October 5, 2011 Tricia McGinnis Center for Health Care Strategies

1. HINDSIGHT, FORESIGHT, & INSIGHT: State Financing Innovations to Integrate Physical and Behavioral Health October 5, 2011 Tricia McGinnis Center for Health Care Strategies

2. Integration = Opportunity to Improve Care/Reduce $$ Top 5% highest-cost beneficiaries account for 57% of $$ Among the most expensive 1% Medicaid beneficiaries (acute care only) 80% have 3 or more chronic conditions 49% of those with disabilities also have psychiatric illness The presence of psychiatric illness increases spending and hospitalization rates by as much as 75% Yet, most are in fragmented and disconnected physical & behavioral health delivery systems 2 *Sources: RG Kronick et al., “The Faces of Medicaid III: Refining the Portrait of People with Multiple Chronic Conditions.” Center for Health Care Strategies, October 2009; C. Boyd, et al. “Clarifying Multimorbidity for Medicaid Programs to Improve Targeting and Delivery of Clinical Services.” Center for Health Care Strategies, December 2010.

3. Cost Impact of BH Comorbidity Among U.S. Medicaid-Only Beneficiaries with Disabilities SOURCE: C. Boyd et al. Faces of Medicaid: Clarifying Multimorbidity Patterns to Improve Targeting and Delivery of Clinical Services. Center for Health Care Strategies, December 2010.

4. What Ideal Care CAN Look Like:

5. Complex Care Management: Critical Elements

6. Innovations in Integrated Physical and Behavioral Health Financing States are exploring a range of options for integrating the management and financing of physical and behavioral health services with a focus on individuals with serious behavioral health needs. Two innovations include: • Behavioral Health Organization (BHO) as Integrated Care Entity • Accountable Care Organizations (ACO) as Integrated Care Entity

7. BHO as Integrated Care Entity • Contract with BHOs to provide both physical and behavioral health services for individuals with serious mental illness (SMI) or other serious BH needs. • Considerations • Established BHO infrastructure is critical • Capacity of contractors to manage PH and BH needs • Adequate provider network • Whether to allow subcontracting • Incorporation into broader health home initiatives

8. PROS PH/BH system alignment of financial incentives Full integration of administrative data Leverages specialty capacity of BH system for complex need population Potential for greater consumer engagement CONS Lack of BHO capacity in providing PH and Rx services Emerging model, thus limited experience Questions regarding oversight authority BHO as Integrated Care Entity

9. Innovations in Arizona • RFI for specialty Regional Behavioral Health Authorities (RBHAs) • RBHA would be full risk for and manage all behavioral health and physical health services for SMI beneficiaries • Will operate under Department of Behavioral Health Services • Closely connected to health homes • MA-SNP capabilities • No subcontracting

10. Innovations in Massachusetts • Based on PCCM program, which is one of several managed care options • BHO at full risk for behavioral health and managed fee-for-service for physical health • Financial incentives for improved outcomes • BHO required to provide high-risk members: • Care management program to coordinate care • Integration of physical and behavioral health care providers • Integration of mental health and substance abuse treatment

11. ACOs as Integrated Care Entities • Regionally-based provider entities charged to provide both physical and behavioral health services for all individuals, including those with SMI • Considerations • Financial incentives through shared savings are key • Must have capacity to facilitate data sharing among providers • Requires strong behavioral health lead within ACO • Adequate primary care reimbursement is critical

12. PROS Shared savings aligns incentives and promotes coordinated care ACOs can function within managed care, PCCM, or FFS systems Potential for true clinical integration Potential for patient and community engagement CONS Significant start-up costs Shared savings and information exchange may be hindered by BH carve out environment Statewide implementation may be difficult ACOs will likely need to partner with multiple MCOs ACOs as Integrated Care Entity

13. ACOs in Minnesota • Includes behavioral and physical health services delivered to non-dually eligible beneficiaries in FFS and managed care • Deploys two shared savings models to attract integrated and non-integrated providers • RFP emphasizes: • Comprehensive care coordination • Meaningful engagement of patients and families • Partnerships with community organizations, social service agencies, and counties

14. Parting Thoughts • Integrated financial/management systems are critical to effective integration of health services • States are undertaking a range of approaches to solve this disconnect • Systems-level integration efforts must be paired with efforts to integrate services at the point of care

15. Questions? 15

16. State Technical Assistance • The Integrated Care Resource Center was recently established by CMS to help states develop and implement integrated care models for Medicaid beneficiaries with high-cost, chronic needs • Technical assistance (TA) to help states integrate care for: (1) individuals who are dually eligible for Medicare and Medicaid; and (2) high-need, high-cost Medicaid populations via the Health Homes state plan option as well as other emerging models • Individual and group TA coordinated by Mathematica Policy Research and CHCS • Visit www.integratedcareresourcecenter.orgto submit a TA request and/or download useful resources, including policy briefs, tools, state best practice resources, and the latest CMS guidance 16 16