ACA & MHPAEA:
DRUG MEDI-CAL
CADPAAC
May 30, 2013
Patrick Gauthier, Director
CMS ON MHPAEA IN
MEDICAID
2009
Center for Medicaid and State
Operations: Letter to State Directors
SHO 09-014
CHIPRA #9
November 4, 2009
Dear State Health Official:
The purpose of this letter is to provide general guidance on
implementation of section 502 of the Children’s Health Insurance
Program Reauthorization Act of 2009 (CHIPRA), Public Law 1113, which imposes mental health and substance use disorder
parity requirements on all Children’s Health Insurance Program
(CHIP) State plans under title XXI of the Social Security Act (the
Act). This letter also provides preliminary guidance to the
extent that mental health and substance use disorder parity
requirements apply to State Medicaid programs under title
XIX of the Act.
Center for Medicaid and State
Operations: Letter to State Directors
MHPAEA expanded the application of the existing mental health parity
requirements in section 2705 to substance use disorder benefits,
and added new requirements such as:
• Financial requirements (e.g., co-payments) that are applied to
mental health or substance use disorder benefits must be no more
restrictive than the predominant financial requirements that are
applied to substantially all medical/surgical benefits.
• Treatment limitations (e.g., numbers of visits or days of coverage)
that are applied to mental health or substance use disorder benefits
must be no more restrictive than the predominant treatment
limitations that are applied to substantially all medical/surgical
benefits.
• No separate financial requirements or treatment limitations can
apply only to mental health or substance use disorder benefits.
• When out-of-network coverage is available for medical/surgical
benefits, it also must be available for mental health or substance use
disorder benefits.
Center for Medicaid and State
Operations: Letter to State Directors
Application to Medicaid
The MHPAEA requirements apply to Medicaid only insofar as
a State’s Medicaid agency contracts with one or more
managed care organizations (MCOs) or Prepaid Inpatient
Health Plans (PIHPs), to provide medical/surgical benefits as
well as mental health or substance use disorder benefits. In this
case, those MCOs or PIHPs must meet the parity
requirements of MHPAEA, as incorporated by reference in title
XIX of the Act, for contract years beginning after October 3,
2009. MHPAEA parity requirements do not apply to the Medicaid
State plan if a State does not use MCOs or PIHPs to provide
these benefits.
Center for Medicaid and State
Operations: Letter to State Directors
Additional policy guidance will be provided on this issue after the
MHPAEA regulation is published. However, in the meantime, we
encourage all States to begin a dialogue with their Centers for
Medicare & Medicaid Services regional office concerning their
timeline for complying with these parity requirements.
If you have any questions on the information provided in this
letter, please send an email to
CMSOCHIPRAQuestions@cms.hhs.gov or contact Ms. Maria
Reed, Deputy Director, Family and Children’s Health Programs
Group, at 410-786-5647.
Sincerely,
/s/
Cindy Mann
Director
CMS ON MHPAEA
2013
CMS on MHPAEA: 2013 Letter
January 16, 2013
RE: Application of the Mental Health Parity and Addiction Equity Act to
Medicaid MCOs, CHIP, and Alternative Benefit (Benchmark) Plans
Dear State Health Official:
Dear State Medicaid Director:
This letter provides guidance on the applicability of the requirements under the Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
(MHPAEA, Pub.L. 110-343)1, 2 to Medicaid non-managed care benchmark and
benchmark-equivalent plans (referred to in this letter as Medicaid Alternative
Benefit plans) as described in section 1937 of the Social Security Act (the Act), the
Children’s Health Insurance Programs (CHIP) under title XXI of the Act, and
Medicaid managed care programs as described in section 1932 of the Act. The
Centers for Medicare & Medicaid Services (CMS) previously issued a State Health
Official (SHO) letter on November 4, 2009, concerning section 502 of the Children’s
Health Insurance Program Reauthorization Act of 2009 (CHIPRA, Pub.L. 111-3)3.
This letter issues new guidance on the application of MHPAEA in Medicaid and
expands upon the guidance for CHIP.
