Preparing to Thrive in the Pay-For-Value World

Preparing to Thrive in the Pay-For-Value World

Joanna Conti
Originally Posted:


Most addiction treatment and behavioral health providers know that major change is coming to the industry, but few are making the preparations necessary to take advantage of it. This article outlines what it’s going to take to thrive in the coming pay-for-value world.

The first thing you need to know is that these changes are happening faster than you think. Already, almost 20% of insured Americans are attributed to an Accountable Care Organization (ACO), Managed Care Organization (MCO), or health home that typically keeps a large portion of the savings if they can provide care to their members at less than the agreed-upon annual rate.

It’s also important to understand that people struggling with mental health and addiction issues are among the most expensive members to provide services for. Not only do they tend to accrue expensive emergency room and detox charges, but it costs more to treat any physical problems they have. An analysis of Medicaid spending found that the costs of treating a patient for several common chronic health conditions were 200% to 400% higher if they also had co-occurring mental illness and/or substance abuse disorders:

Annual Medicaid Costs to Treat Consumers with Chronic Health Conditions



No Behavioral
Health Disorder
Mental Illness
With Mental Illness
and Addiction
Asthma/COPD $8,000 $14,081 $24,598
Congestive Heart Failure $9,488 $15,257 $24,927
Coronary Heart Disease $8,788 $15,430 $24,443
Diabetes $9,498 $16,267 $36,730
Hypertension $15,691 $24,693 $35,840

Source:  Open Minds 2016 Strategy & Innovation Institute

Because of this, it is in the self-interest of MCOs and ACOs to fund reasonably-priced addiction treatment if they can be confident that it will reduce their future costs of care for these patients.

Organizations with value-based payment structures want to contract with effective substance abuse disorder treatment facilities. Their problem is that they are having a hard time identifying them.

Dr. Kristofer Smith, the Medical Director of Northwell Health Solutions, an $8 billion health system in the Northeast, talked about the frustrations of identifying good organizations to contract with at a recent Open Minds Strategy & Innovation conference. He said that organizations often contact Northwell asking to be part of their network. However, simply saying “we’re willing to share the risks” isn’t good enough, according to Smith. “If they don’t have data, I won’t meet with them.”

So there’s the rub. With very few exceptions, the addiction treatment industry has avoided measuring its effectiveness. Most programs have no way of answering the questions payers want to know, such as:

  • What percentage of your clients succeed in staying clean and sober after treatment?
  • What does it cost per patient to achieve this success rate?
  • Will the cost of addiction treatment be more than offset by reductions in the patient’s future medical costs?

While behavioral health and addiction treatment programs have until recently been able to get away with not answering these difficult questions, this is changing rapidly. If your goal is to be an accepted provider for a value-based payer organization two years from now, you’ve no time to waste. Because it will probably take between 18 and 24 months to generate one-year post-treatment outcomes for an adequate number of patients, you need to start measuring your outcomes today. 

Ready to get started? Vista’s RECOVERY 20/20 outcomes research can provide you with the hard data you need to prove to value-based payer organizations that your program should be included in their preferred network because it will save them money long-term. 

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