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Healthcare Reform and You


Part Three

New Care Delivery and 
Payment Models 
Under Healthcare Reform

This is the third in a three-part series on the implications 
of the Affordable Care Act for clinical mental health counselors:

  • Part One, “Lost in the Shuffle: Implications of the Affordable Care Act’s Health Insurance Market Reforms and State Health Insurance Marketplaces,” ran in the October issue.
  • Part Two, “The Waterfall Effect: The Impact of the New Medicaid Expansion Program on Access to Health Insurance and Quality Care for People With Mental Health Conditions,” ran in the November issue.

By Joel E. Miller
AMHCA Executive Director & CEO

Rally Behind a Solution to Ease the Human Suffering 
Caused by Mental Illness

People in the U.S. public mental health system who have a serious mental illness are dying 25 years earlier than the general population. Those who have a dual diagnosis of mental illness and substance abuse, on average, die nearly 32 years earlier than their fellow citizens outside of the public mental health system. 

Even individuals who self-identify as having a mental illness in the general population die nearly nine years sooner than those without a mental health disorder. 

This problem is crying out for a solution, and the most promising solution is to improve access to mental and physical healthcare, and to integrate behavioral healthcare and primary healthcare services. 

The fact that people with mental illnesses have substantially shorter lifespans is a major public health issue as well as a health-disparity issue. Further, the magnitude to which premature death is the result of preventable medical conditions has led many clinicians to observe that this situation has become a major public health crisis, with consequences for the entire healthcare delivery and financing system.

In a 2003 study by the National Comorbidity Survey Replication (NCSR-1), nearly 70 percent of adults with a mental illness has at least one medical condition, and nearly 30 percent of individuals with a medical condition had a co-morbid mental 

health disorder. (See Figure 1, right.)

The epidemic of obesity and diabetes in the general population increases the risk of multiple medical conditions and cardiovascular disease. In addition, a significant and growing morbidity and mortality is associated with mental illnesses. 

In essence, we are witnessing epidemics within epidemics. 

Specifically, persons with schizophrenia have over three times the mortality rate for respiratory diseases and diabetes than the general population. Depression is strongly linked with other chronic conditions such as diabetes and asthma, and individuals with these conditions make twice as many visits to primary-care doctors as the general population. 
Besides the cost in human suffering, this problem is costing the nation billions of dollars. For example, people with major depression who have diabetes have four times the health expenditures as the general population. 

When these major mortality and morbidity issues came to public light more than 10 years ago, it was acknowledged then that episodic, point-of-service treatment is ineffective and inefficient for treating chronic behavioral and medical illnesses. Integrating services would yield improvement in clinical outcomes and quality of life and the best possible results, and it is the most acceptable path and effective approach for clients with multiple chronic conditions.

Several states have accelerated the integration of behavioral healthcare services with primary healthcare (a term synonymous with “physical healthcare”) to improve the health of people with mental illness. New York State adopted several approaches under the banner of “bi-directional” integration. Behavioral health providers were integrated into primary-care settings, and primary-care caregivers were incorporated into mental health systems and practices. Although the experience was good, we have entered a new delivery-of-care imperative that attempts to expand on the early implement-ers of integration efforts into more comprehensive efforts.


Enter Healthcare Reform

Under the Affordable Care Act (ACA), the Centers for Medicare and Medicaid Services’ (CMS) Innovation Center was created, and it is currently implementing “Health Homes” under Medicaid, and “Accountable Care Organizations (ACOs)” under Medicare, in order to improve quality of care and reduce healthcare costs. 

Behavioral health service providers such as clinical mental health counselors (CMHCs) and supportive programs have the expertise in integrated care, care coordination, and service delivery, and they should play an important role in implementing these two new models of care, as well as other emerging strategies in both the public and private sectors. 

Health Homes and Accountable Care Organizations have the potential to unleash powerful incentives to better coordinate and integrate behavioral health and primary-care services, and thus can be seen as, “taking integration to the next level,” since they contain several new elements to improve care. 
A new model called the “Coordination Care Organization” that the state of Oregon is introducing on a system-wide basis is a further example of enhanced integration that encompasses large insurance companies and Accountable Care Organizations. 

