The Benefits of a Behavioral Health Specialty Care Program

As federal and state health care expenditures continue to rise, state agency leaders look to the managed care industry for solutions to better manage health care costs while covering more members. The Congressional Budget Office Extended Baseline Scenario projects costs for Medicaid, Medicare, the Children’s Health Insurance Program, and the health insurance exchange subsidies to grow by more than 60 percent of their 2010 levels by 2035. The recent economic downturn has placed particular strain upon state budgets, with fewer tax revenues to allocate for Medicaid and other publicly-funded health programs. At the same time, membership for these programs has increased in response to a weakened labor market, a lack of viable insurance alternatives, and other economically-induced factors.

Medicaid will play an even larger role in providing insurance coverage for aged, blind, and disabled (ABD) individuals with mental illnesses/substance use disorders post-health reform. Current estimates indicate that Medicaid will cover 24.3 percent of these individuals when reform is fully implemented in 2019. Medicaid members with behavioral health disorders are expected to account for approximately 31.9 percent of the expected increase in total Medicaid expenditures. (1) These expenditures are expected to increase by 49.7 percent—not including the added costs of the many co-morbid medical conditions we know to exist among the Medicaid population coping with mental illness. In total, the needs for appropriate care and improved health outcomes are imperative to states’ control over their Medicaid budgets. We believe the only way to achieve these goals is through the implementation of a specialty behavioral health program.


Behavioral health specialty care programs are defined as programs that contract directly with managed behavioral health organizations, separately from the remaining health care benefit package. They include mental health and substance use disorder specialists. Programs can range from simple administrative services only (ASO) contracts to shared savings models and full behavioral health capitation.

The advantages of specialty care programs have been studied since the inception of behavioral health managed care. Evidence suggests that they are successful in lowering costs and maintaining or improving access to care. They have been instrumental in addressing long-standing challenges in utilization, access, and cost of behavioral health care.

Across the country, behavioral health specialty care programs have provided higher rates of access and greater levels of specialization for Medicaid managed care than integrated behavioral health programs. Through contract language and performance incentives, behavioral health specialty care programs provide recovery-oriented services that are critical for individuals with serious mental illness and children at risk. A SAMHSA-sponsored study of Medicaid managed behavioral health care found that public specialty care programs had penetration rates of 11 percent compared to the 5.6 percent penetration rates that HEDIS reported for Medicaid HMOs nationally in Quality Compass 2000 (1999 data). Penetration for outpatient care was considerably higher in specialty care programs, with the SAMHSA study programs averaging 10.9 percent compared to NCQA’s 5.5 percent average.

Some of the programmatic elements that have shown particular promise include:

  • Behavioral health specialty care program programs to manage the special needs of the population, such as the individuals with serious and persistent mental illness (SPMI) or those with dual diagnoses.
  • Targeted care management and care coordination for individuals with complex care needs.
  • Development of contractual performance standards to ensure high quality of care for individuals.
  • Provider access standards to ensure that members can receive timely care from health care providers and specialists.
  • Transparency of program design and accountability of the contractors and providers involved within the program.

Additional advantages of specialty behavioral health programs include:

  • Single point of accountability with expertise at overseeing the behavioral health care for Medicaid individuals.
  • A reduction in expenditures, especially in inpatient services. The greatest savings are experienced at the onset of behavioral health managed care programs.
  • Access to a specialized psychiatric and behavioral health provider network, including community-based providers, offers members a wide variety of providers from which to choose.
  • Targeted behavioral health performance guarantees enable clients to drive their program and attain desired results.
  • Experienced behavioral health professionals provide utilization management in specialty programs and are more effective in reducing costs while improving member outcomes. Traditional Medicaid managed care organizations have not shown the capacity or the interest in delivering specialized services for those with serious mental illness, unless there was significant money to be made by reducing benefits.
  • Focused attention on behavioral conditions, especially those that are co-morbid with a medical condition, can reduce costs across the board.
  • Improved care coordination ensures that treatment is both specialized and integrated into the medical PCP environment.
  • Use of recovery strategies, person-centered planning and evidence-based practices serve populations with complex and serious needs who require a high level of expertise to develop treatment plans.
  • A demonstrated capacity to assist with reinvestment into the behavioral health delivery system aids in expanding alternative services.
  • Behavioral health expertise is woven into all services for clients: clinical, reporting and data management, and consultation allow each client to analyze the data necessary to make informed decisions.

