Impact of Affordable Care Act on Behavioral Health Care

November 20, 2013

There are three major impacts that the Affordable Care Act (ACA) will have on the Behavioral Health Care industry (BHC). First, it will strengthen behavioral health care benefits through stronger and more complete recognition of parity.

Second, we will see an increase in the pool of patients on insurance, in particular on Medicaid. This will therefore increase the number of patients who will seek and receive mental health care, especially in public health settings.

Third, the ACA will change incentives to support integrated, value based care.

These changes will have different impacts on the different segments of the BHC market, which can be divided into three sections as follows:

1. Cash only fee for service where payer payments are made for out of network benefits or not at all and the patients assume most of the responsibility

2. Public mental health facilities and private facilities that serve public mental health patients

3. Employer based payer system

The ACA will dramatically increase the size of the BHC market. For those in the cash only fee for service segment of the market, impacts will be minimal. Medicaid roles will increase which, along with parity, will enlarge the public behavioral health care market.

Meanwhile, parity and the trend towards care management in primary care settings will have opposing effects on the employer based behavioral health care payer system. Those within this market can prepare by doing the following:

a) Don’t panic. Arguments about the shrinking of the employer based behavioral health care market are premature and theoretical rather than based on observable trends. It is my opinion that there will be always be a role in the employer based system for high quality, free standing, independent, private practice behavioral health practices as they simply produce better outcomes AND do it more efficiently than is done in primary care settings.

b) Develop competence at Measurement Based Care (read our whitepaper here) so that they can demonstrate value to payers and potential partners in Account Care Organizations (ACO’s). This requires an EMR at the minimum, preferably one with a patient portal that capture

c) Develop relationships with larger primary care practices and explore ACO arrangements: develop competence at tele-health and care management within a practice.

d) Consider building fee for service “cash” portion of practice. Requires investment in marketing and specialty treatment for patients that can afford out of pocket payment.

e) Expand into Medicaid and/or addictions markets.

I predict that it will take at least two years for the dust to settle before we have a clear picture of how ACA will impact private practice behavioral health care practices. So don’t overreact, but do take thoughtful steps to increase your chances of success.

AUTHOR: Dr. David Lischner

Last Updated: March 29, 2017