Health Homes

The Health Homes construct is a service-delivery model being tested by several public- and private-sector health insurance and provider organizations
to better coordinate
services and programs
for people with
chronic illnesses.

With some of the best physicians and scientists in the world, our current healthcare system is very good at treating serious disease—cancer, heart attacks, and rare illnesses. Where we need to greatly improve is in the care of common ailments—chronic illnesses such as depression, anxiety disorders, asthma, arthritis, obesity, high blood pressure, and diabetes. Treating chronic illness is expensive, and if we can find a better way to deal with it, we will have a healthier, more productive country and spend less money on healthcare. 

Enter the Health Homes strategy, or the “Patient-Centered Medical (or Health) Home.” (These terms should not be confused with home healthcare or home healthcare aides.)

The Health Homes construct is a service-delivery model being tested by several public- and private-sector health insurance and provider organizations to better coordinate services and programs for people with chronic illnesses. 

Health Homes are collaborative care models that offer opportunities for improved coordination and integration of behavioral healthcare and primary-care systems. Health Homes are a promising strategy for revitalizing and redefining the primary mental healthcare system. 

Highly functioning and responsive, Health Homes can enhance efficiency and quality while improving access to needed healthcare and support services, including appropriate
referral and linkage with specialty providers,
such as CMHCs,
and specialty services,
such as community behavioral healthcare.

Highly functioning and responsive, Health Homes can enhance efficiency and quality while improving access to needed healthcare and support services, including appropriate referral and linkage with specialty providers, such as CMHCs, and specialty services, such as community behavioral healthcare. 

A state plan option under Medicaid has been created to provide Health Homes for those with multiple chronic conditions. Under this strategy, the federal government has been providing a 90 percent funding match for the first two years of these new initiatives. Importantly, two of the six chronic conditions defined are a serious mental health condition and a substance use disorder. 

The concept of a single point of clinical responsibility has long been a foundation of sound community behavioral health-care systems, although the execution has been challenging given the fragmentation in financing for care. 

Under the Health Homes option, states can reimburse a patient-designated Health Homes provider, who agrees to provide care-management services, makes necessary referrals to specialists, provides support services as needed, and uses electronic health records and health information technology to monitor and coordinate several services and programs on behalf of the consumer.

Under the state plan option, individual states must:

  • Monitor and report on performance and outcomes, and
  • Develop and implement a proposal for using health information technology to provide Health Homes services.

Health Homes developed and implemented for people with mental illnesses make it possible for community behavioral health centers and agencies to coordinate and manage the integration of services over the full range of consumer needs, even when several caregivers and agencies are involved in a patient’s care. 

Clinical mental health counselors should ensure that financing mechanisms
in the public and private sectors align with, and promote, a single,
integrated point of clinical responsibility for
individuals, moving
away from fragmented, fee-for-service reimbursement
that encourages over-utilization.

CMHCs could begin to promote connections between behavioral health specialists and primary-care physicians who provide care within a Health Home. Once health teams are established through the grant program, CMHCs could also consider ways to collaborate with Health Homes teams to foster integration of community-based behavioral health resources within disease prevention and disease-management efforts. 

New Health Homes demonstration projects explicitly include mental health and substance use conditions. People with mental illness treated in the specialty mental health sector face many challenges in accessing appropriate primary medical care. This gap or poor quality of care could contribute to excess rates of mortality among people with serious mental illnesses. 

For these vulnerable populations, “specialty Health Homes” located in community mental health settings could provide a strategy for delivering integrated, comprehensive high-quality care. 

