June 2011 ACO Special Edition

ACO mission: Behavioral Healthcare Under the Medicare Shared Savings Program

By David K. Ries*, Human Capital Specialists, Inc., San Diego, CA

AuthorThe promotion of Accountable Care Organizations (ACOs) – a new model for delivering healthcare services at reduced costs - is an exciting aspect of the Patient Protection and Affordable Care Act (PPACA).1 The potential for this reform will be demonstrated primarily through the Medicare Shared Savings Program (MSSP), which is described in proposed regulations published by the Centers for Medicare & Medicaid Services (“CMS”) on April 7, 2011. The influence of the ACO regulations on the nation’s health system will extend beyond the MSSP. As risk-bearing entities, ACOs require capitalization, so hospitals and physician groups are partnering with insurers to form these entities.2 The partnerships that participate in the MSSP will undoubtedly cross over into commercial plans, and Medicare will not be the only health insurer to benefit from the cost reductions realized by ACOs.

Given the importance of the ACO model beyond Medicare, the clinical approach of the proposed regulations is arguably disappointing. American healthcare is possibly being transformed by PPACA, but there were promising policy reforms prior to that landmark legislation which are losing significance in its wake. This is especially true in the area of behavioral healthcare – the treatment of mental health and substance abuse disorders. Delivery systems for behavioral healthcare have been reshaped in the previous two decades by mental health parity laws and coverage mandates, at both the state and federal levels. As the stigma of behavioral health needs abates, these laws dictate positive changes in insurance coverage and broaden access to treatment services. Unfortunately, these positive changes are not reflected in the proposed rules for ACOs, and their impact on beneficiaries will be muted under the MSSP, where the provision of behavioral health treatment will not be integrated with the delivery of medical treatment.

Research shows that the assessment and treatment of behavioral health disorders can reduce medical costs. A study supported by the Centers for Disease Control and Prevention reported that depressed adults were significantly more likely to report a lack of physical activity, smoking, binge drinking, obesity, high blood pressure, and high cholesterol.3 A 20-year study by Kaiser Permanente found that 60 percent of medical visits were by the “worried well” – patients without a diagnosable disorder.4 And a national study found 12 percent of emergency department visits were related to behavioral health, with 40 percent of those visits resulting in a hospital admission.5 Such evidence suggests a role for behavioral healthcare in a program meant to demonstrate medical cost savings.

I. Purpose of the MSSP

As a new model introduced under the MSSP, ACOs are intended to “promote accountability for a patient population” and deliver services by “redesigned care processes for high quality and efficient service delivery.”6 The incentive for discovering such efficiencies will be a financial reward to successful ACOs – the opportunity to share in Medicare’s savings.

In addition to treating the immediate needs of Medicare patients, the underlying mission of ACOs will be to identify best practices for delivering quality care at reduced cost. This mission will be accomplished through the promotion of a medical home model that demands coordination of care across treatment settings.

The proposed regulations seek to introduce ACOs as a ready-made medical home by assigning beneficiaries to ACOs based on their past utilization of primary care services.7 Using Medicare billing records for the admissions procedures and diagnostic assessments routinely performed in primary care settings, nursing homes and home health settings, CMS will assign beneficiaries to an ACO that includes the physician they have seen the most for their recent care.8

Under PPACA, ACOs are responsible for devising processes to promote evidence-based medicine, patient engagement, and coordination of care.9 The statute also requires that ACOs demonstrate that they meet “patient-centeredness criteria” to be devised by CMS.10 These criteria are developed in the proposed regulations.11

ACOs must “ report on quality and cost measures” to CMS under the law.12 PPACA charges CMS with the task of developing “quality and other reporting requirements.”13 The statute provides examples of these measures: clinical processes and outcomes, patient experience of care, utilization rates, hospital discharge planning and post-discharge follow-up, use of electronic health records, and other quality performance standards. The proposed regulations categorize these measures into five domains, and CMS has suggested 65 measures that it may apply to assess ACO performance.14

II. Role of Behavioral Health in the Proposed Regulations

Although it is understood that the medical home model includes the coordination of treatment across different specialties as well as settings,15 behavioral health plays almost no role in the MSSP under the proposed regulations.