MHPAEA extended the MHPA requirements to substance
use disorder benefits in addition to mental health benefits.
MHPAEA also added new requirements regarding financial
requirements and treatment limitations in addition to the
limitations on aggregate annual and lifetime dollar limits.
The Affordable Care Act (Pub.L. 111-148) expanded the
application of MHPAEA to benefits in Medicaid nonmanaged care benchmark and benchmark-equivalent state
plan benefits pursuant to section 1937 of the Act (referred to in
this letter as Medicaid Alternative Benefit plans) (see section
2001(c)(3) of the Affordable Care Act, adding section
1937(b)(6)). The application of MHPAEA to Medicaid nonmanaged care Alternative Benefit plan benefits was
effective on March 23, 2010. Also effective as of that date,
Medicaid Alternative Benefit plans that are benchmarkequivalent plans must include mental health and substance
abuse services as a basic service (see section 2001(c) of the
Affordable Care Act).
Application of Mental Health/Substance Use Disorder Parity
Requirements to Medicaid Alternative Benefit Plans
• All Medicaid Alternative Benefit plans (including benchmark
equivalent and Secretary–approved benchmark plans) are
required to meet the provisions within MHPAEA,
regardless of whether services are delivered in managed
care or non-managed care arrangements. This includes
Alternative Benefit plans for individuals in the new low-income
Medicaid expansion group, effective January 1, 2014.
Specifically:
• Section 1932(b)(8) of the Act applies parity requirements to
MCOs.
• Section 1937(b)(6) of the Act, as added by the Affordable Care
Act, directs that approved section 1937 Medicaid nonmanaged care Alternative Benefit plans that provide both
medical/surgical benefits and mental health or substance use
disorder benefits comply with MHPAEA.
Application of Mental Health/Substance Use Disorder Parity
Requirements to Managed Care Organizations
The CMS noted in its November 2009 SHO letter that mental
health and substance use disorder parity requirements apply to
MCOs (defined in section 1903(m) of the Act) that contract with
the state to provide both medical/ surgical and mental health or
substance use disorder benefits. In light of Medicaid regulations
that direct states to reimburse MCOs based only on state plan
services, CMS will not find MCOs out of compliance with
MHPAEA to the extent that the benefits offered by the MCO
reflect the financial limitations, quantitative treatment
limitations, non-quantitative treatment limitations, and
disclosure requirements set forth in the Medicaid state plan
and as specified in CMS approved contracts. However, this
does not preclude state use of current Medicaid flexibilities
to amend their Medicaid state plans or demonstrations/waiver
projects to address financial limitations, quantitative treatment
limitations, non-quantitative treatment limitations, and disclosure
requirements in ways that promote parity.
In addition to MCOs, which are statutorily-defined, CMS has, by
regulation, recognized entities known as Prepaid Inpatient Hospital
Plans (PIHPs) and Prepaid Ambulatory Health Plans (PAHPs). These
entities provide a more limited set of state plan services (in some
instances through a carve-out arrangement). CMS urges states with
these arrangements to apply the principles of parity across the
whole Medicaid managed care delivery system when mental
health and substance use disorders services are offered through a
carve-out arrangement. CMS intends to issue additional guidance
that will address this issue and will continue to consider
additional regulatory changes that may be necessary to properly
implement MHPAEA.
MCOs that are not in compliance with the parity requirements
described above should take steps to come into compliance with those
requirements. States should assess their contracts with all MCOs
which offer medical and surgical benefits and mental health or
substance use disorder benefits to assure that plans comply with the
provisions of MHPAEA. CMS will offer technical assistance to states
regarding strategies for PIHPs and PAHPs to implement MHPAEA.
