News & Views

Pennsylvania Psychiatric Leadership Council Value Based Purchasing Overview

April 12, 2017

The purchasing or funding of Behavioral Health(BH) services; Mental Health, Substance Use, and Co-Occurring Disorders; has primarily and historically entailed the billing of insurances; both public, private; on a fee per unit of delivered service basis.  This is often “braided” with other funding streams from public sector “program funding” wherever possible and, in rarer cases, foundation support.  In some cases services have been modified to meet certain interests of funders which might vary from the originally intended purposes of the provider, but garners much-needed funding to support the overall operations. This results, over time, in some patchwork service delivery structures which may or may not be the most effective in offering the necessary community support. This can be especially true in providers with the expressed intent to serve those with Serious Mental Illness(SMI).

Over the past forty years, the public sector funding for BH services has transitioned from a “Program Funding” Model toward a “Fee for Service” type of system.  This transition was intended to create a higher level of efficiency on the part of the provider to provide more units of service in order to achieve higher reimbursements while maintaining a quality level of service provision assured by annual or more frequent surveys or inspections by public agencies tasked with those duties. Cases can be made on either side of that argument as to the success or lack thereof, of those initiatives.

However, following the lead of the Affordable Care Act, the most recent direction in funding of these services, at least from the public perspectives of Medicare and Medicaid, will be toward “Value Based Purchasing” rather than the simple providing of a licensed/approved type of service and billing those entities for their delivery.  

It may be noted that there has been some effort in this direction over the past several years in offering special Pay for Performance incentives for those plans/providers which can demonstrate exceeding expected compliance with certain benchmarks. These include: Follow up after discharge from Acute Psychiatric Hospitalization within seven and thirty days and scheduling of outpatient appointments within given timeframes post hospital discharge.  These are noted in the PA Office of Medical Assistance Quality Strategy for PA in the Office of Mental Health and Substance Abuse Services Sub-Section 1. A. ii.  Additionally, there are performance incentives for those offering Health Choices Plans through the PA Department of Human Services which are intended to drive greater collaboration in care for those receiving behavioral health services and are hospitalized with coverage through the physical health plans.  

In fact, the US Department of Health and Human Services has set a goal of shifting the percentages of from paying for services from “volume to value” to 90% by 2018.

There remain a number of opinions and facets of what constitutes “Value-Based Purchasing” and contracting. These run the gamut from some minimal, “shared-risk” arrangements; to global capitation; and on to assessing value of achieved outcomes and future contracting based on those achievements, or lack of achievements.

We will be offering commentary on some relevant research in this area and its relevance and potential for implementation in BH services over the next several installments.  We hope you find them thought provoking and encourage your engagement and response from the perspective of today’s public Behavioral Health system.

Respectfully submitted,

Lloyd G. Wertz, M.S. Pennsylvania Psychiatric Leadership Council

Lloyd G. Wertz, M.S.

Mr. Wertz has worked over 40 years in the field from Community BH Services, Director of large and small Acute Psychiatric Inpatient Units, and County MH/IDS Administrator. In addition, he served over 12 years as Administrator in a large Assisted Living Program while advocating for and supporting the rights of the Consumer in the Community setting. He holds both Bachelors and Masters Degrees in Psychology with a focus on clinical work. In his current position, Mr. Wertz advocates for the inclusion of the Family and other Significant Persons in the provision of service, along with other advocacy for the improved treatment of publicly funded Seriously Mentally Ill Consumers in our Commonwealth.