Session 3

Financing and Payment Challenges

Session 3 explored financial and regulatory obstacles that can impede the effective deployment of behavioral health services, such as better care coordination and reimbursement strategies. The session aimed to highlight innovative payment models and policy reforms to support a more sustainable and equitable system. Speakers discussed moving toward value-based care models, enhancing coordination across sectors, and adopting a more integrated approach to service delivery. Box 4 provides highlights from presentations.

Richard G. Frank, senior fellow in economic studies and director of the USC-Brookings Schaeffer Initiative on Health Policy, moderated Session 3, which focused on the economic and payment challenges for the behavioral health workforce. He began by emphasizing the importance of defining a problem accurately when discussing solutions. He argued that often the definition dictates proposed solutions—and those implemented. For example, he highlighted the perceived shortage of care providers. Frank noted that despite a consensus on the need for more providers, the nature of this shortage is complex. He argued that although evidence shows that more people are receiving treatment than ever before (which seems to contradict the idea of a severe shortage affecting access), significant misalignments in provider distribution occur across areas of the country, across payers (Medicaid vs. Medicare vs. private insurance), and across professional categories (psychiatrists vs. social workers), which suggests that the problem is about not just the number of providers but also where and how they are deployed.

Frank also discussed economic factors influencing the behavioral health workforce. He said that market dynamics are different for cash-paying patients

(who face no shortages) compared to those relying on public or private insurance. He underscored the need for a nuanced approach to addressing shortages, one that considers their specific contexts. He also encouraged the participants to engage with “difficult facts,” meaning data that might challenge prevailing narratives about behavioral health service provision. He said, “These so-called shortages are extraordinarily different across professions and across contexts.” By confronting these facts, collaborators can better understand the complexities of the issues and develop more nuanced solutions.

ADDRESSING BEHAVIORAL HEALTH WORKFORCE CHALLENGES

Ronald W. Manderscheid, adjunct professor at the Johns Hopkins Bloomberg School of Public Health and principal at Capstone Solutions Consulting Group, advocated for establishing a national infrastructure to address the systemic challenges to the behavioral health workforce. He argued that the fragmented nature of behavioral health services requires a coordinated and centralized approach to improve outcomes and ensure equitable access to care.

Manderscheid outlined the rationale for creating a “home” for the behavioral health workforce at the national level. He pointed out that it has been 30 years since SAMHSA had national leadership authority around this workforce and 20 years since it last produced a national strategic plan on behavioral health human resources. After reviewing the history of fragmentation of federal agency leadership, he emphasized that the “system,” characterized by a lack of coordination among various federal and state agencies and service providers, leads to inefficiencies and disparities in care. He proposed creating a National Office on Behavioral Health Workforce Practice, which, with adequate staff and budget, could serve as a central body to streamline workforce efforts, integrate services, and provide a unified strategy for addressing behavioral health needs across the country. He emphasized the importance of consistent national leadership and coordination in addressing workforce challenges. Manderscheid highlighted several key functions this national office structure could perform:

1. coordination of services to ensure that behavioral health services are integrated with primary care, public health, and social services;
2. a policy development office responsible for developing and implementing policies that support the workforce, including strategies for expansion, training, and retention;
3. centralized funding and more efficient resource allocation, ensuring that funds are directed toward programs and initiatives that have the greatest impact;
4. data collection and research—playing a key role in collecting data on behavioral health trends, workforce needs, and service use to help identify areas where additional resources are needed; and
5. advocacy and public awareness to support behavioral health initiatives by leading campaigns to reduce stigma, promote mental health literacy, and advocate for the rights of individuals with behavioral health conditions.

Additionally, he advocated for developing a National Center on Behavioral Health Workforce Excellence, which would share best practices, promote innovation, and create a strategic plan for the behavioral health workforce.

Manderscheid acknowledged several challenges to establishing a national office. These include potential resistance from agencies and partners that may view this as a threat to their authority or funding. Additionally, he noted the significant difficulties presented by the need to secure the necessary congressional support and ongoing appropriations to establish and sustain the office. Despite these challenges, Manderscheid argued that the potential benefits of a centralized office would far outweigh the potential obstacles. He urged collaborators to come together to advocate for it as a necessary step to address the nation’s growing behavioral health needs.

Manderscheid said a first step would be to convene interested groups to build consensus and create a strategic plan, emphasizing that this initiative would require a series of short, intermediate, and long-term actions and would likely take 5 or more years to fully develop.

ADDRESSING WORKFORCE CHALLENGES: AN IMPLEMENTATION PERSPECTIVE

Andrew Bertagnolli, the national clinical director for virtual behavioral health at Amazon-One Medical, began by providing an overview of One Medical, a membership-based primary care organization operating in 12 states, with nationwide services offered both in person and virtually. It uses a multipayer system, predominantly relying on a fee-for-service payment model, although it also engages in value-based and direct primary care contracting. One Medical’s approach to behavioral health focuses on integration into primary care rather than developing stand-alone specialty programs. Bertagnolli highlighted that the model incorporates a combination of colocation, real-time consultation, and collaborative care. He discussed the rapid expansion of One Medical’s behavioral health services, growing from a small pilot with three full-time equivalent staff to a large-scale operation with approximately 80 FTE staff since June 2020. This growth presented significant challenges, particularly in terms of recruitment and management. He noted that finding qualified care managers remains a critical issue, and the organization continues to seek talented individuals to fill these roles.