CMS ON ALTERNATIVE
BENEFIT PLANS
November 2012
CMS on Alternative Benefit Plans
SMDL # 12-003
ACA # 21
RE: Essential Health Benefits in the Medicaid Program
November 20, 2012
Dear State Medicaid Director:
The purpose of this letter is to provide guidance to states on Medicaid
benchmark benefit coverage options (hereafter referred to as
“Alternative Benefit Plans”) under section 1937 of the Social Security
Act. Under the Affordable Care Act, states will rely on the benefit options
available under section 1937 as they expand eligibility to low-income
adults beginning
January 1, 2014. This letter provides guidance on the use of Alternative
Benefit Plans for the new eligibility group for low-income adults; the
relationship between Alternative Benefit Plans and Essential Health
Benefits (EHBs); and the relationship of section 1937 with other Title XIX
provisions.
CMS on Alternative Benefit Plans
The Affordable Care Act made a number of changes related to section
1937 that are effective on January 1, 2014. These changes include:
• Any Alternative Benefit Plan must cover EHBs as described in
section 1302(b) of the Affordable Care Act and applicable regulations;
o EHBs include the following ten benefit categories, recognizing that
some of the benefit categories include more than one type of benefit:
(1) ambulatory patient services, (2) emergency services, (3)
hospitalization, (4) maternity and newborn care, (5) mental health
and substance use disorder services, including behavioral
health treatment, (6) prescription drugs, (7) rehabilitative and
habilitative services and devices, (8) laboratory services, (9)
preventive and wellness services and chronic disease management,
and (10) pediatric services, including oral and vision care.
• The Mental Health Parity and Addiction Equity Act (MHPAEA)
applies to Alternative Benefit.
DHCS
DRUG MEDI-CAL
CA DHCS on Medi-Cal MH and SA
Drug Medi-Cal Today
Counties provide or contract with providers to deliver the Drug Medi-Cal benefit to
Medi-Cal beneficiaries. In cases where counties have decided not to provide all or
part of the benefit, the Department of Health Care Services (DHCS) instead
contracts directly with providers in the county, and is reimbursed by the county for
the non-federal share. Any medication treatments for alcohol or drug dependence
not provided through the Drug Medi-Cal formulary are provided through Medi-Cal
fee-for-service. Counties use 2011 Realignment funds to fund the non-federal
share. The current Drug Medi-Cal program has five benefits; however, the general
adult population is limited to three benefits, which are generally exclusive:
methadone maintenance, naltrexone for opioid dependence, and outpatient drugfree services. Counties will use their existing resources to continue providing Drug
Medi-Cal services to the currently eligible Medi-Cal population.
Drug Medi-Cal will continue to operate with the current benefit and delivery
system for the expansion population. The estimated costs associated with
providing the current benefit to the expansion population are $42 million by 2020, of
which the 10 percent non-federal share will be $4.2 million.
CA DHCS on Medi-Cal MH and SA
Enhanced Substance Use Disorder Benefit
Counties could opt-in to provide a standard enhanced
substance use disorder benefit package through the Drug
Medi-Cal program for both the currently eligible and
expansion populations.
If the counties opt-in, they would agree to pay for the
non-federal share of these benefits. Specific funding
would be made available to counties as an incentive to
opt-in and the estimated cost would vary based on the
specific benefits included in the enhanced Drug Medi-Cal
benefit package.
CA DHCS on Medi-Cal MH and SA
Based on the previously received recommendations for
enhanced benefits from the counties and substance use
disorder treatment providers, DHCS is specifically
considering these potential enhanced benefits:
• Intensive Outpatient Treatment: Currently a Drug MediCal benefit, but limited to pregnant and postpartum
women and children and youth under the age of 21.
Historically referred to as “Day Care Rehabilitation.” This
could be opened up for the general adult population.
CA DHCS on Medi-Cal MH and SA
• Residential Substance Use Disorder Services: Currently a Drug Medi-Cal
benefit, but limited to pregnant and postpartum women. This could be opened
up for the general adult population.
• Recovery Supports: These are a broad set of longer term care management
services to support the ongoing sobriety of the client and prevent relapse,
with a flexible service intensity level depending upon the needs of the client.
Services may include engagement, self- management supports, and
counseling. Recovery support has been added to four state Medicaid plans
(AZ, NM, PA, IA) as of 2010 through the Rehabilitation Option. Currently,
Medi-Cal provides the Rehabilitation Option for eligible mental health clients
through Medi-Cal specialty mental health.