PPACA provides CMS with the discretion to define which healthcare professionals are eligible to form and manage an ACO.16 Rather than exercise this authority, the proposed rules adhere to the categories explicitly designated by Congress. Therefore health service providers in psychology are excluded from the regulatory definition of “ACO professional.” ACO professionals – those who will be central to the clinical operations of the organization – are limited to medical doctors, physicians’ assistants, nurse practitioners and clinical nurse specialists.17

Compounding this exclusion of most behavioral health expertise from ACOs’ management is the lack of consideration for mental well-being among the proposed rules’ proposed patient-centeredness criteria. The regulations would require an assessment of “psychosocial needs” as part of individualized care planning for high-risk individuals targeted for case management.18 But when ACOs evaluate their population’s health needs, they are not obligated to assess behavioral health needs.19 If ACOs are not aware of their population’s behavioral health needs, they may not provide targeted case management to address such concerns. The regulations’ criteria for shared decision-making do not account for beneficiaries’ functional capacity,20 and ACOs are required to communicate with beneficiaries about “evidence-based medicine” – which excludes methods of clinical practice that do not, strictly-speaking, involve medicine.21

Among the 65 quality measures for ACOs proposed by CMS in the proposed rules, just one measure acknowledges a prevalent behavioral health need of Medicare beneficiaries: depression. As drafted, the regulations would require that ACOs screen for depression and document a follow-up plan. Similar to other proposed criteria, this will measure a procedure rather than a treatment outcome. Though depression screening is listed within the “preventative” domain, it will neither prevent depression nor encourage coordination with behavioral health practitioners. to treat the condition. This lone measure also ignores other behavioral health concerns for Medicare beneficiaries, such as unresolved chemical dependency.

III. Recent National Policy on Behavioral Health

The proposed exclusion of behavioral health services from the MSSP seems out-of-step with healthcare reforms that preceded PPACA at both the state and federal level.

Congress addressed inequities in access to behavioral health treatment in 1996 and again in 2008. The Mental Health Parity Act of 1996 equalized annual and lifetime limits for mental health benefits with limits for medical benefits. The Mental Health Parity and Addiction Equity Act of 2008 went further, requiring insurers and group health plans that offer coverage of behavioral health treatment to make all such benefits comparable to medical benefits.22 In 2008, Congress also passed parity a third time, by equalizing Medicare reimbursements under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). Under that law, by 2014, providers of non-hospital mental health treatment will be fully reimbursed for their services, whereas they previously received only half of their billed expenses.23

At least thirty states have similar parity provisions within their insurance code,24 and a dozen of those adopted mental health parity as early as 1997.25 In addition, a majority of states require insurance coverage for serious mental illnesses,26 nearly as many mandate substance abuse coverage,27 and more recently some have begun to require that autism treatment be insured.28

The pressing needs of military personnel and veterans have required federal care systems to become innovators in the delivery of behavioral health treatment services. The military is a major consumer of technologies to remotely deliver therapy. TRICARE - the health program of the Department of Defense - provides beneficiaries with web-based access to counselors, and the armed services are testing “transportable telehealth units” to allow soldiers stationed or deployed abroad to be treated by therapists in the United States. The Veterans Administration has implemented behavioral health integration in its busiest facilities and clinics.29

This broad recognition of the importance of behavioral health to overall wellness indicates that ACOs are unlikely to achieve their treatment objectives under the clinical model proposed by the proposed rules.

IV. ACOs in the Context of PPACA

By largely excluding behavioral health from its proposed clinical model in the proposed rule, CMS also risks setting the MSSP apart from other important provisions of PPACA.

PPACA will extend mental health parity to qualified plans participating in the state-based insurance exchanges that will commence in 2014.30 The legislation also guarantees that coverage acquired through the exchanges, or offered by any insurer who participates in an exchange, will include behavioral health benefits. Behavioral health treatment is a designated “essential health benefit” under the statute.31

PPACA also establishes “National Centers of Excellence for Depression” to disseminate research, release treatment standards, devise clinical guidelines, and “ establish and maintain a national, publicly available database to improve prevention programs, evidence-based interventions, and disease management programs for depressive disorders.”32 With the design presented by the proposed regulations, ACOs may be unprepared to implement these guidelines, standards and interventions.

Separate from the MSSP, the newly established Center for Medicare and Medicaid Innovation will promote medical homes and other service-delivery models that “improve the coordination, quality, and efficiency of health care services.”33 One example is the establishment under Medicaid of medical homes for the provision of coordinated and integrated services to adults with mental illnesses who have co-occurring primary care conditions or chronic medical diseases.34 Programs made available by this funding will be open to Medicaid patients who experience a chronic medical condition in addition to a “serious and persistent mental health condition.”35 While PPACA promotes the integration of behavioral health expertise in these models, CMS is missing an opportunity to similarly integrate the treatment offerings of ACOs.


The proposed ACO regulations were eagerly anticipated, and the MSSP is already inspiring commercial imitators. CMS should leverage this high profile by encouraging the delivery of behavioral healthcare in the final rules for ACOs. Doing so will further the Affordable Care Act’s purpose of improving the quality and efficiency of treatment under this new model of patient care.

* David K. Ries is chief counsel for Human Capital Specialists ( www.hcspecialists.com ), a California-based business collaborating with healthcare organizations to optimize resources and improve patient outcomes. Contact him at (619) 696-9655 or dries@hcspecialists.com.

