Medicaid Value-Based Payment Reform Linked to Reduced Mental Health ER Visits

State Medicaid programs are increasingly overhauling payment structures in favor of value-based payment systems. A new report suggests that value-based payment reform may decrease mental health emergency room visits.

Value-based payment strategies reward providers and health plans with incentive payments for the quality, rather than quantity, of care provided to patients.

A new study published in the JAMA Health Forum found that Medicaid value-based payment reform was associated with increased behavioral health visits.


It was also associated with a reduction in mental health emergency department visits.

“Consistent with policy goals, [value-based payment] reform was associated with more behavioral health visits and fewer mental health ED visits,” authors of the study wrote. “Generally, the strongest and most sustained associations were seen in patients with depression.”

ER visits for mental health emergencies typically involve long wait times and many hospital emergency rooms are unprepared to handle urgent behavioral health needs.


Value-based payment reform is crucial for Medicaid patients who already experience significant health inequities, according to the study. Medicaid patients who also have a mental illness are even more at risk, with a four-times higher mortality rate than Medicaid patients without mental illnesses.

The study, carried out by researchers from NYU Grossman School of Medicine and NYU School of Medicine, analyzed Medicaid administrative claims and encounter data in New York cross-referenced with data that identified providers affiliated with Delivery System Reform Incentive Payment networks, meaning that the researchers could tell which providers participated in value-based payment reform.

Researchers focused on non-Medicare adults between the ages of 18 and 64 who were enrolled in Medicaid and diagnosed with depression, bipolar disorder and/or schizophrenia.

Patients with depression and bipolar disorder exposed to providers that participated in value-based payment reform had an increased number of yearly behavioral health visits compared to patients who went to other providers.

There were no significant changes to primary care visits for patients with depression or bipolar disorder. Value-based payments were, however, associated with fewer primary care visits for patients with schizophrenia.

Value-based payments were associated with fewer yearly mental health emergency department visits for patients with depression, bipolar disorder and schizophrenia.

Researchers specified that the study was limited to the state of New York and that its findings may not be generalizable to other states. The results of the study, however, suggest that New York’s DSRIP program could serve as an example of a successful program.

This new study, the authors concluded, is one more piece of evidence demonstrating significant benefits to alternative payment models within Medicaid and mental health care.

“We found that Medicaid VBPs were associated with increased behavioral health visits and reductions in mental health ED visits for patients with mental illness,” authors of the study wrote. “Our work contributes to a growing literature demonstrating benefits of alternative payment models within Medicaid and mental health care.”