• Opioid Detoxification: Currently a Medi-Cal benefit through fee-for-service,
outside of Drug Medi-Cal, but with a time limitation of 21 days. This could be
allowed, in addition, through Drug Medi-Cal for a longer time period of up to 6
months, which is the maximum allowed by federal regulation.
• Alcohol Detoxification: This could be made available as an elective benefit
in outpatient settings.
CA DHCS on Medi-Cal MH and SA
Drug Medi-Cal Delivery System Waiver
With a greater population of beneficiaries because of the
expansion population and additional service options
through an enhanced benefit, an organized delivery
system could better help direct beneficiaries to the
most appropriate Drug Medi-Cal benefits. Counties need
the tools to effectively manage the Drug Medi-Cal program.
Counties should manage these programs through an
organized delivery system under a waiver of federal
Medicaid law, in place within three years.
CALIFORNIA MENTAL HEALTH
AND SUBSTANCE USE
NEEDS ASSESSMENT
Submitted to
The California Department of Health Care
Services
Prepared by TAC/HSRI, 2012
California Mental Health and Substance
Use Needs Assessment
(Page 291) 2. Needs and gaps in the current system
The California behavioral health system has many strengths, and these
strengths form a solid foundation for implementing system enhancements
and improvements in the future. As has been described throughout this
report, there are also a number of gaps and issues with regard to the
system that need addressing.
It must be noted that California’s behavioral health system has
experienced serious budget cuts and service restrictions over the past few
years. These occurred in the context of a behavioral health system that
was already stretched for resources. In addition, the realignment policy
had placed additional responsibilities at the county level, and it is not
clear that the amount of funds available to be “realigned” is sufficient
to meet these responsibilities. As with most states, the substance
use services system in California is the most severely underfunded,
even when compared to mental health services. The very low
penetrations rates for substance use services in both Medi-Cal and DADP
services is testament to this fact.
OPPORTUNITIES
Issues
 Reducing ED admissions and re-admissions
 Medicaid managed care
 Managed care business operations and infrastructure
 Competition
 Prescription drug abuse
 Financial risk
 Licensure and credentialing
Issues
 “Diabesity” epidemic
 Whole health, person-centered care
 Medication assisted treatment
 Integration (vertical) and Consolidation (horizontal)
 Carve-in
 Retail healthcare
 Health Coaches
 Continued de-institutionalization
 eHealth / mHealth
27
International Comparison of Spending on Health, 1980–2010
Average spending on health
per capita ($US PPP)
Total health expenditures as
percent of GDP
18
$8,000
US
$7,000
16
SWIZ
NETH
$6,000
14
CAN
12
GER
FR
10
AUS
UK
8
JPN
US
NETH
FR
GER
CAN
SWIZ
UK
JPN
AUS
Notes: PPP = purchasing power parity; GDP = gross domestic product.
Source: Commonwealth Fund, based on OECD Health Data 2012.
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
0
1988
$0
1986
2
1984
$1,000
1982
4
1980
$2,000
1980
6
2010
$3,000
2008
$4,000
2006
$5,000
Health Care Costs Concentrated in Sick Few—
Sickest 10 Percent Account for 65 Percent of Expenses
Distribution of health expenditures for the U.S. population,
by magnitude of expenditure, 2009
1%
5%
10%
Annual mean
expenditure
22%
50%
50%
$90,061
$40,682
65%
$26,767
97%
$7,978
Source: Agency for Healthcare Research and Quality analysis of 2009 Medical Expenditure Panel Survey.
Problem: Causes of Premature Death in the
General Population
Proportional Contribution to
Premature Death
0%
30%
40%
10% 5%
15%
Genetic
disposition
Social
circumstances
Environmental
exposure
Health care
Behavioral
patterns
N Engl J Med. 2007 Sep 20;357(12):1221-8.
30
HEALTH CARE REFORM
Brief Impact Statement
31
Reform
Coverage expansion
2. New models
1.
