Bending the Medicaid healthcare cost curve through financially sustainable medical-behavioral integration

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By Stephen P. Melek | 24 July 2012

When it comes to Medicaid costs, a single percentage point can have billion-dollar implications. Medicaid managed care premiums increased only 1.0% to 2.0% on average in recent years. This increase in premiums amounts to $36.5-$41.9 billion over 10 years in total, with the state governments funding $13.0 to $14.9 billion. Reducing costs by even a tenth of a percent has significant implications for Medicaid, which is why increased behavioral health deserves consideration.

This paper recommends providing more behavioral healthcare services to Medicaid beneficiaries, not less, through integrated medical-behavioral healthcare programs. It also presents some data to assess the value opportunity for doing this integration, discusses the language of integrated/collaborative care, addresses the challenges in achieving financially sustainable integration models, and looks at recent innovations and pilot programs that are focused on delivering better healthcare, attempting to achieve better clinical and financial outcomes, and providing input for the case that medical-behavioral integration innovations can work well.

State Medicaid programs, because of the large amount of spending devoted to beneficiaries with behavioral disorders, could experience savings by implementing the approaches outlined in this paper. As with any new approach to delivering healthcare, innovations can be met with hesitation and even scrutiny from payors, due to a lack of evidence that the changes will accomplish the desired goals. This paper provides state Medicaid agencies and Medicaid managed care programs with current information on integrated medical-behavioral programs to help them make informed decisions as they struggle to provide healthcare benefits while available funds are diminishing.