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Providers react to recession ripples by diversifying levels of care

June 30, 2014
by Julie Miller
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The great recession is still sending ripples through psychiatric health centers. With tighter state budgets, providers have experienced a reduction in utilization of residential care and an increase in inpatient and outpatient hospital care. Mark Covall, president and CEO of the National Association of Psychiatric Health Systems (NAPHS), says it’s a trend he’s been watching unfold for three years or more.

“With a decline in state budgets, it puts more pressure on the residential level of care,” Covall says. “But tied into that is the continued move at the state level to move children and adolescents into less restrictive environments, especially as managed care has become more dominant in the Medicaid sector. They’re developing more wrap-around, in-home programs and other community-based, non-24-hour programs that are having the effect of providing services for these kids outside the residential setting.”

For inpatient hospital care, four key measures were on the increase in 2012, according to new NAPHS survey data released in late June:

·         Average total days;

·         Average total inpatient admissions;

·         Inpatient mean length of stay; and

·         Occupancy.

Meanwhile, residential treatment trends for freestanding centers and hospital-based programs show decreases for 2012, according to the survey:

·         Average days of residential care;

·         Average residential admissions;

·         Average occupancy; and

·         Average length of stay, which dropped 8.7%, from 175 days to in 2011 to 160 days in 2012.


Range of services

Coval says health systems and treatment centers are providing varied levels of care to keep up with the changing market landscape. For example, NAPHS members said in the survey that in psychiatric services for 2012, the level of care most represented was inpatient hospital treatment with 78.8% of members offering such care. However, for addiction treatment, residential care still remains the most represented. Here, the residential level of care was reported by 47.5% of respondents, followed by outpatient addiction treatment at 36.9%.

“Our members are providing all the different levels of care, including residential, and that trend seems to have intensified over the last few years,” Covall says. “Depending on how it’s done, other levels of care could be less expensive than residential, so I think budget and financing has a lot to do with it.”

He says the wrap-around, in-home programs have grown in pockets across the county for many years, depending on the local funding streams. But the prevalence of the service varies significantly by market. Providers understand the need to diversify their service portfolios not only to keep up with new demand, but to offset lower utilization as the funding outlook shifts.


Future payer mix

In the future, as the Affordable Care Act (ACA) and the mental-health parity law continue to play out, more business will come from the Medicaid segment, Covall says. While only about half of the states have expanded Medicaid eligibility under ACA, data from the Centers for Medicare and Medicaid Services (CMS) shows that as of the end of March 2014, Medicaid enrollment had increased by more than 4.8 million people. Enrollment growth in states that have expanded Medicaid coverage was significantly higher than in non-expanding states (12.9% vs. 2.6%).

Covall says within the payer mix for the future, Medicare business will also produce a slight increase, meanwhile, commercial segments will get a boost from the ACA insurance exchange health plans. Each segment will contribute to some overall growth.

“In the end, the balance for the payer mix will not be all that different, which is my guess at this point,” he says. “But I think Medicare and Medicaid would continue to increase a little bit more quickly than commercial. The diversity of the payer mix will not be dissimilar in two or three years.”

ACA reinforces parity. However, it will likely cause an increase in the demand for services because the law requires mental health coverage as an Essential Health Benefit in the new commercial health-insurance exchanges. In other words, exchange plans must provide mental health service coverage, not just ensure parity where mental health coverage is in fact offered.

“That will add to the continuing demand for these services,” Covall says. “That’s good for providers that are trying to meet that demand, but more important for the people who will have access to these services in a much more affordable way.”