Uniting in care, but still divided in payment | Behavioral Healthcare Executive Skip to content Skip to navigation

Uniting in care, but still divided in payment

May 29, 2013
by Dennis Grantham, Editor-In-Chief
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Roger Kathol, MD

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 the money trail runs smack into a wall?

That’s a question for people like Roger Kathol, M.D., a psychiatrist turned investigator who does what might be called “forensics” on the impact of behavioral health problems on health and cost outcomes for insurers and hospital systems nationwide. In a recent presentation to county behavioral health directors, Kathol asserted that the “wall of separation” that exists between payment streams for behavioral health services and other medical services represents in essence, a crime against better healthcare coordination, cost-effectiveness, and outcomes.

The U.S. isn’t alone in its use of a behavioral health carve-out, Kathol said, noting that internationally, such carve-outs are the rule. Carve-out proponents, he continued, have based their support on studies that claim it can save payers one-third or more in behavioral health service costs. But things just shouldn’t be this way, he continued, noting that even if payer cost savings are real, carve-out proponents never had the chance — or the motivation — to see if those big carve-out savings had a similar cost-saving impact on overall medical care costs.

As it turns out, 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 on both sides of the payment wall and has made poor treatment for behavioral health disorders the rule, rather than the exception, in medical settings. The costs of separate payment streams 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. As a result, the remaining 80% of those with behavioral health conditions—including serious mental illnesses—get what care they can in primary care and medical settings. However, that care is bound to be limited or non-existent due to the scarcity of behavioral health professionals and the paucity of related treatment dollars.

At first glance, this picture of behavioral health’s funding (97% of available dollars) and staffing (90% of available professionals) might look like a disproportionately good deal. The problem is that behavioral health commands so little of all healthcare funding (1 to 4% of overall funding, and 4 to 6% of Medicaid funding) that even a dominant share means inadequate funding for specialty behavioral health providers and inadequate or non-existent behavioral health care in many medical settings.

Why should such a problem persist? The reason is that “both sides have a vested interest in the status quo,” Kathol explained, noting that “separate practice locations have evolved, separate channels of communication have evolved, and separate power structures have evolved.” And, while both sides acknowledge the practical benefits of integration, “neither side is willing to share its dollars to pay for the help of the other.” 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.

“If our dollars and theirs were together, we could work together to do the best thing for patients,” Kathol suggested. 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 worried that “behavioral health continues to forfeit its chance to make a huge difference in medical outcomes.”

The difference behavioral health can make

When separated, behavioral health and medicine stand on two sides of a very costly issue: treating patients with chronic disease and comorbid behavioral health conditions. Among medical patients with behavioral disorders, studies show that 60% receive no behavioral treatment whatsoever. Of those that get treatment, only a handful — some 13% — receive what Kathol called “minimally effective treatment.”

Citing a 2005 study of 6,500 Medicaid patients (Thomas, et al.), Kathol stated that patients who received no mental health care in a year averaged $2,700 in physical health care (medical, pharmaceutical) expenses. But, he added, “if you add in any psychiatric illness, the cost of that care nearly doubles.”  

While some level of higher cost is understandable for medical patients with behavioral disorders, Kathol pointed out that the costs of behavioral interventions don’t account for the difference. “You also see a higher amount spent on medical services, on average one-quarter to one-third more than for those without a behavioral condition.” Of this, he explained that “the vast majority of these costs – 80 to 90% - are for what I call ‘excess medical service use.’” He noted that even pharmacy costs rose, and that those incremental costs were “70% medical, not mental-health related.”