ACOs and integrated delivery systems
b) Health Care (Medical) Homes & Dual Eligibles Initiatives
a)
New administrative structure
3.
a)
b)
Essential Health Benefits (benchmark plans)
Health Insurance Exchanges
4. New risk-based financing mechanisms
Medicaid managed care and capitation
Coverage Expansions
133 – 400% FPL ($88,000 family)
Below 133% FPL ($29,500 family)
Medicaid Expansion To
Childless Adults
State Exchanges
•
•
•
•
•
•
Coverage for essential MH/SA at parity
for benchmark plan
Feds pay 100% for 3 years, then down
90%
Simplified enrollment, express apps:
web too
Integrated data with State exchanges:
one application
Foster kids up to age 26
•
•
•
•
Coverage for essential MH/SA at parity
& prevention @ no co-pays
Helps individuals and small employers
with purchasing health insurance
Assist by voucher to pay premiums or
cost sharing
Develops consumer friendly tools &
plain language on insurance
One application to both exchanges or
Medicaid; can do on the web
33
California by the Numbers
34
California
35
California FQHCs
•
•
118 Federally-Qualified Health Centers
Statewide
1,039 FQHC Service Sites
• www.statehealthfacts.org
36
Prevalence of Substance Use Disorders Among Adults Ages 18 – 64 by Current
Medicaid Status and Eligibility for Medicaid Expansion or Health Insurance
Exchanges: California, US
37
SUD in CA Medicaid Expansion and
Health Insurance Marketplace
• Most common characteristics of persons with
SUD in Medicaid expansion population in
California is:
•
•
•
•
Male
18-34 years old
Non-Hispanic White or Hispanic
Less than High School Education
Sources: 2008 – 2010 National Survey on Drug Use and Health (Revised
March 2012) 2010 American Community Survey
ORGANIZED AND INTEGRATED
SYSTEMS OF CARE
ACOs and Medical/Health Homes
Organized Systems of Care
• Integrated MH and SUD
• Integrated Behavioral Health and Primary Care
• Integration with FQHCs
• Accountable Care Organizations
• Medicaid Health Home Models
• Patient Centered Medical Home Models
ACO
•
•
•
•
•
Promote evidence-based medicine and engagement in
care
Report quality measures to CMS
Invest continually in the workforce and in team-based
care
Publicly report 33 measures of performance and quality
Link quality and financial performance and set a high bar
on delivering coordinated and patient-centered care, and
emphasize the Triple Aim
•
Enhance patient experience of care
•
Improve health of populations
•
Reduce or control the per capita cost of care
Triple Aim
• 1. Improve the health of the population
• Increase the number of people served
• Address health disparities for individuals with mental illness and/or
substance use disorders
• 2. Enhance the patient experience of care
• Move to community-based services
• Reduce unnecessary stays in hospitals and licensed residential settings
• Increase access to primary care services
• 3. Reduce, or control, the per capita cost of care
• Use existing resources more effectively
• Promote recovery and resiliency
• Decrease emergency department utilization
• Focus on early assessment, intervention and supports
Core Capabilities
•
•
•
•
Clinical pathways
Care coordinators and navigators
Medical Home model
Preference for certified EHR, certified
Meaningful Use capabilities, and health
information exchange (HIE)
ACO
Structure, Governance and Shared
Savings
IT Infrastructure and Data
Management
Long-Term
Care
Home
Care
& Hospice
Public
Health
Population Health
Home
Rx & Lab
Hospital
& Rehab
Surgical
& Specialty
Primary
Care
Mental
Health
Substance
Use
Disorder
44
California & ACOs
•
•
•
•
CMS has approved 400+ ACOs nationwide.
Include a range of providers and sizes; about half are
physician-led organizations that serve fewer than
10,000 beneficiaries.
One-fifth include rural health centers, community
health centers, and critical access hospitals, which
serve rural and low-income communities.