1 “Patient Protection and Affordable Care Act”, 111 H.R. 3590 [ including the Medicare Shared Savings Program under Title III - named “Improving the Quality and Efficiency of Health Care” - under the subpart for “Encouraging Development of New Patient Care Models.”]
2 BlueCross Blue Shield of Minnesota has launched a “shared incentive” payment model with four of Minnesota’s largest care systems — Allina Hospitals & Clinics, Essentia Health, Fairview Health Services, and HealthEast Care System. (See http://www.bcbs.com/news/plans/minnesota-largest-health-plan-signs-new-total-cost-of-care-contracts.html) In San Diego, Anthem Blue Cross is collaborating with Sharp Community Medical Group and Sharp Rees-Stealy Medical Centers on an ACO. (See http://www.sharp.com/news/anthem-blue-cross-scmg-srs-collaborate.cfm)
3 Daniel, J., Honey, W., Landen, M., et al. “Mental health in the United States: health risk behaviors and conditions among persons with depression-- New Mexico, 2003.” Morbidity and Mortality Weekly Report; (39): 989-91 (2005).
4 Cummings, N.A. & VandenBos, G.R., “The twenty years Kaiser-Permanente experience with psychotherapy and medical utilization: implication for national health policy and national health insurance.” Health Policy Quarterly, 1:159-175 (1981).
5 Owens, P., Mutter, R.L., & Stocks, C., “Mental health and substance abuse-related emergency department visits among adults, 2007.” (Agency for Healthcare Research and Quality, 2010) [Available at: http://www.hcup-us.ahrq.gov/reports/statbriefs/sb92.pdf]
6 42 U.S.C. § 1899(a )(1).
7 According to the preamble to the proposed regulations, CMS’ methodology intends to encourage ACOs to “coordinate and redesign care for patients seeing primary care providers and creates incentives for ACOs to establish primary care linkages for their patients who may not have a primary care provider.” (Proposed regulations at page 152.)
8 Proposed rule 42 C.F.R. § 425.4 [defining “primary care services” by Health Care Procedural Coding System Codes 99201-99215, 99304-99340, 99341 – 99350].

42 U.S.C. § 1899(b)(2)(G).


42 U.S.C. § 1899(b)(2)(H).


Proposed rule 42 C.F.R. § 425.5(d)(15)(ii)(B).


42 U.S.C. § 1899(b)(2)(G).

13 42 U.S.C. § 1899(b)(3).

Proposed rule 42 C.F.R. § 425.10. The five quality measurement domains listed in the proposed regulations are: patient/care giver experience, care coordination, patient safety, preventative health, and at-risk population/frail elderly health.

15 See 42 U.S.C. § 256a-1 [Under the PPACA section for “Establishing Community Health Teams to Support the Patient-Centered Medical Home” one requirement of health teams is that they “implement interdisciplinary, interprofessional care plans” § 256a-1(c)(4)] and 42 U.S.C. § 1396w-4 [Under PPACA’s “State Option to Provide Health Homes for Enrollees with Chronic Conditions”, the care team is comprised of “physicians and other professionals, such as a nurse care coordinator, nutritionist, social worker, behavioral health professional, or any professionals deemed appropriate by the State.” § 1396w-4(h)(6).]

42 U.S.C. § 1899(b)(1)(E).



Proposed rule 42 C.F.R. § 425.4.



Proposed rule 42 C.F.R. § 425.5(d)(15)(ii)(B)(4).



Proposed rule 42 C.F.R. § 425.5(d)(15)(ii)(B)(3).



Proposed rule 42 C.F.R. § 425.5(d)(15)(ii)(B)(7).


Proposed rule 42 C.F.R. § 425.5(d)(15)(ii)(B)(6).


29 U.S.C. § 1185a; 29 C.F.R. § 2590.712.

23 42 U.S.C. § 13951(c).

States with mental health parity statutes are: Alabama (§ 27-54-4(b)), Alaska (§ 21.54.151), Arizona (§ 20-2322), Arkansas (§§ 23-99-501 to 23-99-12), Connecticut (§ 38a-476a), Georgia (§ 33-29-24.1), Hawaii (§ 431M-5), Idaho (for state employees at § 67-5761A), Illinois (215 § 5/370c), Indiana (§§ 27-13-7-14.8, 27-8-5-15.6), Kansas (§ 40-2,105a), Minnesota (62Q.47), Missouri (§ 376.811), Montana (§ 33-22-703 ), Nebraska (§ 44-793), New Hampshire (§ 415:18-a ), New Mexico (§§ 59A-23E-18), New York (Ins. § 3221(1)(5)(A)), North Carolina (§ 58-3-220), North Dakota (§26.1-36-08), Ohio (§§ 3923:29, 3923:281, 3923:282), Oklahoma (§ 6060.11) , Oregon (§ 743A.168), Rhode Island (Ch. 27-38.2), South Carolina (§ 38-71-290), South Dakota (§ 58-17-98), Tennessee (§ 56-7-2360 [mental health], § 56-7-2602 [substance abuse]), Texas (Ins. § 1355), Vermont (8 § 4089b), Virginia (38.2 § 3412.1:01 [mental health only]), and Wisconsin (§ 632.89).