The Patient-Centered Primary Care Collaborative, which is supported by several primary care associations, includes 14 state Health Homes projects and has achieved solid results. For example: 

  • The North Carolina Health Homes program saved the state $60 million in Medicaid costs in 2003, which increased to $154 million in savings in 2007.
  • The Missouri Community Mental Health Center Healthcare Homes initiative includes:
    • Pharmacy costs were reduced by 23.4 percent, general hospital costs were reduced by 6.9 percent, and included with other changes, resulted in reduced costs overall of 16 percent.
    • Key outcomes for behavioral health clients included:
      • Independent Living for clients increased by 33 percent;
      • Vocational Activity increased by 44 percent;
      • Legal Involvement decreased by 68 percent;
      • Psychiatric Hospitalization decreased by 52 percent;
      • Illegal Substance Use decreased by 52 percent; and
      • CMHC Services substantially decreased overall medical costs.

Accountable Care Organizations (ACOs)
The ACO model is a reaction to the failure of two strategies:


  • Fee-for-service payment arrangements, which offer incentives to provide excessive services but do not devote needed resources to managing chronic disease or coordinating care, and
  • Capitated payment, which offers healthcare providers perverse incentives to restrict necessary care and take on more financial risk than many can handle.

ACOs are comprehensive, vertically and horizontally integrated care systems designed 
to manage and coordinate care to Medicare fee-for-service beneficiaries only, with strong parallels to public mental health system constructs for a single point of clinical and financial accountability, and comprehensive home- and community-based services systems. 

ACOs will be eligible for enhanced payments from the federal government based on shared savings if they meet quality performance standards, including adoption of electronic prescribing and health records. 

This provision underscores the importance of behavioral health records integration, enabling behavioral health providers and care networks to play as full partners in ACOs. AMHCA has urged the full inclusion of behavioral health in ACOs, including integration of behavioral health records. 

With their focus on effective, coordinated care for the whole person, ACOs hold the potential to significantly improve the health of the clients they serve, including people with behavioral health conditions. Access to effective behavioral care services will be critical to the effectiveness of ACOs as well as Health Homes. 

The ACO model is similar to Health Homes, but its focus is on arranging comprehensive, integrated, team-based care involving all caregivers along the delivery continuum. That means ACOs could be more accessible to behavioral health providers currently in solo practice and small groups. 

Health Homes are similar to ACOs in that they consolidate multiple levels of care for patients. However, Health Homes have the primary physician lead the care-delivery “team.” Simplistically, an ACO consists of many coordinated practices, while a Health Home is a single practice. 

CHMCs should advocate in meetings with public- and private-sector purchasers—as primary mental health providers and as specialty behavioral healthcare providers—to be included as ACO participants. 


Get Involved! Engage!

These next few months arecritical for
positioning yourself so that you can
“be at the table” when healthcare
reform is served up.

If you have any questions about
healthcare reform or how to take
any of the steps described here,
please email me directly at

Or call the AMHCA office, toll free, and leave
a message for me at 800/326–2642

— Joel Miller, AMHCA Executive Director & CEO

Some behavioral health caregivers have expressed skepticism about participating in
ACOs due to the current lack of Medicare reimbursement. However, participating on an ACO team could provide behavioral health providers new opportunities to: 


  • Integrate vertically with other components of the healthcare system,
  • Contribute to achieving cost and quality targets, and 
  • Share in new payment methods, such as episode or case rates. 

CMHCs also should explore with certain behavioral healthcare providers opportunities to establish their own private-sector ACOs for patients whose primary diagnoses are behavioral health-related, where payment is not dictated by Medicare. 

Health Homes and ACOs will likely be foundational elements of the future healthcare system, and behavioral health providers must immediately begin positioning themselves to be recognized as qualified partners through ongoing discussions with payers and purchasers at all levels. 

The Congressional Budget Office has estimated that potential savings to Medicare from promoting ACOs could amount to $5.3 billion between 2010 and 2019, although net savings would not begin to be realized until 2014. The savings would be realized as providers reduce the volume and intensity of services delivered to their patients.