Nearly 30 ACOs in CA
45
Sampling of Golden State ACOs
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
Brown & Toland Physicians, based in San Francisco;
HealthCare Partners Medical Group, which serves Los Angeles and Orange counties;
Heritage California ACO, which serves southern, central and coastal California;
Monarch HealthCare, based in Orange County;
PrimeCare Medical Network, which serves Riverside and San Bernardino counties;
Sharp HealthCare System, based in San Diego
ApolloMed Accountable Care Organization in Glendale;
Golden Life Healthcare in Sacramento;
John Muir Physician Network in Walnut Creek;
Meridian Holdings in Hawthorne;
North Coast Medical ACO in Oceanside; and
Torrance Memorial Integrated Physicians
UCLA ACO
Cedars Sinai ACO
Hill Physicians/Dignity Health, serving Sacramento
Palo Alto Medical Foundation
Santa Clara County IPA
St. Joseph Health
46
Golden State ACOs
47
Golden State ACOs
48
Golden State ACOs
Population Health Management
• ACOs must develop a process for identifying patients
who have complex needs (multiple chronic conditions)
or are at high risk of developing such needs and
provide them with wellness and prevention programs,
disease management, and complex case management,
as indicated
• ACOs make available or support providers’ use of
electronic prescribing, electronic health records
systems, registries, and self-management tools
Integration
Managing Knowledge (training, process improvement, etc)
Informing & Educating (patient and family education)
Patient Value
defined here
(health/cost)
Measuring and Monitoring (testing, records, etc)
Assuring Access to Services (continuum of care, hotline, transport)
Prevention
Risk
Factors
Screening
Monitoring
Assessment
Diagnosis
History
Testing
Consult
Preparing
Counseling
Interviews
Teaming
Feedback
Loops
Intervening
Orders
Procedures
Counseling
Therapy
Recovery
& Rehab
Fine tuning
Discharge
planning
Monitoring
&
Managing
Compliance
Lifestyle
Provider
Margins
made
here
Source: M. Porter and E. Olmstead Teisberg
Common Collaborative Care Models
• 1. Coordinated model: behavioral services available at a separate
clinic/location
• Access and convenience is low; patients may not show up for
referral/follow up care
• 2. Co-located model: behavioral services available at the same
medical center/clinic
• More convenient for patients and providers
• 3. Integrated: behavioral services are part of the medical treatment
within the clinic
• Creates a “medical home” for the patient with all services under unified
management
• Facilitates closer communication, patient tracking and follow up
Source: Patient Centered Primary Care Collaborative
52
Medicaid Health Homes
• Defined in Section 2703 of the ACA
• to expand traditional and existing medical home models
• to build linkages to community and social supports
• to enhance coordination of medical, behavioral, & long-
•
•
•
•
term care
New Medicaid State Plan Option effective 1/1/2011
a comprehensive system of care coordination for
individuals with chronic conditions
Health Home providers will coordinate all primary, acute,
behavioral health and long term services and supports to
treat the “whole-person”
Can include dual eligibles
53
Health Homes
•
The chronic conditions listed in statute include
 mental health condition,
 substance abuse disorder
 asthma,
 diabetes,
 heart disease, and
 obesity (as evidenced by a BMI of > 25).
•
States may add other chronic conditions for
approval by CMS
54
Health Homes: Key Features
• Shared services, goals and risk
• Central management
• Community or regional networks
• Multi-disciplinary community health teams
• Dedicated care coordinators
• Integrated primary care/behavioral health services
• High-performing primary care providers
• Population management tools
• Health information technology & data exchange
55
Health Homes: BH Rationale
• People with BH conditions die years earlier by up to 25•
•
•
•
35 years
One million people with behavioral health conditions will
die from heart attack or stroke in the next 5 years.
Behavioral health conditions are implicated in all major
chronic diseases, and vice versa
Disabled Medicaid beneficiaries with SMI - 29% to 49%.