One major operational challenge he highlighted is the complexity of managing state provider licensing requirements. One Medical operates in almost all U.S. states and territories, and its variability in licensing requirements adds significant administrative burden. He detailed the complexities of obtaining and maintaining licenses across multiple states, exacerbated by the rapid expansion of virtual care, which has outpaced the regulatory frameworks governing licensure and practice. The lack of uniformity in state regulation

creates inefficiencies and limits providers’ flexibility to operate across state lines. He advocated for greater reciprocity between states and a streamlined process for license renewal and maintenance to reduce administrative burdens for care providers. He noted that some interstate compacts, in spite of complex rules, are helpful in some regions, while others are “mired in guild problems.”

Bertagnolli addressed the difficulties encountered in navigating the multipayer environment, particularly regarding reimbursement for behavioral health services. He noted that while One Medical participates in multiple payment models, the reimbursement landscape is fragmented, creating challenges in implementing consistent care practices across different payers. One key problem he noted has to do with the role of students in training and nonlicensed workers. To be able to bill for the services of an intern or a postdoctoral student, One Medical must have a licensed person in the room supervising them, which doubles the cost of providing care. He explained that this is also an issue for peer coaches, peer specialists, and other nontraditional care providers. Even where an appropriate billing code for “coaching” exists, many of the health plans do not reimburse for them, and “collaborative” codes are cumbersome to use, he said.

Bertagnolli focused on patient preferences and how they influence integration of nontraditional providers, such as peer support workers, care managers, and coaches, into the system. Bertagnolli acknowledged that patient acceptance has been lower than anticipated, posing a barrier to the broader adoption of these innovative care models. He emphasized the need for research and strategy development to align patient expectations with the available workforce.

ADDRESSING WORKFORCE CHALLENGES ACROSS THE CONTINUUM OF CARE: FINANCING AND PAYMENT CHALLENGES

Sandra Wilkniss, senior program director for Behavioral Population and Public Health at the National Academy for State Health Policy, said that state governments are often the primary drivers of health care policy change. However, behavioral health systems remain fragmented, leading to inefficiencies and gaps in care. To address this, several states are modernizing these systems. She highlighted the activities of six states that are engaged in comprehensive, multiyear reforms with multiyear investments intended to “de-fracture” the system:

• Massachusetts: Roadmap for Behavioral Health Reform¹ & Mental Health ABC Act: Addressing Barriers to Care²
• North Carolina: Investing in Behavioral Health and Resilience
• New York: Governor’s 2024³ & 2025⁴ Investments
• Texas: Statewide Behavioral Health Strategic Plan⁵
• Idaho: Behavioral Health Workforce Plan⁶
• Colorado: Strengthening the Behavioral Health Workforce in Colorado: An Approach to Community Partnership

She said the top four states are committing significant resources, each totaling at least a billion dollars in their reforms. While making direct and indirect investments into the workforce, these efforts also include loan repayment and scholarship programs, expanding reimbursement for new types of service providers, and building centers of excellence for workforce training. She said some states have also developed behavioral health workforce plans, which could form the basis of a national strategy.

Wilkniss indicated that Medicaid funding is a key focus for state policy makers, as it offers opportunities to modernize behavioral health care systems. She noted that in addition to increasing reimbursement rates and covering new types of care providers, many states are reducing supervision requirements to ease billing processes. She also highlighted the role of community health workers and peer recovery specialists, which are now reimbursed by mental health and substance use agencies in 38 states. States are also using Medicaid waivers available under Section 1115 of the Social Security Act to test new models addressing social determinants of health (SDOH) and services for individuals who have been incarcerated transitioning back into the community. Wilkniss pointed out that Medicaid managed care programs use many different quality measures, but no unified set of measures is driving quality improvement. This represents an opportunity for greater alignment in measurement and payment systems. Wilkniss also emphasized the importance

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¹ See https://www.mass.gov/roadmap-for-behavioral-health-reform (accessed September 17, 2024).

² See https://www.mamh.org/assets/files/MH-Omnibus-Fact-Sheet-Chp-177-of-the-Acts-of-2022_10.26.22.pdf (accessed September 17, 2024).

³ See https://www.governor.ny.gov/news/governor-hochul-announces-passage-1-billion-plan-overhaul-new-york-states-continuum-mental (accessed September 17, 2024).

⁴ See https://www.governor.ny.gov/news/governor-hochul-announces-key-mental-health-investments-all-new-yorkers-part-fy-2025-budget (accessed September 17, 2024).

⁵ See https://www.hhs.texas.gov/sites/default/files/documents/texas-statewide-behavioral-health-strategic-plan-progress-report-dec-2023.pdf (accessed September 17, 2024).