As a nationally recognized managed behavioral health care provider, Beacon Health Options has wide-ranging experience in working with state agencies to develop customized specialty care programs that meet the specific needs of Medicaid beneficiaries. Our experience includes increasing access to services, expanding engagement and satisfaction of Medicaid beneficiaries and advocates, and achieving savings that have been reinvested in the behavioral health care systems and communities we serve.

Beacon Health Options leads the industry with publicly-funded programs in 26 states and Washington, D.C. We tailor program strategies and administrative approaches to each client’s target populations and management vision. In each program, we have successfully developed a delivery system that provides mental health and/or substance use disorder services for adults, adolescents, children, seniors and families from diverse economic, cultural and ethnic backgrounds.

We believe our formula for success has been a simple one:

  • Partner with local providers—aligning incentives to re-engineer the system of care.
  • Focus our efforts on the most vulnerable Medicaid members—serving those that no one else wants to serve.
  • Maximize the power of integrated technology for data sharing, clinical improvement, and client reporting.
  • Reduce inpatient admissions and significantly improve access to community-based care.
  • Improve outcomes, reduce costs, and increase the value of each dollar spent.



Public behavioral health programs for individuals with disabilities and high-risk populations require specialized solutions and dedicated staffing to coordinate care. We tailor our program strategies and administrative approaches to address the needs of targeted populations and the management visions of each of our clients. Our experience, technological innovations, and flexible program design enables us to partner with public sector entities to develop and implement cost-effective behavioral health programs and solutions that are responsive to all stakeholders—consumers, families, providers, and our clients.

Some of the solutions we bring as a specialty behavioral health company include:

  • Braided Funding—As states have increasingly braided Medicaid dollars with other funding streams, such as mental health, child welfare, substance abuse and juvenile justice, Beacon Health Options Braided Funding has applied new and innovative technology to bring increased efficiency and effective monitoring. With this technology, clients are able to track dollars across agencies and programs, and to realize savings from five to 10 percent of total expenditures by maximizing the value of the different funding sources.
  • Peer Support Services—Recovery and resiliency are fundamental to our approach. We offer unmatched experience serving Medicaid populations across the country with innovative program designs emphasizing peer support and member-driven care. We integrate peer and family support services into best practice delivery of behavioral health care to drive consumers toward recovery. Service planning processes encourage consumers and their families to not only participate but lead goal setting, selecting service options and engaging treatment professionals. Network and program development, which are driven by consumer and family member voices, offer the widest possible array of service and support options—whether through a nationally-recognized housing program, extensive peer support networks, or innovative vocational programs.
  • Care Coordination—Beacon Health Options has invested heavily in developing program designs and infrastructures that provide coordinated physical health and behavioral health care for high risk/high cost populations. We know these populations require more support than any other and we acknowledge our role as system navigators, advocates, and social support networks that connect consumers with the resources they need to access appropriate, timely care. Our proactive interventions foster increased functioning, prevent exacerbation of symptoms and crises, and help members to live in the least restrictive, most supportive environment. We ensure that an active care team, anchored by the consumer or family and including both behavioral and physical health providers, understands and informs the member-centric care plan.


We provide contract-specific examples of our success, by state of service, below:


Our Colorado Medicaid partnerships consist of two behavioral health organizations providing services for the Colorado Medicaid Behavioral Health Services Program. Each partnership holds a contract with the Colorado Department of Health Care Policy and Financing for Medicaid funded behavioral health services on a regional service area basis. Colorado Health Partnerships is a community provider-driven partnership between us and eight not-for-profit Community Behavioral Health Centers (CBHC) in the South/West service area while our Foothills Behavioral Health Partners program features two not-for-profit CBHCs in the Metro West area. Together, they cover 48 of the 64 counties and a total of more than 550,000 Medicaid eligible members.

In Colorado, we’ve helped to significantly reduce wait lists for routine care, shifted care and funding from institutional to community-based settings and improved access for the most at-risk members—representing a historical program savings of approximately $100 million.