A 2008 Massachusetts law required creation of a Special Commission on the Health Care Payment System. A 2009 commission report recommended that the state make the transition from the current fee-for-service payment system to global payments over a period of five years. It also recommended creating an agency to guide implementation of the new payment system. Among other things, the entity would be responsible for defining and establishing risk parameters for ACOs, which will receive and distribute global payments. ACOs will assume risk for clinical and cost performance.

Programs in at least two states—Colorado and North Carolina—already use networks of providers that, while not true ACOs, have the potential to develop into ACOs and Health Homes. The programs focus on primary care for Medicaid enrollees and rely on provider-led local networks that are responsible for improving care, quality, and efficiency for the patients served. 



New Delivery and Financing Strategies

Other related delivery-financing strategies include bundling and capitation. 

Bundling payment for services that patients receive across a single episode of care is one way to encourage healthcare providers to work together to better coordinate care for patients—both when they are in the hospital and after they are discharged. 

Under capitation, physicians are paid a monthly fee for each patient under their care to cover a set of services regardless of the amount of services provided. Capitation in behavioral health and primary-care settings should motivate caregivers to provide preventive care to members, and focus on keeping the member healthy, thus relying less on costly specialists. 



The New Breed: Coordinated Care Organizations (CCOs)

Oregon has embarked on a dynamic experiment that could fundamentally redefine healthcare coverage, delivery, and payment. 

The new organization, created by legislation, is called a Coordinated Care Organization. A CCO is envisioned as a community-based organization that will be a hybrid of insurance companies and Accountable Care Organizations (large organized groups of providers in this case.) 

CCOs will include behavioral health, medical, dental, public health, and most likely other services that are necessary for health—social services, housing, employment, transportation, and more. 

CCOs are already being designed around innovative service-delivery models. These include patient-centered primary care Health Homes; team-based care; behavioral health/primary-care integration; care coordination; community health workers; proactive treatment of chronic health conditions such as depression, obesity, hypertension. asthma, and diabetes; and robust prevention and health-promotion efforts. 



CMHCs Must Be Part of All Health Homes and ACOs

The development of Health Homes and ACOs has taken center-stage in the movement toward improving the coordination and integration of care. 

AMHCA recommends that Health Homes and ACOs be established to align with consumer needs and consumer preferences. Financing mechanisms must align with these objectives and promote a single, integrated point of clinical responsibility for the individual, moving away from fragmented, fee-for-service reimbursement. 

The concept of a single point of clinical responsibility has long been a foundation of sound community-mental-healthcare systems, although the execution has been challenging given 
the fragmentation in financing for care. 

Services provided in Health Homes must be coordinated, and must include patient and family support, transition from the hospital, use of health information technology, and provision of referral to community and social services. 

The full inclusion of clinical mental health counselors and behavioral health prevention and treatment services must be an essential part of all Health Homes and ACOs.



Key Actions Clinical Mental Health Counselors Should Take:

  • Action: Services provided in Health Homes must be coordinated, including patient and family support, transition from the hospital, use of health information technology, and provision of referral to community and social services. The full inclusion of behavioral health prevention and treatment services must be an essential part of all Health Homes. CMHCs should begin to promote connections between their practices and primary-care physicians who provide care within a Health Home delivery mechanism. 

Once Health Home teams are established through Medicaid initiatives, for example, CMHCs should also consider ways to collaborate with Health Homes teams to foster integration of community-based behavioral health resources within disease-prevention and disease-management efforts. 


  • Action: CMHCs should advocate through all communication mechanisms and platforms, meetings with public- and private-sector health plans and employers, and as part of local coalitions that clinical mental health counselors be included as ACO participants. CMHCs should work with other behavioral healthcare providers to establish their own ACOs for patients whose primary diagnoses are behavioral health-related. 
  • Action: CMHCs should potentially, on a selective basis, merge with an ACO or Health Home, or partner with them on a contract basis. CMHCs may function as a specialty provider receiving referrals from the Health Home or ACO, with a business agreement that facilitates the referrals. It may also become a Health Home for people with severe conditions—obtaining recognition as a Health Home or partnering with an entity (e.g., a federally qualified health center) that has Health Home status.