SMIs represented in 3 of the top 5 most prevalent dyads
are in the highest-cost 5% of beneficiaries
Community-Based Strategy for Improving Care of High-Cost Patients
Regulatory relief,
technical assistance
Community governance
Seed funding
High-cost patients with
multiple chronic
conditions
Payment reform
•
•
•
•
•
•
•
•
Medical home care management fee
Accountable Care Organizations
Bundled payment for acute episodes
Partial capitation
Shared savings and shared risks
Gain-sharing
Value-based purchasing
Public–private payer harmonization
Health information
technology
Primary care
•
•
•
•
•
•
Medical homes
Primary care practice teams
System of off-hours care
Transitions in care
Reduced readmissions
Care coordination
•
•
•
•
•
•
Electronic health records
Electronic prescribing
Meaningful use
Support for self-care
Mobile health applications
Computerized decision support
BEHAVIORAL MEDICINE
The Medical Sector responds with a solution of their
own
Issues of BH in Primary Care
• The importance of primary care integration
• PCPs deliver half of BH care
• PCPs prescribe 70% of psychotropic drugs
• PCPs have limited BH training; widespread under diagnosis
• Up to 70% of primary care visits stem from psychosocial issues
• Problems faced by PCPs
• PCPs have limited time to treat psychosocial issues
• BH care inaccessible to PCPs
• Many referrals do not result in visits/services
Behavioral Medicine
“the field concerned with the development of
behavioral science knowledge and techniques
relevant to the understanding of physical health and
illness and the application of this knowledge and
techniques to prevention, diagnosis, treatment, and
rehabilitation”
Yale Conference on Behavioral Medicine
Behavioral Medicine Targets
 Adolescent Health
 Cystic Fibrosis
 Aging
 Depression
 Arthritis
 Diabetes
 Asthma
 Eating Disorders
 Cancer
 HIV/AIDS
 Cardiovascular Disease
 Obesity
(heart disease,
hypertension, stroke),
 Children's Health
 Chronic Pain
 Pulmonary Disease
 Substance Use Disorders
including Smoking
Cessation
 Women's Health
Behavioral Medicine
Strategies
 Integrating behavioral medicine strategies into primary
care and managed care;
 Increasing public awareness of behavioral interventions;
 Including effective behavioral interventions in
development of clinical practice guidelines;
 Increasing use of information technology for behavioral
interventions;
 Improving integration of research and practice
Big Picture Thinking in Behavioral Medicine
SUD
Outpatient
Psychiatric
Outpatient
Outpatient MH
Counseling
Psychiatric
Inpatient
Residential
Emergency
Department
Pediatrics,
Childhood Trauma,
SED
ID/DD,
Autism
Heart
Disease Cardiology
Diabetes and
Obesity
SBIRT
Health Home, Health
Neighborhood, PCMH,
ACO, CCO
Intensive Case
Mgmt, Care
Coordination, ACT
COPD,
Asthma,
Tobacco Use
Disease
Mgmt
Prescription Drug Mgmt., DrugSeeking, Narcotic Medication
Abuse (pain meds, sleep meds,
anxiety meds), Pharmacy
Consult/Education
63
CONSOLIDATION IN
BEHAVIORAL HEALTH
The Market Responds with a Business Solution
M&A Activity 2012
• In 2012, dealmakers committed $143.3 billion to finance
the year’s activity in the health care merger, acquisition
and takeover market.
• In terms of the number of health care deals announced,
2012 was one of the busiest in the past decade, with
1,063 deals, up 5.9% compared with 2011’s 1,004.
