Fee-for-Service vs. Episodic vs. Full Risk for Medicaid Members with SUD

Substance use disorder (SUD) is markedly different from most other chronic conditions in that most people with it are not actively engaged in routine care. Data shows that approximately eight out of ten individuals with an SUD diagnosis do not receive treatment. Additionally, more than 80% of Medicaid members with SUD do not have an active relationship with a primary care physician or behavioral health provider.

Medicaid members with SUD also often have many social determinants of health (SDOH) needs across housing, transportation, appointment coordination, and others. These needs are not transactional and tend to be perpetual or at least have a long tail to them. As an example of housing, a Medicaid member with SUD may be homeless and their housing journey could move from short-term shelter to transitional housing (sober living), to Section 8 housing, and finally to a self-sustaining abode. The journey through this housing spectrum may take several years and have many other SDOH dependencies such as employment, transportation, and legal assistance.

Lastly, Medicaid SUD members often face moments of personal crisis that need immediate attention. Waiting three weeks for an appointment with an outpatient provider does not align with these immediate needs.

Because of these nuances, three very specific support mechanisms are needed for these individuals.

1.    Someone needs to find the 80% of the SUD members not seeking treatment and convince them to do something they may not actually want to do (engage in treatment).

2.    Once these individuals are found and engaged, someone needs to coordinate the needs of these members, not only with an extremely high level of intensity, but for an extended period of time.

3.    Lastly, due to crisis needs, the healthcare ecosystem needs to have an extremely fast response time outside of the inpatient setting, 24 hours a day, seven days a week.

I believe most providers have positive intent and strive to provide the best care they can under the payment structure in which they operate. However, the fee-for-service model does not align with the overarching nuances of the SUD population because there is no payment mechanism to find and engage the 80% of SUD members who are not in treatment. There is no CPT code for that work. As such, fee-for-service providers typically open a clinic, conduct some sales and marketing, perhaps launch a website, engage other providers for referrals, and then support whoever comes in the door. Additionally, fee-for-service providers do not have a payment mechanism for the extremely intense and long-term care coordination work that sits in the “gray space” with SDOH and patient-support needs. Fee-for-service outpatient provider models also don’t easily support someone “cutting in line” who happens to be in a crisis. Most afterhours outpatient answering lines direct patients to the emergency room if they are in crisis. Additionally, it is extremely difficult to call an outpatient fee-for-service provider and quickly reach a live person, much less secure an immediate appointment.

Episodic — or bundled payment —models help close the gap on some of the Medicaid SUD population needs, but still leave opportunities. These models provide a payment mechanism for providers to invest in the care coordination of the “gray areas.” Providers under these payment models can also invest in creating capacity for urgent or crisis care needs and have ways for patients to cut in line for support. The bundle or episodic payment structure typically looks back at the historical, holistic costs of an episode, which normally includes inpatient or other high-cost care that was associated with the episode. The bundle is then reduced by a defined amount by the payer (government, state, MCO, employer) to generate guaranteed savings, and the rest of the bundled payment is assigned (indirectly) to the provider who is managing the bundle. Under this model, providers can offer healthcare services either at a higher level of intensity or time (longer visits) or they can provide services that don’t have a CPT code (care coordination). These providers make these investments through a belief that they will reduce expensive and avoidable healthcare costs by more than their investment costs. In essence, avoiding unnecessary healthcare costs funds these extra activities, as long as the savings from the cost-avoidance is greater than the investment in extra services for the patient.

Typically, episodic or bundled payment models work either around an “anchor” healthcare event like an inpatient or residential stay, or the models work around a defined service such as Medication Assisted Treatment (MAT). For anchor-based models, these typically include the anchor plus a certain number of days. For a defined service, these models are based around the defined service (MAT) plus perhaps some quality bonus payments around reducing other costs such as admissions or readmissions. The gap in episodic or bundled payment lies in the fact that the needs of a Medicaid SUD population go beyond an episode or a narrow set of activities. A bundled payment program anchored around a residential treatment stay plus 30 days ignores the concept that these members have a large number of coordination needs beyond 30, 60, or 90 days. A bundled payment program based around MAT plus quality metrics does not fund high-intensity crisis care which may require deploying staff out into the community. Lastly, both described models are centered around the 20% of the Medicaid SUD population that is in treatment, and neither does anything to incentivize providers to find or engage the 80% who are not in treatment.

A population health or full risk model is very effective at providing a funding mechanism for finding and engaging members not in treatment, for longitudinal and perpetual care coordination, and for high intensity crisis care. Providers have the total medical expense, minus some savings guarantee back to the payer, to invest in these three areas in advance of the generation of savings. The full scope of total cost of care responsibility is also the funding mechanism for new and innovative ways to address the needs of the member such as crisis care, “gray area” care, longer provider to patient visits, and home care. Typically, these full risk arrangements are multiple years in duration due to the upfront investment in additional resources, allowing for longitudinal and perpetual support services for members of the population.

The Achilles heel of population health or full risk models is the risk of the unintended consequence of withholding care that is needed for members. This risk however is very short-sighted and a company that engages in finding savings by withholding necessary care will not exist much beyond one annual cycle as this is simply short-term kicking the can. For example, if a member truly needs an inpatient residential treatment stay for SUD and the company manages the member away from that treatment (either indirectly or through utilization management), the member’s condition is likely to decline and the member will likely eventually present at the hospital, therefore nullifying the cost savings generated by denying the necessary residential treatment stay.

It is encouraging to see the continued migration from fee-for-service reimbursement to quality-based models, episodic models, and full risk models. Our nation’s substance use disorder population needs innovation in healthcare delivery to assist in their recovery and overall well-being.

Frazer Buntin is the Chief Operating Officer at Wayspring, a value-based healthcare organization that provides medical, behavioral health, and social support services to people with complex needs. For more information, please visit wayspring.com