide

Pennsylvania’s localized approach to Medicaid could be a model for behavioral health and physical health integration nationwide.

That’s according to the University of Pittsburgh Medical Center (UPMC) Health Plan and Community Care Behavioral Health Organization, which recently published a policy report in the Journal of Psychiatric Services.

Unlike other states, Medicaid behavioral health in Pennsylvania is funded through and managed via counties that contract with behavioral health managed care organizations. These counties also manage social support programs, like housing services.


Behavioral health is a carve-out benefit in Pennsylvania. Still, it was conceptualized as an integrated human services model from the get-go, according to Dr. Matthew Hurford, president of Community Care Behavioral Health Organization and vice president of behavioral health for UPMC Insurance Services.

“There was a recognition early on that people with serious mental illness and substance use disorders … are often overly represented in the human service systems like housing, criminal justice, child welfare,” Hurford told Behavioral Health Business. “Since many of those services are managed at the county level in Pennsylvania, it made sense for the behavioral health Medicaid funding also to be managed at the county level. [That’s] to allow for alignment in policy, and blending funding to reinforce those systems and help to streamline the complexity faced by … individuals with behavioral health challenges.”

UPMC Insurance Services is owned and operated by the University of Pittsburgh Medical Center. It covers 4.5 million members and provides commercial products for groups and individuals.


It owns the nonprofit behavioral health managed care organization Community Care Behavioral Health Organization, which was founded in 1996 to support Pennsylvania’s HealthChoices program for Medicaid beneficiaries.

Hurford noted that behavioral health carve-outs are often seen as a barrier or limitation in integrating behavioral health care.

“What we’ve been able to demonstrate in Pennsylvania is just really the opposite,” Hurford said.

There are multiple reasons for that, he explained.

”So many of the domains of someone’s life, what we now think of as social determinants of health and health-related social needs, are being met through these systems at the county level,” Hurford said. “It’s a lot easier to incorporate and integrate with physical care health care than it is to try and start with health care and go out and partner with all of those other organizations systems that serve those social and human services needs.”

The model has had some recent successes. The policy report found that overall medical costs for Community Care members decreased by 15% due to a reduction in hospital based-services over the last two years.

Hurford noted that wrap-around services that help address social determinants of health contribute to these reductions.

“In Pennsylvania, we require the Medicaid program to incorporate community-based organizations into our value-based payment arrangements, which we see not as an onerous mandate but as a golden opportunity,” Hurford said. “Because we know that things like helping people recover in their communities and not getting readmitted to the hospital … is going to be impossible if they’re not stably housed, or have access to food.”

There was also a massive uptick in Community Care’s Medicaid members utilizing medication-assisted treatment (MAT). The number of members receiving MAT jumped by 43% from January 2018 to June 2022.

Hurford attributes some of the success of the MAT program to a grant that UMPC received in collaboration with Pennsylvania’s Department of Drug and Alcohol programs.

“We set up a hub-and-spoke model for medication-assisted treatment,” he said. “This model includes a Super Hub, located at UPMC’s Western Psychiatric Hospital, and then an array of regional hubs, at the single county authorities (SCA), the local county drug and alcohol authorities, in a number of rural counties. The team worked with a network of providers, not just medication-assisted treatment, but also some social service agencies we spoke about that help support those needs.”

While localizing behavioral health Medicaid allows counties to practice holistic care, collaboration is the key to success.

“You simply can’t do this work alone, and we have to come into this with some significant degree of organizational humility,” he said. “As health care providers, we are doing pretty well if we can impact somewhere between 10% and 15% of somebody’s total health outcome. The other 85% to 90% is a function of so many of these other things, where people live, what kind of meaning they have in their lives, and so on.”

Hurford said that the county-level model could be replicated in other regions.

“The Pennsylvania model provides this unique platform where, because the Medicaid funding is managed at the county level, you have communities that know their [populations] better than anyone else,” Hurford said. “It provides this platform to engage with payers, providers, members, their families, community organizations, to bring them together in an integrated and holistic fashion to address people’s challenges in the full context of their lives, not simply by their diagnosis or disorder.”

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