In a Nutshell:

• Attempts to integrate Medicaid payments for physical and mental health services have met repeated resistance in Michigan
• Integrating payments is an essential step to better integrating the care patients receive
• With stakeholder consensus remaining elusive, it’s time for the legislature to act

The Michigan Senate Committee on Government Operations has been holding hearings on SB 0597 and SB 0598, bills to integrate state payment for behavioral health services with Medicaid physical health care services. On an adjacent path, a package of bills in the Michigan House would create a Behavioral Health Oversight Council and streamline many administrative and oversight services in the state’s mental health system to a singular public entity. The bills make few substantive changes to promote integrated care.  

Both current legislative packages stand as the latest chapters in a long saga of attempts to improve mental health services in Michigan, ongoing since Michigan turned the page on the Section 298 Initiative. Section 298 was a legislative directive to the Michigan Department of Health and Human Services to recommend “the most effective financing model and policies for behavioral health services in order to improve the coordination of behavioral and physical health services for individuals with mental illnesses, intellectual and developmental disabilities, and substance use disorders.”

Integrating payments for physical and behavioral health services is generally acknowledged as a key factor to improve the integration of care provided to patients; however decades of attempts to improve integration in Michigan have met with resistance, these latest plans being no exception. After many years of failed attempts to reach stakeholder consensus, the important goal of integrating care will likely depend on leadership and oversight from the state legislature.  

The Importance of Integration

Health is a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity, but our systems to care for people’s health were set up at a time when our understanding of medicine, social systems, and human behavior were far less holistic than the current biopsychosocial paradigm of health. Not only do we separate our teeth (dentistry) and feet (podiatry) from routine medical care, we also have developed a system of care that assumes a person’s mental well-being and behavior are somehow separate from their physical health (despite overwhelming evidence to the contrary). This disconnect persists despite the broad conceptual acceptance of integrated care.

Untreated (or inadequately treated) behavioral health conditions lead to major increases in medical treatment and associated costs (that do not appear on the behavioral health side of the ledger). This is because persistent mental health comorbidities have a tremendous impact on a person’s stress levels and physical health condition, as well as their ability to manage factors like medical treatment adherence, self-care, and lifestyle characteristics that impact their overall health. This leads to an estimated $300 billion in excess medical costs in the United States annually; programs integrating behavioral health have been shown to reduce these costs by 9-16 percent, and even greater savings and patient outcome improvements may be possible through improved integration and investment in preventative and support services.

While efforts have focused on integrating care at the provider level, it has proven difficult to yield such monumental organizational (and paradigmatic) changes in health care without tying these changes to financial reimbursement. The evidence is compelling enough on its own for health care practitioners to acknowledge the importance of integrated care; however, payment reform is needed to fully turn word into deed.

Michigan’s Resistance to Integration

Despite near universal acknowledgement that there are tremendous shortcomings and problems with mental health services in Michigan, the state and various stakeholders have yet to find consensus on the path forward. The battle lines have typically been drawn between Medicaid Health Plans and Community Mental Health entities.

While Michigan’s Medicaid physical health services have been administered through contracts with commercial managed care entities for nearly three decades, a variety of behavioral health services have been carved out and managed by separate Prepaid Inpatient Health Plans (PIHPs), of which there are currently ten. It would be disingenuous to lay the blame for all of the systematic mental health problems in Michigan at the feet of the PIHPs; nonetheless, they have proven to be largely inefficient (with some facing insolvency) and ineffective (without the strict quality controls or care integration incentives needed to improve patient experience and outcomes).

Why the resistance to change?

Certainly, for entities (like PIHPs) reliant on the current system, deviation from the status quo poses an existential threat. It is worth noting that PIHPs would be eligible to become Specialty Integrated Plans (SIPs) under this latest integration proposal. For others—largely a disempowered population of those with serious mental illness or intellectual/developmental disabilities and their advocates—it may be a case of comfort with the devil they know.

Some have argued that the proposed integration legislation would take public dollars away from patients and put them into the coffers of commercial health insurers. In an extensive analysis of the bills, the Senate Fiscal Agency notes a requirement that any savings realized by the integration would be directed to expansion of services. Others have argued that health plans wouldn’t provide the same wraparound and support services currently provided to keep people with mental health or substance abuse issues secure and stable; the bill language specifies that these services be continued.

The crux of most arguments seems to focus on the issue of “privatization” of mental health services, but this is both a mischaracterization and a misnomer.

For one, healthcare services in the U.S. (with small exceptions on the margins) are neither purely private nor public – arguments couched in either privatization or socialization of health care are generally both shallow and hollow. The plan in question would maintain public oversight of newly integrated plans through statute, regulation, and contract management. The Citizens Research Council’s analysis of the Healthy Michigan Plan expansion of Medicaid found this approach to be successful in terms of efficiency (cost savings), effectiveness (patient outcomes and satisfaction), and equity (patient access). Indeed, PIHPs contract with private providers for health care services (not state employed psychiatrists, psychologists, social workers, nurses, etc.), essentially privatizing a portion of their services.

Moreover, as was already mentioned, Michigan has a successful track record of contracting for Medicaid services with commercial health plans. This is certainly not the only viable model for integration—Vermont is pursuing the creation of a single public entity to manage all Medicaid physical and mental health services. Nonetheless, based on the systems currently in place in Michigan, contracting with Medicaid health plans to create an integrated payment model makes the most sense.

Critics of so-called privatization have argued that health plans have incentive to pocket funds rather than use them to treat patients. Regulation (such as established medical loss ratios) places strict limits on the proportion of resources that may be used for overhead or profit. Furthermore, since health plans bear financial risk for the care of patients with costly chronic medical conditions, they have a strong financial incentive to invest in management of behavioral health conditions to prevent/mitigate the development and exacerbation of medical comorbidities.   

With rising rates of behavioral health conditions, care integration has never been more essential for improving the health of Michiganders and the care they receive. Absent willingness of stakeholders to advance viable alternatives to improve the efficiency and effectiveness of care provided to patients, it is time for the legislature to exercise leadership on this issue.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the Citizens Research Council of Michigan is properly cited.