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Uniting in care, but still divided in payment: integrated care can't fulfill its promise without integrated payment systems.

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."

His conclusion: "When you don't treat the mental health problem in the medical sector, the cost of medical services goes up and the cost of pharmacy goes up." Meanwhile, he added, the use of mental health and substance abuse services remains low, we're getting poor outcomes, and we're perpetuating this overspending on the medical side."

Using claims studies from hospitals, Kathol compared the costs of treating individuals with seven chronic medical conditions with those of individuals with identical conditions plus a comorbid behavioral disorder. In hospital-based studies, he found that such patients represented "quite a large percentage" of general hospital patients, between 30 and 45%. Compared to "all insured," health care expenses for those with a chronic physical illness alone were 1-1/3 to 4 times higher. Yet, costs for individuals with both a chronic physical illness and a comorbid behavioral disorder were 62 to 180% higher still. The impact of the difference on hospital profitability was marked, said Kathol. A two-year study of one hospital's claims activity revealed that the two thirds of patients who had a chronic disease but no behavioral health disorder accounted for $26 million in hospital income, while the 1/3 of patients that had chronic disease plus comorbid behavioral disorders accounted for just $2 million in income.

He attributed the huge profitability drop for the latter group on several factors:

1) Longer lengths of stay (LOS). "Those with co-morbid behavioral disorders have more intermediate and long stays than other patients." He added that while chronic disease patients average a 5-day LOS, those with behavioral comorbidities stay in 1.2 to 2 days longer than that.

2) High monitoring costs. To counter a rising rate of patient suicides in general hospitals, where rooms generally lack the patient self-harm prevention features prevalent in inpatient psychiatric facilities, "hospitals are doing a lot more one-on-one monitoring, using sitters as a suicide prevention measure." This, he said, has become a "huge facility cost."

3) A 40% differential in 30-day readmissions.

Kathol went on to say that, according to Milliman, commercial insurers and Medicare incur an estimated $132 billion in additional costs each year in physical care settings due to the impact of untreated behavioral health disorders.

"This is our opportunity"

Kathol concluded his remarks with three questions:

1) Is behavioral health willing to quit being part of the problem and ready to become part of the solution?

2) Does behavioral health want to help the 80% of patients that it is now ignoring?

3) Do we wish to see behavioral health benefits become an understood part of medical benefits?

If the answer is yes, he cautioned that behavioral health must end its dependence on a separate payment stream, truly coordinate its resources with medicine, and, take advantage of its "opportunity to make an impact."


Thomas MR, Waxmonsky JA, Gabow PA, Flanders-McGinnis G, Socherman R, Rost, K. Prevalence of Psychiatric Disorders and Costs of Care Among Adult Enrollees in a Medicaid HMO. Psychiatric Services 2005; doi: 10.1176/

RELATED ARTICLE: Carolinas Healthcare: Pursuing "system savings" through integration

John Santopietro, M.D. is the first to tell you that what Carolinas Healthcare System (Charlotte, NC) is doing--integrating behavioral health by way of primary care into a larger hospital and health system--doesn't make perfect financial sense. At least not yet.

But Santopietro saw enough sense in the approach to become CHS' Chief Clinical Officer this spring after more than a decade of work in the northeast, most recently as Chief Medical Officer at Community Health Resources (Windsor, Conn.) and as president of the Connecticut Psychiatric Association.

As COO, Santopietro will oversee a continuum of behavioral health services in the two-state, 40-hospital system--from psychiatric hospitals (one operating, one more in construction) to partial-hospitalization, intensive outpatient and outpatient programs, ACT teams, and more. But his primary concern now is integrating behavioral health, which CHS intends to accomplish through long-term work with its primary care providers.

Primary care represents "a very appropriate way to reach out to the community, since behavioral health is a public health issue, just like watching your cholesterol," he says, noting that "primary care docs are hungry for this, since they are caring for these patients already."

He describes CHS' approach to integration as "a chronic care model" that starts in the outpatient world, with hopes of "catching people upstream, screening as many as possible to identify behavioral health disorders, and getting education and early intervention to them." The vision, he says, is about realizing the "system savings" that are possible when, for example, depression is detected and treated early or a rehospitalization is avoided for a diabetic with a behavioral health condition.

The approach is built around a continuum of care that reaches across four groups:

* Healthy

* Healthy but at risk

* Episodic behavioral health condition

* Serious/chronic behavioral health conditions

For people in early or episodic disease, the long-term goal is to develop the ability of PCPs to manage their conditions whenever possible, yet refer to specialty behavioral care as needed. Santopietro foresees the effort feeding patients into growing primary care or behavioral health homes as part of a population health approach.

In the near term, CHS will launch a number of yearlong pilots that aim at training and supporting PCPs as they gain comfort in screening and managing behavioral health issues. "The more time primary care docs spend in an integrated system, the more comfortable they become (through repeated consultations) in treating the psychiatric issues themselves," he explains. Typically, they begin with training and advance their ability to take on common and complex conditions, often with the help of evidence-based algorithms or protocols. CHS has also launched a behavioral health fellowship for PCPs with an interest in treating behavioral health patients, including those with serious mental illnesses.

Telepsychiatry is integral to the integration effort, says Santopietro. This will involve a psychiatrist or advanced-practice nurse to interface with a patient's local PCP or care coordinator/care manager. "The technology will leverage our psychiatry resources, making them more widely available." He cites figures from IMPACT studies that recommend for each PCP in an integrated care setting, there be .5 behavioral health provider and .1 psychiatrist.

While funding the activities of either PCPs or behavioral health providers in integrated programs is often a struggle--and CHS' program is no exception--Santopietro points out that "a lot of cost savings don't have anything to do with payment streams." There's no doubt, he maintains, that "integration provides great outcomes" and that organizations that have the wherewithal to invest in it "have to commit to this before there's a ready payment system." These pioneers can then "go back to the payers and say, look at how much we saved you in pharmacy, in inpatient costs, in rehospitalizations," and push for payment system changes.

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Title Annotation:INTEGRATION
Author:Grantham, Dennis
Publication:Behavioral Healthcare
Date:May 1, 2013
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