Insurance Models to Achieve the Triple Aim

Most people think that the reason for bringing behavioral health services under managed care—a “carve-in”—is to save money. They’re partially right. Carving in services has resulted in savings for the Medicaid program and for States in many instances. In a carve-in, behavioral health benefits are managed within the existing managed care structure along with all other health care benefits (i.e., medical, pharmacy, inpatient, dental, etc.) and included in the same per-member-per-month (PMPM) rate. This results in one locus of accountability for all healthcare needs. Beyond just saving money, integrated payment can drive integrated care.

According to the Kaiser 50-State Medicaid Budget Survey completed by Health Management Associates in partnership with the National Association of Medicaid Directors an increasing number of states are moving toward carved-in benefits. In this year’s survey, the number of states reporting benefit cuts or restrictions fell to the lowest level since 2008. A far larger number of states, 21 states in FY 2014 and 22 in FY 2015, reported enhancing or adding new benefits. The most common benefit enhancements or additions reported were for behavioral health services (10 in FY 2014; 5 in FY 2015).

New York’s current plan is to enroll 95% of Medicaid recipients in managed care and to reduce fee-for-service spending to less than 4%. How this transition to managed care occurs will have a tremendous impact on whether people have access to high quality, integrated, comprehensive, and person-centered care. While there are certainly pros and cons to carving in behavioral health services, this article will focus on how carve-in can impact care integration.

The Triple Aim

The Centers for Medicare and Medicaid Services (CMS) have embraced the triple aim of better population health through the provision of better quality services at a lower overall cost of care. Achieving any one of these ambitious goals would be a heavy lift. Two at the same time would be extraordinary. All three together would be Herculean. Thanks to the hard work of dedicated researchers, creative practitioners and passionate advocates, we have learned some valuable lessons that—if we put them to use properly—will help us achieve the triple aim. Three critical lessons we have learned that will make this possible:

(1)  Health outcomes are determined by behavior patterns. These behaviors “represent the single most prominent domain of influence over health prospects in the United States.” Behaviors that impact health outcomes include diet, exercise, drug and alcohol use, tobacco use, suicidality and many others. (see chart #1 on page 32)

(2)  Social determinants like housing, education, employment, trauma and socioeconomic status have a profound impact on health outcomes. (see chart #2 on page 32)

(3)  Integrated health and behavioral healthcare improves outcomes, reduces costs and increases provider satisfaction.


Notably, all three of these fundamental lessons point to the essential work of the behavioral health field. The behavioral health sector has decades of experience helping people change their behavior and we are well ahead of the rest of the healthcare community in understanding the critical importance of housing, jobs and supporting those affected by trauma. We have been leading the way in providing care for the whole person, from both the neck up and the neck down.

The Problem of Poorly Integrated Care

Separate systems of health and behavioral health care have led to terrible outcomes for people with serious mental illness (SMI), who have mortality rates up to four times as high as those of their peers without mental illness and life expectancies up to 25 years shorter. Even moderate mental illness diagnoses correlate with premature death, and people with SMI die even earlier than people with moderate mental illness. People with SMI are more likely to be diagnosed with cancer and are less likely to survive when they get it. In addition, people with mental illness are more likely to engage in unhealthy behaviors like smoking, overeating, insufficient exercise, and excessive consumption of alcohol and other drugs.

The Promise of Integrated Care

State of the art clinical care is integrated care, whether through Patient Centered Medical Homes, Advanced Primary Care or some other model of collaborative, integrated, patient-centered care. The benefits of collaborative care have been broadly demonstrated in over 70 randomized controlled trials, which have shown it to be—across a wide range of practice settings and patient populations—more effective and more cost effective than usual care for common mental disorders such as depression.

Integrated care has produced better outcomes for many prevalent and costly chronic medical diseases including asthma, hypertension, congestive heart failure and diabetes, and has been shown to be more effective for many of the most common mental illnesses, including anxiety disorders, depression, bipolar disorder and schizophrenia.

