NC Medicaid Tailored Plans: We Gotta Get this Right

North Carolina is just 2.5 months into implementing Medicaid managed care with the Standard Prepaid Health Plans (PHPs), and there have been several bumps in the road. While providers, PHPs, and the State are quickly adapting to the learning curve that comes with any major system changes like this, we can’t overlook the fact that we have another important phase of Medicaid Transformation ahead: the implementation of Tailored Plans in July 2022. The Tailored Plans will serve as an integrated health plan for individuals with significant behavioral health needs and intellectual/developmental disabilities (I/DDs).

As a former policy director for the State of Indiana’s Medicaid program, I have worked in the trenches through program design and implementation, most notably in the behavioral health space. As such, I understand the incredible importance of this program and the opportunities that it presents for the beneficiaries and the State, but I also recognize the challenges that providers face when managed care is implemented. Therefore, today’s article will explore the importance of access to quality services for individuals with behavioral health needs, the use of managed care to improve behavioral health delivery and financing in Medicaid programs across the country, and in my experience, what lessons are critical for stakeholders in North Carolina to learn from.

Let’s get started.

Making a Case for Managed Behavioral Health Care

Why is the implementation of the Tailored Health Plans important to the North Carolina General Assembly and DHHS? It is all in the numbers.

Approximately one in four adults in the US suffer from mental illness in a given year; nearly half will develop at least one mental illness in their lifetime.

The National Alliance on Mental Illness informs us that:

• 1 in 5 US adults experience mental illness each year
• 1 in 20 US adults experience serious mental illness each year
• 1 in 6 US youth aged 6-17 experience a mental health disorder each year
• 18.4% of US adults with mental illness also experienced a substance use disorder

As the primary means of delivering and financing behavioral health care in the US, state Medicaid programs have a significant role in addressing gaps in access, delivery, and integration.

According to Kaiser Family Foundation:

• In 2015, Medicaid covered 21% of adults with mental illness, 26% of adults with serious mental illness (SMI), and 17% of adults with a substance use disorder (SUD).
• Approximately 9.1 million adults with Medicaid had a mental illness, and over 3 million had an SUD in 2015.
• Nearly 1.8 million of these adults had both a mental illness and an SUD.
• In 2014, Medicaid accounted for 25% of all spending on mental health services and 21% of SUD services, making it one of the largest financing sources.

Finally, lack of integration between physical and behavioral health delivery results in inefficient (and more expensive) care. Although they make up only 20% of the Medicaid population, individuals with behavioral health needs account for 48% of Medicaid spending because treatment and supports often include costly medical and long-term services. Medicaid spending is four times higher for individuals with behavioral health conditions, primarily due to increased physical health spending.

While Medicaid covers a broad range of mental health and substance use disorder services, there remain systematic barriers to accessing that care for many Medicaid beneficiaries, as demonstrated by the fact that 28.7 percent of Medicaid adults with a serious mental illness reported not receiving treatment in the previous 12 months. (Note: While this number is high, it is important to note that Medicaid is doing a better job ensuring access to behavioral health care than its commercial health insurance counterparts, which had 34.3 percent of individuals with an SMI reporting they did not receive mental health care in the previous year.)

A MORE HOLISTIC APPROACH TO HEALTH

Among experts, there is a recognized association between mental and physical health. People with mental health disorders have a greater risk of developing chronic diseases like diabetes or cancer. And 18% of US adults with mental illness also have a substance use disorder. Such comorbid conditions can lead to longer illness duration and worse health outcomes, ultimately diminishing an individual’s quality of life. Studies of individuals with SMI show that the “lack of attention for physical health problems contribute to early death; on average ten years earlier than the general population.”