⁶ See https://publicdocuments.dhw.idaho.gov/WebLink/DocView.aspx?id=22705&dbid=0&repo=PUBLIC-DOCUMENTS&cr=1 (accessed September 17, 2024).

of “braiding/aligning” funding sources—such as modifying state insurance strategies, accessing SAMHSA block grants and other federal agency grants, and using philanthropic dollars—to support integrated care goals. She discussed the growing importance of CCBHCs, which now prevails in 46 states (National Council for Mental Wellbeing, n.d.). These clinics provide comprehensive behavioral health services and operate under a flexible payment model similar to Federally Qualified Health Centers (FQHCs).

Wilkniss stressed the need for state leadership and continued innovation to address the behavioral health crisis. She urged interested groups to explore new payment models, foster cross-sector partnerships, and support integrated care to ensure sustainable and effective services.

CMS INNOVATION CENTER: BEHAVIORAL HEALTH TRANSFORMATION

Purva Rawal, chief strategy officer at the Centers for Medicare and Medicaid Services (CMS) Innovation Center (Innovation Center), discussed the Innovation Center’s efforts to develop and test new payment and care models to improve behavioral health services for Medicare and Medicaid beneficiaries. She emphasized the importance of value-based care to enhance quality, access, and outcomes while maintaining or reducing federal health care spending. The Innovation Center tests interventions that, if successful, are expanded to broader Medicare and Medicaid programs. In 2021, the center introduced a new 10-year strategy with five key objectives: driving accountable care, advancing health equity, supporting person-centered integrated care, addressing affordability, and partnering to achieve system transformation.⁷ Rawal highlighted the high prevalence of behavioral health conditions among Medicare (25 percent) and Medicaid (40 percent) beneficiaries (HHS, 2024), underscoring the need for innovative care models.

She discussed how value-based payment models incentivize health care providers to focus on high-quality care that improves outcomes, as opposed to traditional fee-for-service models that incentivize service quantity. Rawal also explained what value-based care can offer providers; these systems offer more flexibility, allowing up-front investments in health IT and team-based care capabilities. She said the Innovation Center can provide regulatory flexibility, payment waivers, and other enhancements that enable health care providers to deliver care outside traditional office settings.

She provided a brief overview of two of the models being tested by the Innovation Center. The first, Making Care Primary, is a 10.5-year multipayer

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⁷ See https://www.thenationalcouncil.org/program/ccbhc-success-center/ccbhc-locator/ (accessed September 29, 2024).

model launched in July 2024.⁸ It has three tracks aimed at helping primary care providers gradually adopt population-based payments and improve behavioral health and specialty integration. Track 1 is aimed at bringing in behavioral health and primary care providers and organizations that are new to value-based care and is designed to help them build the capabilities to gradually adopt prospective population-based payments and then build infrastructure to improve behavioral health and specialty integration. In Track 2, participants implement the behavioral health integration approach. In Track 3, participants receive prospective capitated payments. The model includes features to strengthen coordination between primary care, behavioral health, and social service providers.

The second model, Innovation in Behavioral Health (IBH), will launch in January 2025.⁹ It focuses on Medicaid enrollees with moderate to severe behavioral health conditions, who often receive care outside of primary care settings. It aims to integrate behavioral health care with primary care and address health-related social needs through a value-based payment system. This model includes investments in health IT, practice transformation, and workforce development. The Innovation Center hopes to award up to eight cooperative agreements with state agencies, aligning Medicare payment as well. Despite the challenges of implementing demonstration programs, Rawal emphasized the potential of these value-based models to reduce health disparities. She said the goal is to ensure that all patients, regardless of background or location, have access to high-quality behavioral health services.

DISCUSSION

One participant asked about plans to include CCBHCs in the CMMI prospective payment models. Rawal replied that CMMI worked closely with CMS and SAMHSA and that CCBHCs are eligible entities for the IBH model. Another participant expressed concern about the effect of state-level legislation banning programs to enhance diversity, equity, and inclusion on students training to enter the behavioral health workforce. Wilkniss replied that they support state officials across the country to continue to advance efforts with respect to equity and diversity using whatever terminology is possible. Another participant was interested in the uptake of mental health services within the prison and jail system. Manderscheid pointed out that states can ask for a waiver for the state Medicaid program to pay for transitional

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⁸ See https://www.cms.gov/priorities/innovation/innovation-models/making-care-primary (accessed September 24, 2024).

⁹ See https://www.cms.gov/priorities/innovation/innovation-models/innovation-behavioral-health-ibh-model (accessed September 24, 2024).

services (from jail to community), but the larger issue of supporting longer-term community services is more fraught.

Frank expressed concern in general about relying too much on Medicaid and SAMHSA because neither source provides sufficient financing for infrastructure, leaving aside the recurrent operating costs. He said it is not obvious where the additional money comes from. Goldman added that two billing codes for coordinated specialty care exist but using them requires a state Medicaid plan amendment and a lot of work on developing the payment rates and approach.

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