This is an exclusive BHB+ story
Value-based care has been the great white whale of behavioral health for nearly a decade. Yet there has been very little movement in the space.
The vast majority of behavioral health providers rely on fee-for-service models of care. In a recent Behavioral Health Business survey, 65% of respondents reported that none of their organizational revenue was derived from value-based care arrangements.
There are glimmers of hope as payers and providers look to engage in meaningful conversation in the future, I believe. Last week, BHB hosted our annual VALUE event in New Orleans. The conference included candid and tactical conversations about practically implementing value-based care strategies in behavioral health care.
As a moderator and attendee, I had the chance to sit in on several conversations about what is next. My three main takeaways were:
– It doesn’t have to be all or nothing regarding value-based payment. There are stepping stones between fee-for-service and fully at-risk.
– The therapeutic alliance isn’t just a talking point. The right implementation could make meaningful impacts on value-based behavioral health care.
– Medicaid was an early adopter of value-based care. Cutting Medicaid could set the conversations around VBC back while disrupting the industry in seemingly countless other ways, too.
In this latest edition of your exclusive BHB+ Update, I’ll explore those takeaways, along with the following questions:
– Why providers should consider lower-stakes alternative payment models before jumping into a value-based care arrangement
– What the therapeutic alliance is, and why payers and providers should care about it
– How Medicaid cuts could impact the behavioral health industry
Learning to crawl, walk, run in VBC
Although payers and providers often consider full-risk, value-based care models the North Star, the climb from fee-for-service to these comprehensive arrangements is often too steep. The stakes are high for providers looking to engage in a value-based care arrangement, and with already low margins in the behavioral health space, one wrong move could jeopardize a business.
Still, other types of alternative payment models could be a stepping stone for providers to engage in the value-based care waters.
“I think of value-based care as a continuum,” Brian Holzer, CEO of Aware Recovery, told me at VALUE. “And I don’t think you go from fee-for-service to risk-based value. I think folks complicate the discussion by thinking it’s zero to 60 without a continuum, as you sort of ramp up your speed towards more of a true value-based payment.”
For example, Aware Recovery, an in-home addiction care provider, uses a bundled payment model – and it has done so for years. While Holzer said that bundled payments make sense in the substance use disorder (SUD) space, this type of alternative model isn’t right for every subsector of behavioral health.
Others agreed.
“My company operates outpatient care. We support people with mild to severe mental illness, but really at the mild end,” Jenny Welling-Palmer, chief strategy officer at Thriveworks, said at VALUE. “And that’s probably more about pay-for-performance and saying, ‘Let’s ensure we’re delivering high-quality care and discharging people as quickly as possible.’ That’s not appropriate for a bundled arrangement, and so I think it’s also very unique to the kind of services that you’re providing.”
Welling-Palmer, who has experience on both payer and provider sides, outlined alternative payment arrangements – from pay-for-performance to bundled payments, risk-sharing models, and, ultimately, capitation.
She noted that in order to participate in any kind of alternative payment model, it’s important to define quality mental health care; to date, there is no national agreement.
Measuring the therapeutic alliance
Several providers discussed how the therapeutic alliance could be used as a way to define success in value-based care arrangements. Therapeutic alliance refers to the relationship between a therapist and a client.
Despite the nebulous nature of therapeutic alliance in value-based care, Evernorth’s president, Amy Ayrault, offered a concrete business perspective.
“We measure a laundry list of items, but what we have found so far is the No. 1 measure that we can execute against that drives total cost of care savings is therapeutic alliance,” Ayrault told me during a panel at VALUE. “So as we look at what that means, typically, we understand that to be three sessions with the same therapist, within a defined period of time. And we’ve actually been able to demonstrate with one of our payer partners that drives down total cost of care by up to 20%. Turning that into a number is like $1,800.”
This comment really struck me. I could see folks on the financial side seeing metrics like the therapeutic alliance as somewhat “squishy,” but the numbers don’t lie.
Emphasizing the therapeutic alliance means that providers must prioritize matching patients to the appropriate clinician for their needs instead of just matching a patient to a clinician with an opening.
LifeStance Health (Nasdaq: LFST), the largest behavioral health provider in the country, is also focusing on the therapeutic alliance metrics, specifically by looking at engagement and sustainability.
