What exactly are states encouraging when they promote the “integration of behavioral and physical health?” Per the SAMHSA-HRSA Center for Integrated Health Solutions, behavioral health integration covers a broad continuum from coordinated to co-located and, ultimately, to integrated care. States can use Medicaid managed care contracting levers to motivate or require plans and providers to integrate care along this spectrum.

While many states are taking foundational steps toward integration ― such as encouraging health plans and medical providers to screen for depression or co-locate behavioral and physical health services ― fewer states have sought to drive behavioral health integration at all levels of the system, including administrative, financing, and practice-level integration. Arizona’s Medicaid agency, the Arizona Health Care Cost Containment System (AHCCCS), shows how state-level behavioral health integration efforts can support both system-wide integration as well as practice-level transformation.

Making the Case

Integrating behavioral health care is essential because people with behavioral health conditions ― including mental illness and substance use disorders ― often experience barriers accessing much-needed physical and behavioral health care, as well as social supports. This population frequently has high rates of chronic physical health conditions and unmet social needs, such as homelessness and food insecurity. With nearly 70 percent of the Medicaid population enrolled in managed care nationally, states that prioritize integration through Medicaid managed care programs can deliver improved outcomes for enrollees through a whole-person approach.

“Carving In” in the Valley of the Sun

AHCCCS began its integration efforts in 2015 after the state expanded Medicaid. Prior to 2015, AHCCCS had “carved out” behavioral health services, dividing responsibility for behavioral health services between physical health plans and Regional Behavioral Health Authorities (RBHAs). Before 2015, RBHAs, overseen by the Department of Health Services’ Division of Behavioral Health Services (DBHS), were responsible for the behavioral health care of Medicaid members with serious mental illness (SMI). Historically, carving out behavioral health was the norm at the state level, although this trend has been reversing for some time. Carving out often led to an arrangement with duplicative oversight and billing processes, fragmented care, and misaligned incentives, often resulting in worse outcomes for patients.

In response, Arizona decided to “carve in” behavioral health services and move the provision of behavioral health services from DBHS to AHCCCS, which now has direct oversight of the physical health plans and RBHAs. Since 2015, the RBHAs have managed an integrated benefit for individuals with SMI. Since 2018, integrated AHCCCS Complete Care (ACC) plans have been managing both physical and behavioral health services for additional Medicaid enrollee populations, including: (1) children with serious emotional disturbance; (2) adults with substance use disorder; and (3) adults and children with mild-to-moderate behavioral health needs. Today, the state is fully integrated.

Scaling the Benefits of Behavioral Health Integration at the Practice Level

Arizona’s integration efforts, both financial and administrative, led to broader changes to improve care delivery. Those changes continue to have impact today, such as the Targeted Investments Program, which was launched in 2016. Under this program, Arizona invested $300 million as part of its 1115 waiver demonstration to help support the development of practice-level infrastructure needed for behavioral health integration. Providers, including behavioral health providers, were eligible to receive some of these funds if they met or exceeded certain quality thresholds. Arizona providers responded to these incentives and improved communication and care planning as a result. Due to its success, the state is seeking to renew the Targeted Investments Program.

Additional key lessons from AHCCCS’ transition to system-level integration include:

1. Integration can bring about a culture change within a Medicaid program.

The influx of DBHS staff with behavioral health expertise helped eliminate duplicative oversight and shifted the state from a siloed approach to a population-health focus. AHCCCS’ movement to prioritize “whole-person care” in managing services for individuals with SMI positively influenced care for other high-risk populations because the skills required to manage care for people with SMI translate well to providing high-quality services for other at-risk groups. As a result, AHCCS’ program shifted from narrowly focusing on patient diagnosis to a more comprehensive approach for addressing physical and behavioral health needs, as well as social needs for all populations.

2. Integration can change how data is shared among plans and providers.

The statewide move to behavioral health integration accelerated the development of tools necessary for both plans and providers to provide high-level care, such as accessible data exchanges. One Arizona-based provider group, Partners in Recovery, noted the benefit of receiving physical and acute care utilization data because of integration. This new information allowed Partners in Recovery to flag patients who had been frequently admitted to inpatient settings and provide more tailored care plans.

3. Incentives aligned toward integration can alter how plans contract with providers.

Having physical and behavioral health oversight under one roof enables the state to use more consistent contracting requirements from plans to providers, or to have payment arrangements that encourage integration. Studies have shown that plans can influence integration at the practice level by altering reimbursement rates. This dynamic makes it easier for states to incentivize other forms of behavioral health integration at the plan- or practice-level, such as requiring co-location or, in Arizona’s case, mandating that plans enter into at least two alternative payment model contracts with integrated providers that offer physical and behavioral health clinical integration.

Bottom Line

Moving forward, AHCCS is seeking to apply the state’s integrated approach to improve care for other populations, including adults with autism spectrum disorder, chronic pain, and substance use disorder, as well as children in foster care. The practical administrative changes and reorganization required for behavioral health integration ― including making data sharing more accessible, improving financial incentives, and rewarding providers ― can lead to a more coordinated care approach that can better serve patients. These changes not only streamline processes but lead to a whole-person care approach that can help destigmatize care for people with behavioral health needs. States can drive critical improvements in caring for Medicaid populations by integrating behavioral and physical health services, carving in care, and aligning incentives.

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