Since 1995, we have re-balanced Medicaid health spending—instead of 65 percent of funding going to institutional care, more than 90 percent now goes to community-based services. Individuals with serious and persistent mental illness have been moved from restrictive treatment settings and successfully engaged in alternative treatment and support, including: supported employment and housing, respite homes, in-home crisis intervention, and homeless outreach. These interventions improve access to the most at-risk members and represent a historical program savings of approximately $100 million.

In the last 12 years, Colorado Medicaid behavioral health enrollment more than tripled. During this time, our Partners have achieved significant quality outcomes and cost savings by improving the quality and accessibility of care and investing in community-based services and de-emphasizing restrictive levels of care, such as inpatient and residential levels, For example, we helped reduced wait lists for routine services from months to days and have shifted care and funding from institutional to community-based settings.

Specific examples include:

  • Colorado Health Partnerships: In spite of massive growth in Medicaid enrollment, CHP was able to constrain its cost increases to approximately $2 per member per month (PMPM), from approximately $33 PMPM in 1995 to only $35 PMPM in 2013.
  • Foothills Behavioral Health Partners: FBHP expanded access to more than 17 percent of approximately 80,000 covered lives; decreased hospitalization usage from 50 percent to 7 percent of total expenditures; and increased community tenure for members by reducing hospital utilization.

These results have also led to increased member satisfaction over the past three years with overall satisfaction with access to services increasing from 83.6 percent to 85.7.


Beacon is the behavioral health ASO for the Connecticut Behavioral Health Partnership (CT BHP) managing over 800,000 Medicaid members through a partnership with the Connecticut Department of Social Services, the Department of Children and Families, and the Department of Mental Health and Addiction Services. This program includes the full continuum of behavioral health services for children, families and adults, and encompasses evidence-based programs and community-based alternatives including intensive care management and formal peer support program. Through collaboration with the members served, their family members, providers and social support systems, we promote a strengths-based treatment approach focused on member success and recovery.

For over nine years, we have been influential in decreasing youth inpatient lengths of stay by 39.5 percent; resulting from improved access to care and reduced time spent in emergency rooms waiting for available beds. Even though the program experienced an increase in hospital admissions, the total days and readmissions rates have steadily decreased leading to a flat monthly cost of care for Medicaid. Our model of care places Intensive Care Managers and Peer Specialists in hospital emergency departments; thereby helping reduce the lengths of stay and improve the coordination and transition of care. In fact, the adult seven-day detox readmission rate has decreased 11.7 percent and the adult seven-day inpatient mental health readmission rate has decreased 13.4 percent since 2011.

Beacon has also successfully implemented the statewide Autism Spectrum Disorder service in 2015, allowing Connecticut residents to access a full array of services and supports to meet their child’s needs.

In addition to our role as ASO, Beacon manages additional contracts that allows us to expand behavioral health service delivery and fill the gaps within the system of care to include a care management project for the child welfare congregate care youth and a partnership with the state’s medical ASO, Community Health Network of Connecticut. Working with Community Health Network, we support joint care planning for members at the highest level of risk who suffer from co-morbid physical health and behavioral health conditions, thus improving quality and providing cost-effective care.


Since September 2009 we have served as the ASO for the Maryland Mental Hygiene Administration, providing utilization management and claims adjudication services for behavioral health care and substance use disorder services delivered by the State’s Public Behavioral Health System network of providers. This program covers approximately 1.3 million Medicaid and Uninsured adults and children across the state.

Through the use of targeted utilization management strategies focused on managing those providers whose utilization patterns differ the most from best practice trends, we have consistently delivered reduced cost of care both on a PMPM basis and cost per consumer served basis while facing ever increasing membership growth year over year. For example, from FY2011-2013, the state experienced a 14 percent increase in the number of Medicaid mental health participants served. Despite this growth, total expenditures in FY13 were only three percent greater than in FY2011. Over those two years, we saved the Public Behavioral Health System $68.5 million by decreasing the average cost of inpatient care per participant served by $554. We also reduced the average global cost per participant served by $458, a 9.4 percent decrease.

In addition to successfully managing costs through targeted utilization management services, Beacon, in partnership with the State’s Mental Hygiene Administration and the University of Maryland has also successfully implemented one of the most robust and comprehensive behavioral health Outcomes Measurement Systems (OMS) in the country. The system is designed to track how individuals receiving outpatient mental health treatment services are doing over time. It was developed with the input of consumers, caregivers, providers and other stakeholders with the intent that the data will be used for effective systems management and program development. Most recently the OMS data has been incorporated in to the development of a financial modeling tool to be used in conjunction with Beacon’s pay for performance program being piloted in the State of Maryland. Beacon is partnering with Milliman in this first of its kind program designed to provide financial incentives for improved quality based outcomes.

