Hospitals lose money caring for mental health patients; is there a better way?
San Diego Union-Tribune - 7/1/2019
Jul. 1--Chronic underfunding of nearly $4 million per year was one of the main reasons cited for last year's closure of the psychiatric units at Tri-City Medical Center, and the Oceanside hospital is not alone.
For many years now, every hospital in the region has made it clear that they lose money on every psychiatric Medi-Cal patient they treat.
But despite this long-standing situation, the latest thinking about how to increase the quantity and quality of mental health care in San Diego County is largely focused outside hospitals.
Last week, county officials announced sweeping plans to create many more community-based crisis stabilization centers and teams of mental health care workers able to deliver some lower-level services in the field. The idea, as behavioral health leaders presented it, is to do a better job of treating routine mental health needs and thereby prevent low-level problems from becoming severe.
Just as doctors can prevent heart attacks by paying long-term attention to blood pressure, so too can they stave off psychiatric crises by regular management of factors such as depression.
While the approach drew applause from the local medical community, there remains a hospital-shaped elephant in the room. For many years, local hospitals have decried the fact that they lose money with every psychiatric patient they treat.
"We lose 34 cents on every dollar we spend taking care of behavioral health patients because of low reimbursement from Medi-Cal and the county," said Chris Van Gorder, chief executive officer of Scripps Health. "For us, reimbursement remains the main issue. If hospitals were being reimbursed appropriately, we would build more beds as we rebuild our hospitals."
Dan Gross, executive vice president of Sharp HealthCare, the region's largest provider of psychiatric hospitalization services, said that county reimbursement for Medi-Cal patients currently runs between $925 and $1,024 per day, but costs nearly $1,500 per day to provide care. Like Van Gorder, the executive said that the current situation makes it difficult to justify significant investment, especially in larger, more modern buildings.
"When you have a program that results in negative margins, that's not typically where people want to prioritize expansion," Gross said.
Other hospital operators across the region reported similar losses, which begs a simple question: Why can't the county simply pay enough to cover costs?
The answer to that question, said Dr. Luke Bergmann, director of behavioral health services for the county, starts with the simple fact that the state's Medi-Cal rates for hospitalization don't come close to covering the gap.
Currently, the Medi-Cal regional rate for acute psychiatric care is $857 per day. Until very recently, the county has paid very close to that rate, but there has recently been positive movement for hospitals. Last year, the county exceeded the regional rate for the first time since at least 2010, bumping that number up to $925 per day.
That extra cash comes from other state and local sources which can also be used to pay for outpatients services, the kinds that the county has traditionally used to pay for outpatient programs from counseling sessions to drug treatment.
Bergmann said the county's "ambition" is to keep its hospital reimbursement levels higher than the basic rates paid by the state, but exactly how much higher they can go is an open question. At the moment, the executive is overseeing a wide-ranging transition that hopes to go beyond facilities to much wider negotiations with all facets of the complex system involved in delivering behavioral health care.
"We aim to take a very broad approach, not just looking at the cost of buildings and not just looking at rates of reimbursement but also looking at cost-reduction opportunities, also looking at opportunities to give providers more incentives to do more chronic illness management work," Bergmann said.
The idea, he added, is to find a way to be more like the rest of health care which, these days, tends to provide financial incentives to providers if they can find ways to keep people healthy. The aim is to get hospitals working closely with family doctors, psychiatrists and others to make sure that next steps, and especially adherence to prescribed medications, are happening consistently.
"The county is very interested in looking at opportunities to make investments that will not just enable the perpetuation of current levels of acute inpatient psychiatric care, but will incentivize further upstream care, more preventive care, and more robust chronic illness management care for behavioral health services," Bergmann said.
So, while higher reimbursements for hospitals may indeed happen, the county is also interested in finding ways to help hospitals, community clinics, private doctor groups and the "step down" facilities that provide beds for those who no longer need hospital care, to work together more closely than they have in the past.
In the traditional health care world, this kind of system has generally come to be called "value" contracting where providers receive a fixed amount of money for a large number of assigned policy holders, agreeing to handle all of the care that they need. This arrangement puts the providers at risk. If they are able to operate efficiently while still hitting quality goals, they can spend less than they take in and keep the difference. But if inefficiencies can't be ironed out, the provider, not the insurance company, is on the hook for the overrun.
While Bergmann's ideas seem somewhat similar to those value arrangements, he has not indicated that the negotiations currently underway would be exactly the same.
Even though it's far from fully fleshed out, the gist of the idea, local health care executives say, does track with modern thinking about how to get better results while also controlling spending. But there are several hurdles that have historically made such an arrangement difficult to pull off, they note.
First, Gross noted, Medi-Cal is a two-headed beast. The vast majority of Medi-Cal beneficiaries are required to enroll in managed care plans through health insurance companies that contract with providers for services. This arrangement is the norm for all forms of health care except serious and chronic mental health needs. In those "specialty" cases, the state has chosen to pay counties directly to administer funds, doling them out through contracts with individual hospitals and other providers.
The best evidence for value contracting delivering savings and better results for patients, Gross said, is in systems such as Medicare and private health insurance. In these areas, he said, one payer makes a contract with a specific set of medical professionals capable of working together to handle all types of medical services their patients need. But having a government program handle just the severe mental illness coverage, while a private health insurance company handles the rest, there just isn't much precedent for that.
"The bifurcated approach has, to my knowledge, prevented that model from being tested to know if it produces better outcomes," Gross said.
And, Van Gorder added, there is also the issue of value. It's difficult, he said, to get doctor groups to sign contracts if they're not assured that they have a good chance of being rewarded for working to save the system money.
"A model, I'm sure, could be designed, but I'm absolutely certain it would require increased reimbursement," Van Gorder said. "Are we willing to go to value-based reimbursement? Absolutely. But the amount of reimbursement can't be a loser in the end."
At the end of the day, though, no amount of "working upstream" will prevent the need for some to spend time in locked psychiatric units. At the moment, projected bed shortages are severe. But the question is, how many beds would really be needed if health care became better at meeting low-level mental health needs more thoroughly? Bergmann said it's impossible to answer that question without knowing what kind of coordination can be achieved.
He said there is solid evidence that using a crisis-stabilization model, which gives patients a safe and quiet place to reach equilibrium for up to 24 hours, combined with a system to make sure they receive follow-up care on schedule, can significantly reduce the number of patients who are hospitalized.
"As we right the ship and get more of those resources in place, I can't give you a number, but I'm not hypothesizing that those things are going to reduce admissions. They will. I'm just certain yet of the proportion," Bergmann said.
With Tri-City shut down in 2018, the county has been working closely with Palomar Health due to increases in patient demand that have shifted to the organization's emergency departments and behavioral health units in Escondido and Poway. Diane Hansen said she has already had some preliminary discussions with health groups in the community about finding ways to share the risk of keeping patients out of her facilities.
"We've got to figure out how to cross that bridge and get to a place where we are treating the whole patient. What's great about what's going on in San Diego right now is that everybody is talking about T, and that's important because, if nobody's talking about it, we can't begin to fix it," Hansen said.
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