“Although behavioral health and overall health are fundamentally linked, systems of care for general medical, mental health, and substance use disorders are splintered.” While clinical integration of physical and behavioral health services is an important step to improving outcomes and reducing costs for individuals with behavioral health conditions, separate financing for Medicaid physical and behavioral health care as well as state-funded behavioral health services creates barriers to coordinated care delivery. To address these structural silos, several states have contracted with comprehensive managed care plans to integrate financing for behavioral health services and reduce the fragmentation of care for Medicaid enrollees.

Brief History of Managed Behavioral Health Care

With the case for the importance of ensuring access to quality behavioral health services, let’s talk about how state Medicaid programs have been working to do just that with the implementation of managed behavioral health care. It’s been a long road with more than a few hiccups along the way, but that is the excellent thing about Medicaid; it’s a program that has been instrumental in innovating and testing new approaches to care delivery. And with so many states working on these problems, there are lessons to be learned.

Let’s start with a little vocabulary lesson on terms frequently used to discuss managed care.

Comprehensive Managed Care. In comprehensive arrangements, states contract with managed care organizations (MCOs) to cover all or most Medicaid-covered services for their Medicaid enrollees.

Integrated Managed Care. A comprehensive arrangement under which the State requires that a single MCO hold the risk for all contracted services.

Carve-out. A carve-out is a Medicaid managed care financing model where some portion of Medicaid benefits—dental services, pharmacy services, behavioral health services, etc.—are separately managed and/or financed. In the case where the State excludes behavioral health services from the primary managed care contract. Behavioral health services are paid:

1. fee-for-service (FFS) by the State,
2. managed by an administrative-services-only organization, or
3. managed by a managed behavioral health organization (MBHO) in a capitated arrangement

Carve-in. Refers to a comprehensive managed care contract that includes behavioral health or another Medicaid service (pharmacy, dental) that has historically been carved-out.

Historically, state Medicaid programs have generally used a mix of financing models to provide behavioral health services. In the late 1980s and throughout the 1990s, several states moved behavioral health services from fee-for-service to managed care, typically under specialty behavioral health carve-out arrangements. This is the case in North Carolina, the most recent iteration being the LME/MCOs.

Additionally, the companies that operate as comprehensive MCOs have their way of carving out services from their comprehensive contracts by engaging in subcontracts with specialized MBHO, such as Magellan, Cenpatico, or ValueOptions. The MBHO industry was built on the premise that as behavioral health specialists, MBHOs may be better positioned to identify qualified and efficient providers and monitor quality.

In response to the fragmentation of care under carved-out systems, the trend nationally over the last decade has been toward the adoption of carve-in and integrated models for behavioral health services. According to the 2019 Kaiser Family Foundation Annual Medicaid Budget Survey, 30 states exclusively or otherwise cover behavioral health services for adults with serious mental illness (SMI) and/or children and adolescents with serious emotional disturbance (SED) under comprehensive managed care contracts.

States that have made a move toward integrated managed care have varying goals motivating their efforts, but generally, they boil down to three main priorities:

1. Reduced fragmentation of care,
2. Improved health outcomes, and
3. Reduced costs.

In a Center for Health Care Strategies (CHCS) evaluation of the experience of providers in three states that most recently transitioned to integrated care, most interviewees reported that the State’s efforts to integrate physical and behavioral health at the health plan level have accelerated their organization’s clinical integration progress; this will in time lead to the achievement of state-level programmatic goals.

Tailored Plan Model in North Carolina

Prior to the implementation of Medicaid Transformation, North Carolina operated payment and delivery systems for physical health services and behavioral health and intellectual/developmental disabilities (I/DD) services. Physical health services were managed by the State under fee-for-service arrangements with providers, while behavioral health services were carved-out of the traditional Medicaid delivery system and managed by Local Management Entities- Managed Care Organizations (LME-MCOs). The LME-MCO concept was initially designed as a pilot project to serve Medicaid beneficiaries with mental health, developmental disabilities, and substance abuse needs in a limited geographical catchment area but was soon expanded to include all regions of the State.