We have saved the Commonwealth of Massachusetts approximately $1 billion in inappropriate and unnecessary care over the life of our contract.

Massachusetts Behavioral Health Partnership (MBHP)/PCC Plan
For the PCC Plan in Massachusetts, we currently provide behavioral health services to more than 400,000 adults and children with Medicaid. MBHP has managed this contract for 19 years, saving the Commonwealth approximately $1 billion in inappropriate and unnecessary care, resulting in a return on investment (ROI) of 2.70:1.

Our Integrated Care Management Program (ICMP) focuses on the top two percent of high utilizers and has produced positive member outcomes for the past three years. Recent results include a 39.1 percent reduction in poly-psychopharmacology, 11 percent reduction in preventable hospitalizations, 9.17 percent increase in mean healthy days (according to Health Related Quality of Life questionnaire) and 92 percent of members who completed the member experience survey indicated they were satisfied with their outcomes and ICMP services. The 2015 ICMP Total Medical Expense study indicates a return on investment of $61.17 per member per day for those participating in the program.

In addition, through our utilization management program, we have accomplished the following:

  • Successful implementation of a new benefit for youth with autism. Applied Behavior Analysis, an evidence-based practice for the treatment of autism, has been fully implemented in Massachusetts. This includes the availability of a team of professionals with expertise in autism as part of the MBHP/Beacon staff for review and consultation on cases.
  • From 2012 – 2015, the cost of 24-hour levels of care for members of all ages decreased from $33.02 to $22.45 per member per month for a member population of approximately 400,000. A majority of these savings is due to a significant decrease in the number of days members unnecessarily spent in hospitals awaiting placement at less restrictive levels of care.
  • From 2014 – 2015, overall cost savings were in excess of $45 million, or approximately 10 percent of the total medical budget.


Our NorthSTAR program provides an integrated system of care with mental health and substance use disorder services from multiple programs and funding sources. This program covers approximately 900,000 Medicaid and indigent adults and children in seven North Texas counties in the Dallas area. We have managed this contract since its inception in 1999.

According to a 2010 analysis conducted by The Perryman Group, “The NorthSTAR model has seen significant success over the past decade, expanding patient care while decreasing costs and eliminating waiting lists.” The report indicates that NorthSTAR rates “among the highest programs in the state in terms of effectiveness.” Membership has consistently increased—approximately 97 percent from 2000 to 2009—while cost per enrollee decreased approximately 29 percent. Further evidence of cost savings by the Perryman group found that the average cash funding per enrollee across the state was $3,502 while the NorthSTAR program was $1,795. (2)

Additionally, in the Greater Dallas County Region, we developed an integrated behavioral health and physical health intensive care management (ICM) program in 2009 that is part of co-located services available through the Dallas “Bridge” homelessness initiative. This ICM program was developed to more effectively integrate services provided at the Bridge for those high-risk/high cost individuals with a history of inappropriate use of emergency room resources. Through our ICM program, we have achieved a 46 percent improvement in appropriate access, a $72,000 reduction in per member, per year costs for severe outlier populations, and serve approximately 1,400 homeless members per day by coordinating all their bio-psycho-social needs.


The impact of Medicaid managed care varies widely depending on the members served. Medicaid policy makers should be mindful of these differences when designing managed care programs, paying particular attention to the impact of traditional Medicaid managed care plans for members with special needs and chronic conditions. The goal is to maximize quality and value and achieve efficiencies in behavioral health care—specialty managed care programs are proven to do just that.

Beacon has led the industry in developing premiere specialty behavioral health programs. We offer highly specialized, high-quality care management programs with proven success in increasing efficiency, effectiveness, and accountability, all while reducing costs, achieving greater access to care, and improving treatment outcomes.

(1) Donohue, Garfield, & Lave, 2010
(2) The Perryman Group, May 2010 – As Assessment of the Potential Economic and Fiscal Impact of Investment in Expanding Various Aspect of the ValueOptions/NorthSTAR Model for Funding Mental Health and Substance Abuse Services