From the Desk of the CEO: Jonathan De Carlo 

CEO ‘s Corner

Welcome and thank you for taking the time to allow us to share our experiences, observations, and insights from our perspective in consulting in service to the field of behavioral health.  At C4 Consulting, our mission is to secure the missions and advance the visions of behavioral organizations and service providers.  As CEO, I’m honored to serve an amazing team with a breadth and depth of experience, incredible dedication to advancing best practice to real challenges of the providers we serve, and an unrelenting commitment to integrity of service.  In service to our clients, I’m fortunate to have a unique position where I’m able to support the creation, development, and integration of real time solutions to the real-world challenges behavioral healthcare providers and service organizations are solving in providing care to individuals, families, collaborative organizations, and the communities they reside in.  As such, the practice of remaining teachable is a discipline I’ve dedicated myself to.  I am always learning something new, a new way to approach a perennial challenge, and have a steady diet of new information to engage and share.   Whether the topic is developing new ways to ensure balancing organizational health and business optimization, or helping clients transpose their outcomes into a meaningful strategy and executable plan for improved reimbursement negotiations with payors, the goal must always be grounded in a balance of mission, margin, creativity, innovation, and practicality focused into equity by integrity to service.   A key question we at C4 Consulting always seek to understand is simple: how does this solution impact to the lives of the persons being served? 

Although this may seem idealistic, in fact it, is a time tested, grounded way to ensure fidelity and integrity.  If the answer to the question is clear, accurate, and precise, then the solution can be easily integrated, easily communicated, and most likely, easily measured.  While many organizations have been employing quantifiable measures of care as standards have evolved in client care for direct service, many organizations are challenged to transpose the qualitative aspects of their work in meaningfully quantifiable measures that can be employed toward impacting the central issue for many providers: Adequate reimbursement for services rendered.  More on that subject shortly. First, let us provide some experiences and observations.

The state of behavioral health is growing ,or at the very least, there is growing recognition in the public consciousness towards the growing need for attention to behavioral health industry.  The United Nations Office on Drugs and Crime World Drug Report 2023 demonstrates that demand for treatment is on the rise, where an estimated 39.5 million people worldwide were suffering from substance disorders in 2021, but only 1 in 5 people with substance use disorders received treatment. Not surprisingly, simultaneously forecasters describe provider shortages/lack of sufficient providers to respond to the growing need, as indicated in January 2023 reporting on behavioral health trends by Deloitte.  here and echoed by other trusted sources, yet bed/utilization numbers have remained consistent. In a polling of our clients, representing providers of substance use and mental health treatment across locations in 32 states across the US, the average combined subacute detoxification/stabilization and residential bed capacity utilization rate for the first half of 2023 are at 66.7% and outpatient continuums of care (PHP/IOP/OP & MAT including telehealth and hybrid delivery methods) capacity utilization are at 68.4%.  Thus, a particular quandary is at hand.  How can treatment need numbers be so high and there actually be a need for more providers, when bed capacity utilization averages aren’t consistently near 85%?  One person may see an opportunity to invest and build a more accessible and higher quality treatment offering, where others may see an opportunity to double down on their current operations and refine their services to meet the rising demand accordingly. 

Current substance use disorder Level of Care trends analyzed through the first two quarters of 2023 indicate that Sub Acute Detoxification authorizations from insurers is averaging 4-7 days, which is an increase from q3 & q4 2022 averages being reported as 3-5 days.  This increase comes at a particular cost, as there have been steady corresponding declines reported for authorizations of Partial Hospitalization Programs (Day Treatment) during the Q3, and are likely to remain declining through the end of the year.   For those who’ve spent more than a decade in service in the behavioral health industry, none of this should come as a surprise.  These trends are part of a larger macro-economic cycle which repeats nearly every 10 years, almost without fail.  The explanation for our current 12-year expanded cycle is simple, COVID-19 interrupted and delayed things a few years.  Systematically through future newsletters, we’ll be providing a series that will outline the various components of this macro-economic cycle, and how to build a safe haven from the atmospheric pressures this cycle imposes on our industry.  

To that point, let’s return to the subject of provider reimbursement. Appropriate reimbursement for services has and will remain the subject of focus for most providers.  This subject is at the core of efficient business in behavioral health.  The simplest way to think about the complexity of the subject may be summed up in the following:

Payors utilize actuarial data, medical and clinical data & standards of care (e.g., ASAM criteria), the code that describes an item or service, including a Current Procedural Terminology (CPT), Healthcare Common Procedure Coding System (HCPCS), or Diagnosis-Related Group (DRG) code. and documented evidence informed (not to be confused with evidenced based, albeit similar) best practice, along with numerous other data points from diagnostics related effective treatment of physical health conditions, and a preponderance of factors integrated in social determinants of health and wellness.  The Insurers focus is to authorize the most efficient amount of available benefit necessary to adequately resolve the symptoms of the condition at the lowest level of least restrictive care, at the most efficient utilization of the available resource within the plan members benefit, in order to manage care costs and maintain directives and financial goals within the Insurers own fiscal responsibility to its shareholders.  

