Behavioral carve-outs drive long-term cost and care problems | Behavioral Healthcare Executive Skip to content Skip to navigation

Behavioral carve-outs drive long-term cost and care problems

April 3, 2013
by Dennis Grantham, Editor-in-Chief
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Follow the money, Part 1: Behavioral care can dramatically reduce medical costs for chronic disease care, but payment system stands in way

In popular crime stories, it is common for detectives to “follow the money” to identify a motive, track down a perpetrator, and solve a crime. But what does a detective do if there’s little or no evidence—if there’s no money trail to follow? How can it be known that there was, or is, anything that ever went wrong?

That’s a question for investigators like Roger Kathol, MD, a psychiatrist turned investigator who does what might be called “forensics” on the adverse impact of behavioral health problems on health and cost outcomes for a range of insurers and hospital systems nationwide.  In a recent presentation to county behavioral health directors, Kathol asserted, in essence, that the continued wall of separation between payment streams for behavioral health and the rest of medicine represents a crime against healthcare coordination, cost-effectiveness, and outcomes.

The U.S. isn’t the only country that uses a behavioral health carve-out, Kathol said, noting that internationally, such carve-outs are the rule. However, it just shouldn’t be this way, he continued, noting that supporters of the carve-out approach point to studies that say it can save one-third or more in behavioral health service costs. While Kathol allowed that this may be true, he argued that carve-out proponents never had the chance—or the motivation—to see whether those big carve-out savings had a similar cost-saving impact on overall medical care costs.

As it turns out, that they do not.    

In fact, Kathol said that separating the payment and care systems of behavioral health and medicine has driven overall healthcare costs up substantially and has led to a widespread incidence of untreated behavioral health disorders in medical settings. The costs of this separation are paid by all in the healthcare system:  Patients pay in the burden of ineffective treatment and poor outcomes; providers forfeit the profitable and healing synergy of care communication and coordination; and hospitals pay in bloated costs for unneeded and ineffective services, extended lengths-of-stay (LOS), and increased re-hospitalizations. 

Payment split, care split, patients split

The separation of payment streams between behavioral health and medicine has resulted in unusual splits and imbalances throughout the system of care. For example, just 20% of those with serious behavioral health problems are treated in the specialty behavioral health sector, although the sector employs 90% of the trained staff and commands 97% of the available behavioral health funding.  The result is that the remaining 80% of those with serious behavioral health issues—including serious mental illnesses—get what care they can in primary care and general medicine. However, that care is bound to be limited or non-existent since these sectors employ just 10% of the available behavioral health professionals and receive just 3 percent of the behavioral health care budget.

At first glance, this funding and staffing picture sounds like a disproportionately good deal for behavioral health—90% of the available practitioners and 97% of the funding—except that behavioral health commands so little of all healthcare funding, just 1 to 4% of all healthcare funding (4 to 6% of Medicaid funding).  Kathol said that this share means means inadequate funding for specialty behavioral health providers and inadequate or non-existent behavioral health care in many medical settings.  For example, he noted, just 40 percent of patients with mental health conditions receive any form of treatment intervention in medical care environments.

So Kathol asked, why in an era of health reform, should such an obvious problem persist? “Both sides have a vested interest in the status quo,” he explained. “Separate practice locations have evolved, separate channels of communication have evolved, and separate power structures have evolved.” But all of these follow, rather than lead, the evolution of separate payment streams.

At present, both sides acknowledge a vital need to integrate, though “neither side is willing to share its dollars to pay for the help of the other,” said Kathol. The result is that “even if a psychologist or psychiatrist wanted to work in primary care, primary care docs and specialists are not willing to pay us with their dollars.”  The same, he said, goes for primary care practitioners who seek to work in the behavioral health setting.

“Now if our dollars and theirs were together, we could work together to do the best thing for patients,” Kathol asserted.  But, as it is, the separation of payment streams means that “behavioral health is abandoning a huge numbers of patients in the medical sector.” And, as it continues to do so, Kathol said that “behavioral health continues to forfeit its chance to make a huge difference in medical outcomes.”  

Continue to "Follow the money, Part 2"