See, National Advisory Mental Health Council Parity in Financing Mental Health Services (National Institute of Mental Health Archive, 1998) at 54 (listing states that had enacted mental health parity laws by 1997 as: Arizona, Arkansas, Colorado, Connecticut, Indiana, Maine, Maryland, Minnesota, Missouri, New Hampshire, North Carolina, Rhode Island, South Carolina, Texas and Vermont).

26 Insurance coverage for the treatment of mental illness is required by Alabama (27-54-4(a)), Arkansas (§ 23-86-113), California (Ins. § 10125), Connecticut (§ 38a-488a), Delaware (Ins. § 3578), Florida (§ 627.668), Georgia (§ 33-24-28.1), Hawaii (§ 431M-4(c)), Illinois (215 § 5/370c), Iowa (§ 514C.22), Kansas (§ 40-2,105), Louisiana (R.S. 22:1043 ), Maine (Title 24-A, §§2749, 2843, 4234-A ), Massachusetts (Ch. 175, § 47B), Missouri (§§ 376.814, 376.1550 ), Montana (§ 33-22-703 ), Nevada (§§ 689A.0455, 689C.169), New Hampshire (§ 417-E:1), New Jersey (§§ 17:48-6v, 17:48A-7u, 17:48E-35.20, 17B:26-2.1s, 17B:27-46.1v ), North Carolina (§ 58-3-220), Ohio (§ 3923:282), Oklahoma (§ 6060.11), Oregon (§ 743A.168), Rhode Island (Ch. 27-38.2), South Carolina (§ 38-71-290), South Dakota (§ 58-17-98), Tennessee (§ 56-7-2601), Texas (Ins. § 1355), Utah (§ 31A-22-625 [mandating offer of coverage]), Vermont (8 § 4089b), Virginia (38.2 § 3412.1), Washington (§ 48.21.241 [commercial insurance] and § 48.41.220 [coverage by state insurance pool]), West Virginia (§ 33-16-3a) Wisconsin (§ 632.89), and Wyoming (§§ 26-22-102, 26-22-106).
27 Insurance coverage for the treatment of substance abuse is required by Arkansas (§ 23-79-139), Colorado (§ 10-16-104.7), Delaware (Ins. § 3343(b)), Florida (§ 627.669), Hawaii (§ 431M-4(b)), Kansas (§ 40-2,105), Louisiana (R.S. 22:1025 ), Maine (24-A, §2842), Maryland (§ 15-802), Mississippi (§ 83-9-27), Missouri (§ 376.811), Montana (§ 33-22-703 ), Nevada (§§ 689A.046, 689C.166) New Jersey (§§ 17:48-6a, 17:48A-7a, 17:48E-34, 17B:26-2.1), New Mexico (§§ 59A-23-6; 59A-47-35), North Dakota (§26.1-36-08), Ohio (§ 3923:29) , Oregon (§ 743A.168), Tennessee (§ 56-7-2601), Texas (Ins. § 1368), Utah (§ 31A-22-625 [mandating offer of coverage]), Vermont (8 § 4089b), Virginia (38.2 § 3412.1), and Wisconsin (§ 632.89).

Insurance coverage of autism spectrum disorders is required in California (Health & Safety Code § 1374.72), Connecticut (§ 38a-514b), Illinois (215 ILCS 5/3562.14), Indiana (§ 27-13-7-14.7), Louisiana (§ 22:1050), Nevada (§ 689A.0435), Pennsylvania (40 P.S. § 764h), South Carolina (§ 38-71-280) Vermont (8 § 4088i), Virginia (38.2 § 3412.1:01), and Wisconsin (§ 632.895(12m) ).

29 Veterans Health Administration Handbook, 1160.01, Uniform Mental Health Services, ¶ 21 [Veterans’ health facilities “seeing more than 10,000 unique veterans each year, must have integrated mental health services that operate in their primary care clinics on a full-time basis.”]

42 U.S.C. § 18031(j).


42 U.S.C. § 18022(b)(1)(E).


42 U.S.C. § 290bb-33.


42 USC § 1315a.



42 USC § 290bb-42.

35 42 USC § 1396w-4, 42 U.S.C. § 1945 (h)(1)(A)(ii).

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