In simpler terms, Insurers look to adequately treat a given conditions with the least amount of reasonable payout for the most impactful long-term results for a plan member (meaning a person and/or their family system).

The provider’s job is to treat an individual and/or family system, within the frameworks available by governing rules and regulations, for practice scope and standards, with the highest integrity to the most impactful outcomes, at a fee that isn’t equitable to the cost of production wherein a sufficient margin can support a sustainable mission of care. The providers also must manage care costs and maintain directives and financial goals within their own fiscal responsibility to their stakeholders.     

With an economic recession mounting force despite efforts to avoid acknowledging the reality of the current market corrections, rising inflation and various governing bodies’ interventions, corresponding rises to the cost of living are impacting everyone. Yet reimbursement rates for behavioral health care remain a central challenge, as these rates must be negotiated and renegotiated by contractual term and aren’t afforded the same regulatory attention to ensure equity and parity of compensation for services can meet the rising need and demand for accessible services.  Times are potentially changing for reimbursement parity.

The Biden Administration recently published new proposed rule designed to help update and enforce parity through The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The new proposed regulations from HHS and the Treasury and Labor departments seeks to mandate that insurers analyze their coverage to ensure equivalent access to mental health care based on outcomes. Such Insurers would have to look at how they respond to requests from doctors to authorize treatments for substance use disorder and mental illness, as compared to physical health conditions. Insurers would also be required to assess and analyze their provider networks and how reimbursements of providers out of network for these services compared to physical health care models for reimbursement. The rule would also establish requirement changes to doctors obtaining the insurers’ prior authorization to prescribe a medicine or procedure, which have been historically challenging for some providers in their care of persons being served. 

While there have been numerous efforts through the years (dating back to 1996 with the original Mental Health Parity Act) to pass similar parity for legislation, this new proposed rule’s updates include key language requiring reimbursement parity linked to measured outcomes.  The public comment period is open for sixty days, at which time the rule may be enacted.   Given the extensive history of prior unsuccessful attempts to legislate reimbursement parity, historians of behavioral health field aren’t holding their breath.  None the less, this proposed rule is evidence of forward progress.  We simply ask you to seize the moment and join the public commenting to have an actionable amount of support for the rule.  Another way of supporting this critical legislation is to contact your local government officials  as well as both and state representatives and congress members, sharing your perspective and relevant experience. 

A lesser talked about piece of legislation that some providers are just beginning to access comes from a publicly available source. The data from the Hospital Price Transparency rule of the of the No Surprises Act in 2021 is consistently being updated and organized by various sources, but will take time to be meaningfully collated to help providers utilize competitive data to inform payor negotiations. It will take years to organize to be used in a meaningful way, thus data companies are scrambling to sift through the rubble of the available information.  AI engines can help, but the qualitative context of quantifiable information still needs human interpretation for integrated application and explanation.  This pricing information made public through advances in healthcare regulation is an important step towards parity reimbursement and potential reimbursement equity, as hospital systems pricing and reimbursement is one of the data points insurers interpolate in their factors for provider reimbursement rate modeling to non-hospital providers.

So, how is a provider supposed to obtain adequate reimbursement for services rendered? By being prepared for negotiations and collaborating with payors to reach sufficient reimbursement rates that are demonstrated by measurements of care and the provision the care.  Providers need to have and maintain right measurements of the outcomes of their services, especially measurements that demonstrate how the quality of care is delivered, received, and impacts the lives of everyone involved.  Providers need both qualitative and quantitative meaningful measurements which should include:

While there are a wide variety of measurement tools and resources, and even wider array of resources for outcome management for providers, most providers have everything they need already.  All providers have governing regulations such as licenses (for program levels and/or practice scopes), which provides one set of standards to measure. Many providers have accreditations, such as CARF, The Joint Commission, or other discipline specific accreditations, which all have requirements for outcome measurements in their standards.  All providers have financial measures in place, although often many of those measurements aren’t linked directly to person served experiences.  Nearly all providers have electronic health record systems, which provide a wealth of measurements and tolls for measuring outcomes within documentation of the care being delivered. 

A provider who wants to continue to find ways to improve their practice, to refine their service delivery with the highest integrity to those they serve, must join us in developing clear, accurate, and precisely measured answers to C4 Consulting’s integrity fit question: how does this solution impact to the lives of the persons being served?