“We found that if somebody is engaged in their outpatient [care] within the first 90 days of initiation of treatment, that predicts their longer-term outcomes, and we pair it with the standardized tools to actually showcase the improvements as well,” Dr. Ujjwal Ramtekkar, chief medical officer of LifeStance, said at VALUE. “It’s not enough to think about somebody’s improvement in their health or weight loss because they enrolled in the gym. They have to go to the gym and work out. … We’re not only looking at the successful linkage to our initial services for treatment initiation, we’re actually tracking their overall engagement over time very aggressively, in the first 90-day critical period, and then also making sure that we are doing data-driven pivots in their treatment plans based on the symptoms.”
Since the pandemic, payers and providers have stressed the importance of access to care. And while there is no denying that there are still several barriers to care, the patient-clinician matching process may be more critical going forward. It’s something therapists have been preaching for years: Better patient provider relationships mean better outcomes. Better outcomes mean a lower cost of care.
How providers go about getting the therapeutic alliance right is still up for debate. I’ve seen several digital health players touting AI services to help improve the matching process. There isn’t a silver bullet to this one. But I think that providers and payers will have to start focusing on more than just access if they want to see better outcomes and lower costs.
Medicaid cuts could be disastrous
When it comes to what’s next for Medicaid, there are a lot of unknowns. While potential cuts are being discussed at the federal level, the details are unclear, including whether they’ll happen and what they might entail.
One thing is clear: If Medicaid cuts do go through, it could hurt the behavioral health industry and impact patient access. Providers will likely be looking at the impacts on a state-by-state level.
“It’s not good on 100 different levels. Medicaid is complicated enough. Medicaid rates are unbelievably variable, state to state. … And then every single state has different rules around [reimbursement] in terms of if they’re Medicaid expansion states or not. For example, we’re based in Montana,” Dr. Eric Arzubi, co-founder of Frontier Psychiatry, said at VALUE. “We serve three very rural states: Montana, Idaho and Alaska. And really, our focus and our mission is to serve the underserved in rural communities. Medicaid is one of the significant payers for us, so this will be tough. Montana … recently passed Medicaid expansion just last month. But what’s going to happen to federal funding for that Medicaid expansion? So we don’t know yet.”
The cuts could be particularly impactful for community providers. Peter Delia, federal policy and advocacy strategist at the National Council for Mental Wellbeing, said that Medicaid often makes up roughly 80% of its budget for community-based providers.
“It’s certainly a concern on our end, but I think we have to just look out for exactly what we’re looking for as far as Medicaid cuts go,” Delia said at VALUE. “Work requirements are being talked about as one thing. I think that’s kind of a strong consideration right now for House Republicans. Whether it’s just that, or whether it’s [Federal Medical Assistance Percentage] for the Medicaid expansion population, or something like per capita caps, that would have potentially have a much greater impact.”
Medicaid has traditionally been a hotspot for value-based innovation. The Centers for Medicare and Medicaid Innovation (CMMI) has played a significant role in value-based initiatives since its founding in 2010.
I think it’s fair to say that if Medicaid takes a substantial hit, many of these programs could suffer. Additionally, providers just looking to keep their heads above water during these cuts may be less likely to take risks, such as diving into alternative payment models.
And by the way, speaking of CMMI, the Trump administration has already announced that it’s rolling back many CMMI-led efforts. The Primary Care First model is not set to end early, as is the Making Care Primary model and the ESRD Treatment Choices model.
The administrator is also considering options to reduce the size of the Integrated Care for Kids awards or make other changes to the model.
Rose-colored glasses
Providers and payers are still seeking ways to implement value-based care in behavioral health. However, the rose-colored glasses around these types of arrangements are off.
Now, providers are looking to gradually take risks, potentially through alternative payment models, such as pay-for-performance or bundled arrangements.
Stakeholders are also looking at new metrics for measuring success. The therapeutic alliance may be a crucial part of that story.
However, potential Medicaid cuts could inhibit value-based innovation, especially for community providers, as operators are looking to play it safe among mounting uncertainty.
Companies featured in this article:
Aware Recovery Care, Evernorth, Frontier Behavioral Health, Lifestance, Thriveworks