Importantly, the financial case for integrating behavioral health and primary care is profound. Studies have estimated $15 billion in savings per year for the Medicaid system. Others have estimated savings from $26.3 billion to $48.3 billion annually, of which between 34% and 40% would accrue to Medicare and Medicaid. Savings are generated in pharmacy, inpatient and outpatient medical and mental health specialty care, and long-term analyses have shown a return on investment of $6.50 for every $1 spent on integrating care. And as an added bonus, integration achieves a fourth aim – increased provider satisfaction.

Incenting Integration with Insurance

Whatever insurance scheme is put into place, one key indicator of its likely efficacy will be the extent to which it promotes integrated care at the level of clinical practice. In a carved-out environment, the behavioral health benefit is paid for and managed separately from all other health and benefits, leading to disjointed service delivery and oversight. In a behavioral health carve-out, accountability for physical and behavioral health needs is fragmented. With different payers managing care, it is difficult to align financial incentives across physical and behavioral health systems or share information in real-time across systems.

Under a carve-out model the behavioral health expenses for the entire managed population remain under a fee-for-service (FFS) payment model. Clinical services are differentiated by type and are assigned either to the managed care organization (MCO) responsible for the person’s medical/surgical care or paid directly by the Medicaid program. Some carve-out models also exclude the total healthcare needs of people with SMI from any care management at all and leave them in an entirely FFS environment. This gives MCOs greater predictability of healthcare costs, but it prevents them from developing the expertise necessary to manage behavioral health conditions. As well, unmanaged behavioral health costs can drive huge and unpredictable expenses for state Medicaid programs, and the bifurcation of responsibility can lead to duplication and lack of clear accountability. It is extremely difficult to incent integrated care with a dis-integrated insurance scheme.

In a carve-in model, on the other hand, participating MCOs are given responsibility for the total health and wellbeing of their members. All medical/surgical, inpatient, outpatient, specialty mental health and other services are covered by the participating MCOs. Carve-In models can also exclude people with SMI, who can either be covered FFS or by a Special Needs BH Plan (SNBHP); their distinguishing characteristic is that those who are covered are fully covered by a single plan. This creates challenges for MCOs. They need to develop behavioral health expertise, expand their networks to include behavioral health providers, and respond to a landscape with less cost predictability. However, it drives greater cost savings for the state, makes clear to whom savings are attributable, incents integrated care, provides a single point of accountability and oversight for state regulators, and reduces duplicative tracking, monitoring and quality assurance.

Under a carve-in, MCOs are still able to access the support of specialized Behavioral Health Organizations (BHO) to help them build the behavioral health network they need to serve their members, and provide the expertise in behavioral health that they need to effectively manage care while supporting community living, implementing person-centered practices, supporting family caregivers, promoting employment, and meeting people’s diverse needs across the whole lifespan. The key is that there is a single locus of accountability and a single entity that is ultimately responsible for someone’s care.

New York State’s Plans

New York State (NYS) has chosen to transition to a carved-in model of managed care, with plans to carve Medicaid-funded behavioral health services into managed care. Governor Cuomo launched the Medicaid Redesign Team (MRT) initiative in 2011 in order to identify strategies to reduce ever-growing healthcare costs and address multiple issues related to care quality (i.e., despite the high cost of the Medicaid program, New York State ranked last in avoidable hospital admissions for Medicaid members in 2009).

In order to achieve the goal of managing 96% of all Medicaid spending, and improve and integrate care, the MRT proposed carving in behavioral health services into the Medicaid Managed Care program. To accommodate the specialized needs of specific high need populations, adults in New York with SMI and/or significant substance use disorders (SUD) will be eligible for specialized plans called Health and Recovery Plans (HARPs). HARPs will be fully integrated, similar to mainstream plans, but they will also offer an enhanced benefit package of additional home and community-based services (HCBS) designed to keep people with SMI out of institutionalized settings and in the community.

Establishing the system is not a guarantee of success, and it’s true that a bad carve-in may be worse than a carve-out, but by investing in an integrated, carved in Medicaid system, NYS is positioning itself to integrate care and generate positive health outcomes on a population health level.

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