Source: Irving Levin Associates, January 2013
Deals in 2012
Sector
2012
2011
%
2012 Value
Change
2011 Value
% Change
Behavioral Care
17
13
30.8%
$1,006,650,000
$304,488,600
230.6%
Home Health &
Hospice
35
29
20.7%
$5,718,950,000
$289,992,000
1872.1%
Hospitals
94
92
2.2%
$1,886,217,010
$8,280,060,000
-77.2%
Labs, MRI & Dialysis
45
29
55.2%
$2,213,817,500
$6,002,543,000
-63.1%
Long-Term Care
188
172
9.3%
$9,180,208,579
$16,413,994,935
-44.1%
Managed Care
27
20
35.0%
$18,815,500,000
$7,906,000,000
138.0%
Physician Medical
Groups
68
108
-37.0%
$4,411,539,350
$466,534,545
845.6%
Rehabilitation
18
14
28.6%
$750,243,000
$1,337,796,000
-43.9%
Other
121
86
40.7%
$12,033,703,400
$40,722,978,000
-70.4%
Services subtotal
613
563
8.9%
$56,016,828,839
$81,724,387,080
-31.5%
Source: Irving Levin Associates, January 2013
Behavioral Health
• This sector will see a lot more activity in the future, now
that mental health issues have gained national attention
and addiction has lost much of its stigma
• Health care M&A activity will stay strong through 2013 as
the sector looks forward to welcoming many more
insured patients once the Affordable Care Act fully takes
effect on January 1, 2014
Behavioral Health
• M&A activity in behavioral health has surged because in
such a fragmented service sector, there is substantial
untapped opportunity for consolidators to create critical
mass and competitive advantages
• With acquisition demand across the spectrum of
behavioral health and social services greater than
supply, valuations have climbed.
Behavioral Health
Value Add: Behavioral Health
Source: Wyatt Matas, 2013
Creating Value
• Many providers will play a vital role in achieving value-
based care milestones required by the ACA. Within these
markets especially, value-based care requires:
Aligned leadership,
2. Strategies, and
3. Operations to align for the realization, building, or
maintenance of consistent growth
1.
Source: Wyatt Matas, 2013
Behavioral Health Value
• The market now understands the cost impact of patients
with behavioral and physical health co-morbidities,
leading payers to search, test, and develop new care
models to address both behavioral and physical health.
• While integrating behavioral health and physical medicine,
redefinitions of case management promotes need for
cross-trained health workers, placing greater emphasis on
social and life circumstances.
Factors Contributing to Growth
• National expenditures on mental health and substance
abuse treatment are expected to reach $239 billion in
2014, up from $121 billion in 2003, representing a
compound annual growth rate of nearly 7%.
• The demand for behavioral health services has
increased in recent years due to earlier and more
accurate diagnosis of mental health conditions and the
de-stigmatization of seeking treatment.
73
MARKETING BASICS
New skills and strategies for Behavioral Health providers
74
Marketing Basics
1.
Is there a market for what you have to sell? What specifically is that
market?
2.
What particular product(s) are in highest demand?
3.
What level of competition exists in each space?
4.
What regulations and other constraints act on those products and
markets? How?
5.
What does it cost to produce your product or service?
6.
What price is acceptable to each market?
7.
Are the margins sufficient to become successful and maintain viability?
8.
Is it possible to innovate your product making it more effective, less
complex and more convenient for the consumer at a lower cost?
Market Data Analysis
What does market profile data tell you about:
a. Competition among payers?
b. Competition between key providers?
c. Availability of continuum of services?
d. Gaps in services, populations served, or holes in
service areas?
e. Opportunities to innovate?
f. Opportunities to provide payers with a real
solution to a real problem?
g. Opportunities to partner?
What Constitutes Market Research for
Behavioral Health Providers?
•
•
•
•
•
•
•
•
•
Population/Census Data
Prevalence and Epidemiological Data
Competitive Analysis
Health Insurance Market Research
Analysis of Medicaid Market
Due Diligence into Potential Partners
Laws, Rules and Regulations
Reimbursement
Other?
Innovation in the Market
 Is the political, legislative and regulatory environment
stimulating change in the market (Yes)
 Is government supporting the diffusion of innovations
(Yes)
 Has the economy performed at a level that is
impacting consumer behavior and pricing? (Yes)
 Are social and cultural dimensions of the market
supportive of new approaches? (Yes)
 Is technology supporting innovations? (Yes)
Fundamentals of Market Positioning
•
•
•
•
•
•
Market Research
Customer Value Proposition
Channels, Alliances and Partnerships
Product Development
Pricing
Brand Message
Questions
Patrick Gauthier, Director
pgauthier@ahpnet.com
508-395-8429
Offices:
• Palm Desert, CA
• Sudbury, MA
• Germantown, MD
• Albany, NY