Increasingly, payers are seeking to engage in value-based care arrangements amid rising cost pressures for behavioral health services.
Still, engaging in value-based care arrangements can be challenging, as each contract is unique and requires payer time and resources to develop. Additionally, payers and providers are often not aligned on the meanings of value.
“We are in a very tricky situation right now where the costs have gone up exponentially,”Jenny Welling-Palmer, Chief Strategy Officer at Thriveworks, said during Behavioral Health Business’s VALUE event. “And this is an industry where we are not being paid as a whole industry as we should be for the value we are providing.”
Thriveworks is one of the largest outpatient mental health providers in the country. As of 2024, the provider had 340 facilities in 49 states and Washington, D.C., and employed over 2,200 clinicians.
One potential solution to improve alignment and expectations: national evidence-based frameworks for different types and levels of care.
“I haven’t seen a true national framework, where we have the evidence-based gamut of what … value should look like, and that we can all just align around,” Welling-Palmer said. “That helps providers, because we don’t have 155 different flavors on this, but it really helps payers, because payers can truly benchmark different provider groups against each other, and then surely have a sense of their network and what value looks like.”
There is a certain onus on the provider to cross the aisle and better understand the payer’s point of view.
“We’re clinician-based. We are focused on the patient. It’s true. We’re going to partner with insurance companies,” Lee Peterson, executive director of revenue cycle and payer relations at Caron Treatment Centers, said at VALUE. “We can take more time or effort to actually understand their business model so we can incorporate that into our plans and meet them where they are.”
Wernersville, Pennsylvania-based Caron Treatment Centers is a nonprofit provider that serves patients with substance use disorders. It operates in Pennsylvania, Florida, Washington, D.C., Georgia and New York. The company employs roughly 755 people.
Let’s start at the very beginning
One of the biggest challenges in value-based contracting is figuring out exactly what the term means in each partnership, and that can even change over time.
“Value-based care is outside of the fee-for-service realm, but it starts at the lowest level with bundled, alternative payment methodologies, and then there are various steps that go all the way up to full risk and capitation,” Debra Nussbaum, senior director of behavioral health at Optum, said. “There are a lot of different steps in between. … I think that we collectively need to understand all of the different models and then have real conversations on what might fit into [different providers] from a payer perspective.”
Optum is the health services division of UnitedHealth Group (NYSE: UNH).
A difficult part of making a value-based care arrangement work in the behavioral health sector is that outcomes can take a long time to recoup. Meanwhile, members don’t stay with health plans for the long term.
“One of the challenges payers have as well is the turnover of their membership. … The problem we have when we talk about value-based arrangements is we’re generally talking about very upstream proxy measures,” Welling-Palmer said. “But the problem is to really see how long the impact those payers are thinking, those members are going to have left them by the time any rewards are given. And I think that was also a really big challenge we have in this industry, because understandably, their incentive is not there.”
While aligning payer and provider outcomes is critical for these arrangements to work, at the end of the day, patient outcomes remain the focus for both parties.
“The good news is the insurance company, the providers, we want the same outcomes,” Peterson said. “So at the 100,000 feet level, we’re agreeing. When we get to the minute details of where the rubber hits the road, we have some things to iron out, but those are solvable.”
For smaller organizations, the first step to value-based arrangements is getting to know the payers and building relationships with them. This can help both organizations understand what the other has to offer.
“It’s very important to know your payers,” Nussbaum said. “My organization, United, is a massive organization, but on the clinical side, there’s only five of us right on my team … so it’s very, very important for them to know what you do and for you to understand the volume that we’re looking at, to get you to a value-based arrangement. So it is [critical to have] communication with the payer and to ensure they completely understand the services you offer, the populations you treat and your referral sources.”