It is difficult to discuss the State of mental and behavioral health access in North Carolina without using the word crisis, as the North Carolina Healthcare Association and eleven other stakeholder groups described it in a recent letter this summer to the Governor and Legislature. According to the 2021 State of Mental Health in America Report by Mental Health America, North Carolina came in 44th out of 50 as it relates to access to mental health care. Increasingly, the police, the criminal justice system, and hospital emergency rooms are used as the “default safety net” to respond to mental health issues.

Clearly, changes are (urgently) needed.

Beginning July 2022, Tailored Plans will serve individuals with serious behavioral health conditions, I/DD, and traumatic brain injury (TBI), offering a comprehensive array of physical, behavioral health, and I/DD services, including State-funded behavioral health, I/DD, and TBI services, 1915(c) Innovations and TBI services, and additional high-intensity Medicaid behavioral health services.

Through provider-led care management, the Tailored Care Management Model will utilize a single care manager working with a multidisciplinary care team to provide whole-person care management that addresses all the individual’s needs.

DHHS’ model recognizes the importance of ensuring care team members can efficiently exchange member health information in a timely manner to enable them to monitor and respond to medical and nonmedical issues impacting the member’s health.

The Tailored Plan request for proposal (RFP) stated DHHS’ goals for the program:

1. Delivering whole-person care through the coordination of services addressing physical health, BH, I/DD, TBI, long-term services and supports (LTSS), pharmacy, and unmet health-related resource needs with the goal of improved health outcomes and more efficient and effective use of resources;
2. Uniting communities, providers, and health care systems to address the full set of factors that impact health while deploying cost-effective resources that are needs-based and outcomes-driven;
3. Overseeing a transition to provider-based care management at the site of care, in the home, or in the community to promote in-person interaction with members;
4. Improving the Medicaid Managed Care member experience with a simple, timely, and user-friendly eligibility and enrollment process focused on high-quality, Culturally and Linguistically Appropriate Services;
5. Maintaining broad provider participation in NC Medicaid by removing or mitigating provider administrative burden from the health delivery system; and
6. Supporting the Department’s overall vision of creating a healthier North Carolina

Lessons Learned: Experience from Other States

In developing this model and six objectives, DHHS had the benefit of drawing from other States’ experience implementing integrated managed care programs. While the program design is complete, it is important now that providers and other stakeholders understand how the program design will impact their operations and clinical service delivery and assess the change that they will need to make to participate in the program successfully. The areas below represent some of the key areas identified by providers from three states that implemented Medicaid managed care to integrate financing and service delivery across physical and behavioral health.

DATA-SHARING

Providers told CHCS that the key to an integrated managed care program is data-sharing. Integrated data-sharing and quality measures must be informed by accessible, accurate, and complete data from all providers engaged in the individual’s care. Specifically, providers reported that their ability to report such information relied on 1) strong partnerships and data infrastructure, 2) investment in health information exchanges to improve provider access to and sharing of physical and behavioral health data, and 3) a collaborative effort between providers and the health plans to develop quality measures that created accountability, tracked performance, and informed continuous quality improvement (CQI).

INNOVATING PROVIDER PAYMENT AND BUSINESS PRACTICES

Integrated financing can better align system incentives to deliver integrated care. The use of alternative payment structures and arrangements can accelerate providers’ capacity to deliver integrated care, but not all providers in the behavioral health system are ready to engage in alternative payments. States must carefully assess the level of readiness and support providers in moving along the path to value-based care. Past State experience highlights key areas in payment policy and business organization that should be considered 1) incremental incentive payments and value-based arrangements as a driver of provider efforts to improve health outcomes through clinical integration, 2) development of new partnerships and shared protocols to improve clinical integration across provider types (physical health – behavioral health), and 3) assess existing state policies and procedures (licensing, credentialing) that may impede provider capacity to develop new service lines and business models.

