Importance of integrating physical and behavioral health

It is well recognized and well documented that there are significant correlations between physical and behavioral health. However, historically the systems that have been designed to deliver services to address physical and behavioral health have been built and developed independently, with no formal, system-level coordination. Today there is broad recognition that these independent systems are not delivering the best outcomes for those they serve.

This is a particularly important consideration for Medicaid, as it is a major purchaser of behavioral health services and a large portion of medical expense within the Medicaid system is driven by behavioral health needs. According to the Kaiser Family Foundation, in 20151 more than 9 million Medicaid beneficiaries had a mental illness and more than 3 million had a substance use disorder. Comorbid chronic physical conditions among Medicaid beneficiaries with mental illness are also increasingly prevalent (61 percent). Additionally, 50 percent of adults on Medicaid with a behavioral health diagnosis also have a disability.2

A bifurcated system cannot address the significant overlap between physical and behavioral health. According to the Substance Abuse and Mental Health Services Administration (SAMHSA), “the solution lies in integrated care – the coordination of mental health, substance abuse, and primary care services. Integrated care produces the best outcomes and is the most effective approach to caring for people with complex healthcare needs.”

Benefits of integrating physical and behavioral health

There is a strong opportunity for states to improve the overall system of care by supporting physical and behavioral health integration at all levels of the Medicaid program. This would include benefit design, service delivery, and administrative structure. A key driver in achieving system-level integration is leveraging the Medicaid Managed Care delivery system to drive integration in close partnership with providers and community mental health organizations that serve as the backbone of our nation’s behavioral health delivery system.

By integrating behavioral health into a comprehensive Medicaid Managed Care contract, a state can:

  • Provide a comprehensive approach to care coordination across medical and behavioral services, thereby improving the coordination between service providers and addressing opportunities for improved health outcomes, particularly for individuals with serious mental illness and chronic medical conditions.
  • Improve member and provider experiences by ensuring a holistic view of the individual, simplifying access to behavioral health services, integrating materials, resources and tools, and building a quality management program that fully addresses the medical and behavioral needs of the individuals served.
  • Ease a state’s administrative complexity and reduce administrative costs by having fewer vendors to manage, aligning incentives to coordinate care within the health plans, and integrating data and reporting structures.
  • Enhance health plan ability to deliver on state goals regarding integration, improved quality, and increased cost efficiencies by providing health plans with a holistic view of individuals. This approach integrates the management team to include all behavioral health services, and aligns staff training, policies, procedures, work flows and operating procedures to include all benefits, and provides a common information system for communication within the plan.
  • Reduce fragmentation and ease differences across geographies by leveraging an integrated approach to care coordination and planning. This is particularly important considering the critical role many counties play in the delivery and purchase of behavioral health services that often leads to differences in processes, services, available benefits, and providers across a state.
  • Increase capacity to deliver innovations within behavioral health by bringing experience with alternative delivery and payment models that encourage improvements in care and quality outcomes, including system capacity to support providers in enhancing their practice and empowering individuals to take ownership of their overall health.

Continuum of physical and behavioral health care integration

SAMHSA-HRSA Center for Integrated Health Solutions (CIHS) outlined the above Continuum of Physical and Behavioral Health Care Integration noting that fully integrated care, manifested when behavioral and physical health care providers and other providers function as a true team in a shared practice and with a shared vision, and both providers and patients experience the operation as a single system treating the whole person.

Program design donsiderations

The greatest opportunity to improve the overall system of care is to support integration at all levels of the program, including:

  • Delivery system – Behavioral health services should be part of an integrated, comprehensive benefit package for all Medicaid populations. This approach supports a more holistic view of an individual’s health. As with other benefit carve-outs, fragmentation increases opportunities to cost-shift and increases the challenges for individuals to get the services they need. Few, if any, behavioral health services should occur in isolation.
  • Benefit design – Benefits should be comprehensive, from serving mild to severe needs, in a single program. A comprehensive benefit design ensures a holistic, person-centered approach to care management.
  • Health plan operations – Plans should be well-versed in both physical and behavioral health and be positioned to manage services in an integrated manner. Decisions by the health plans should be informed by integrated information, and materials shared with members should be inclusive of both physical and behavioral health and well-being.
  • Service delivery – States should explore opportunities to support integration at the provider level through same-day billing policies that allow providers to bill for behavioral health and physical health visits in the same day, increased utilization of integrated health records, and support for cross-training of basic health and behavioral health providers. When appropriate, value-based contracts should be inclusive of whole person outcomes.
  • Administrative structure – There are historical differences between mental health, SUD treatment, and medical service providers and systems. Removal of barriers in licensing, IT, contracting authority, and eligibility should occur to support seamlessly integrated services.

Trends in Medicaid Managed Care programs

Increasingly, states are moving to include behavioral health benefits into contracts with managed care organizations with responsibilities for physical health benefits. As of January 2019, 30 states have integrated financing of behavioral health in the Medicaid health plan.9

Some states are choosing to pursue specialized programs for individuals with SMI. Under these programs, states are contracting with a managed care organization to provide all Medicaid State Plan and any available waiver benefits. Through this approach, the program targets a more narrow population, but offers integrated benefit design for those who qualify.

Efforts to improve integration of behavioral and physical health are frequently seen as opportunities to improve quality, outcomes, and sustainability of programs. States exploring delivery reforms such as person-centered medical homes, health homes, or accountable care organizations within (or outside of) a managed care framework must also address issues of behavioral and physical health integration if the state is to make headway on improving whole person care.

UnitedHealthcare's experience

UnitedHealthcare serves as a Medicaid managed care contractor in 24 states.10 In many of these states, we are responsible for managing physical and behavioral health services in one or more of the programs we provide. The following map details our experience and the Medicaid benefits within the states we operate Medicaid Managed Care Plans.


  • Eleven states have an integrated behavioral health financing model through a fee-for-service plan (AL, AR (FFS/PCCM population) AK, CT, ME, MT, ND, OK, SD, VT, and WY)
  • Arizona’s Acute Care population is integrated but SMI population is carved out
  • Florida, Hawai’i, and New York’s SMI populations are carved out
  • Massachusetts’s PCCM/ACO delivery system is carved out
  • New York’s Long-Term Care population is carved out
  • North Dakota’s Medicaid Expansion population’s behavioral health services are covered by an integrated financing model administered by an MCO
  • Washington State’s transitional counties have a behavioral health carve out
  • Wisconsin’s Family Care Program population is the only one covered by an integrated financing model administered by an MCO

Source: MarketIntelReport_Medicaid_BHCarveout_022119.pdf


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