INTEGRATING CLINICAL SERVICE DELIVERY

Providers must make critical investments to adapt their clinical teams, service delivery, and internal protocols to incorporate new and expanded aspects of integrated managed care programs (i.e., screenings and referrals, care management activities, and addressing the social needs of patients). 1) Staffing should be assessed to determine how current staff will work within the new model, as well as identify new staffing types or increases in staffing capacities that are needed to fill new roles and tasks. 2) Other providers created new services and partnerships to meet the holistic needs of patients. 3) Finally, internal protocols should be reviewed and updated to support staff in performing new activities and interacting with entities beyond the four walls of the provider organization.

Findings from The National Council’s report, The Transition of Behavioral Health Services Into Comprehensive Medicaid Managed Care: A Review of Selected States, indicate that implementation problems have been the most significant barrier to integrated managed care.

NC Opportunities to Prepare

It is important to call out that while North Carolina has previously leveraged a managed care model to deliver behavioral health services, the Tailored Plans are contracted to manage ALL needed services for their enrolled members. This represents a fundamental change in the manner of care organization, delivery, and payment. Therefore, while the LME-MCOs (which will be the Tailored Plans) have experience contracting with a closed network of behavioral health providers and managing behavioral health service funds, this is a whole new ballgame for them. Let’s not take this lightly; with reflection on recent challenges in North Carolina’s Medicaid Transformation and assessment of experience in other states, there is an opportunity to ensure that the implementation of the Tailored Plans is successful because the alternative has serious consequences for the Tailored Plan population.

Based on my experience working with multiple states implementing new Medicaid managed care programs and findings from the National Council report, DHHS leadership should consider the following strategies to ensure a smoother implementation of the Tailored Plans:

Provider Readiness

• Assess current provider and service capacity and determine whether a sufficient network is available to attend to population health needs.
• Conduct external behavioral health provider readiness reviews with respect to contract negotiation, coding, claim submission, and payment reconciliation abilities and be prepared to offer technical assistance and training.
• Assess provider ability to participate in HIT and HIE initiatives and invest in training and other capacity-building resources where needed.
• Ensure that providers have financial reserves to endure billing and payment delays inherent with the implementation of new managed care programs.

Tailored Plan Readiness

• Ensure Tailored Plan readiness by confirming appropriate governance and staffing, claims processing capacity, reporting capabilities, and development of internal policies and procedures.
• Assess Tailored Plan provider networks and service capacity to determine whether the network is sufficient to meet population health needs.
• Evaluate Tailored Plan provider rates to determine whether they are adequate to support the behavioral health providers in light of increased responsibilities and requirements.
• Institute formal end-to-end systems testing and require Tailored Plans to report on outcomes and document which services were not paid during testing.

System Readiness

• Broadly share existing data resources to inform all stakeholders of the BH service system, including an analysis of population demographics, chronic health conditions, cost drivers, the total cost of care of persons with SMI/SED or SUD, service utilization, and trends and care gaps.

Finally, we must acknowledge and address some of the root causes for the failures in our current delivery of behavioral health services under Medicaid. Among these, one of the most concerning is lack of access and network adequacy. This comes down to the rates associated with delivering behavioral health services and the fact that LME-MCOs (and Tailored Plans) can continue to use closed networks. 

Historically, LME-MCOs have used the authority to have closed networks to tamp down expenditures on the behavioral health side. Now that Tailored Plans will be responsible for both the physical and behavioral health costs, this approach won’t be sustainable.

Additionally, the rates that PHPs (whether Standard or Tailored Plans) are paying are not sufficient to attract behavioral health providers – particularly considering the increased requirements and responsibility associated with the Tailored Plan model.

Speaking as a former policy director for the State of Indiana’s Medicaid Program, I know that even before you can (effectively) anticipate and address the inevitable barriers and operational programs that come with implementing a new program, it is vital that one first validate all assumptions. A successful program, from design to implementation, depends first upon an honest, comprehensive, and reality-based model of the current environment and state of operations.

I think that we can all agree that this is too important not to get this right.