To improve the integration of mental health and substance use care with primary care, many states are employing strategies such as advancing payment and delivery approaches, improving data-driven policy, and building provider capacity and workforce development. Lessons from NASHP’s Behavioral Health Integration Workgroup highlight effective strategies and state examples that can inform future state efforts.
Payment and Delivery Reforms and Braided Funding
States are improving access to integrated care through payment and delivery reforms in Medicaid, often aligning these efforts with other key funding streams. For example:
- Massachusetts is advancing behavioral health and primary care integration in several ways through its Medicaid Section 1115 Demonstration waiver and the Roadmap for Behavioral Health Reform. As part of these efforts, the state implemented an integrated primary care payment model in phases in 2023. The first phase is designed to facilitate multi-payer alignment and build primary care practice capacity — expanding coverage for a range of integrated care models. A later phase includes a $115 million per year investment in primary care through a value-based sub-capitation model that requires providers participating in Massachusetts’ Medicaid accountable care organizations to meet access- and team-based standards while providing more flexibility. Commercial insurance carriers are strongly encouraged to align with these payment policies.
- Value-Based Primary Care Sub-Capitation Model for primary care providers shifts reimbursement to a per-member-per-month (PMPM) payment. This model emphasizes access, team-based integrated care, and delivery flexibility to meet patient needs. The program aligns with the federally qualified health centers’ prospective payment system to ensure financial stability. 2024 Clinical Tier Enhanced Payments (as a component of the PMPM) range from $4.16 for Tier 1 up to $10.40 for Tier 3. Learn more about the specific tier of care delivery, structure and staffing, population requirements, and rate methodology.
- North Carolina’s Tailored Care Management model, a specialized care management service, requires participating providers to coordinate physical health, behavioral health, intellectual and developmental disabilities and traumatic brain injury services, pharmacy, long-term services and supports, and other unmet resource needs, reaching about 210,000 Medicaid enrollees. Offered through local management entity/managed care organizations and the behavioral health/intellectual disabilities tailored plans, the more intensive services model aims to provide broad access to care management with a dedicated care manager taking an integrated, whole-person care and family-centered care planning approach.
- Missouri has leveraged health homes and, more recently, certified community behavioral health clinics to integrate primary and behavioral health care. The state pays PMPM payments directly to health homes. This approach supports sustained integration and incentivizes improved health outcomes in both physical and behavioral health measures. The Missouri Managed Care Contract (sixth amendment) outlines requirements and the required Healthcare Effectiveness Data and Information Set (HEDIS) and non-HEDIS quality metrics for integration.
- California leveraged State Opioid Response and American Rescue Plan Act home- and community-based services funding to rapidly scale the CalBridge Behavioral Health Navigator Program, building capacity in emergency departments (EDs) to provide access to substance use disorder treatment, including medication-assisted treatment for opioid use disorder, and mental health treatment. The grants fund capacity building, technical assistance, and training toward long-term funding of these positions as they are incorporated into the ED budgets as permanent positions. A sustainable Medicaid funding stream via the Community Health Worker Benefit allows reimbursement for hospital-based navigators as preventive services. This strategic use of braided funding allowed California to scale the CalBridge Behavioral Health Navigator Program from eight to 278 hospitals, with at least 100 hospitals establishing permanent behavioral health navigator positions.
Measurement and Evaluation
States are using a variety of behavioral health outcomes and utilization of performance measures to assess the impact of behavioral health integration on access, quality, and cost. By tracking specific outcome measures, they can drive continuous improvement and align incentives with performance. For example:
- Pennsylvania employs a tiered value-based payment (VBP) strategy to align physical and behavioral health (BH) outcomes. Its advanced integrated care plan holds both BH and physical health (PH) managed care organizations (MCO) accountable using seven HEDIS measures. Pennsylvania’s model includes:
- A pay-for-performance program that supports integrated care through MCOs and behavioral health organizations (BHO) separate contracts. VBP models that reimburse providers for delivering integrated services are implemented in both contracts.
- Implementation guidance embedded in the MCO contract templates (2023 CH Agreement , PH-MCO 2023 agreement, and BHO additional guidance.
- New Jersey incorporates both clinical and utilization measures in its VBP strategy. MCOs can earn a home- and community-based services (HCBS) performance payment incentive of up to $4 million for achieving top performance in plan-of-care development in managed long-term services and supports. These plans integrate physical health, behavioral health, and long-term services and supports with requirements for an annual behavioral health integration quality report assessing member satisfaction, provider experience, and integration outcomes through required surveys, focusing on access, care quality, disparities, network management, and cultural competency.
- West Virginia’s risk-based managed care program, Mountain Health Trust, requires MCOs to enhance integrated physical and behavioral health care within the state’s fiscal year 2025 contract template. As part of the “Specialized Managed Care Plan for Children and Youth Program State Strategy for Assessing and Improving Managed Care Quality,” the state has implemented measures for children that include follow-up after ED visit for mental illness, follow-up after hospitalization for mental illness, follow-up after ED visit for alcohol and other drug abuse or dependence, and follow-up care for children prescribed medication for attention-deficit/hyperactivity disorder. West Virginia partners across the full system of care to build out children’s services and drive continuous quality improvement through the West Virginia KidsThrive Collaborative.
Cross-Sector Alignment
States are promoting cross-sector alignment to support integrated care by creating formal collaboration structures, advisory groups, and shared tools and processes. These efforts help break down silos and ensure coordinated action across behavioral health, primary care, and other sectors. For example:
- Michigan created an umbrella organization to drive administrative integration. The agency integrates Medicaid, behavioral and physical health, aging, and intellectual and developmental disability programs, allowing the state to bridge gaps among siloed systems and foster cross-agency collaboration to streamline service delivery in a carved-out environment.
- Arizona merged its Medicaid agency and behavioral health authorities a decade ago, streamlining services and enhancing coordination. The consolidation has strengthened behavioral health integration, improved purchasing strategies, streamlined regulations, and fostered cross-sector collaboration. While structural integration was established early, cultural integration is ongoing to ensure integrated care is fully embraced and embedded into systems. Read more in the Commonwealth Fund brief “How Arizona Medicaid Accelerated the Integration of Physical and Behavioral Health Services.”
- Georgia’s Department of Behavioral Health and Developmental Disabilities (DBHDD) has established a dedicated position, the director of the Office of Medicaid Coordination and Health System Innovation, which has significantly improved coordination between DBHDD and the Medicaid agency. The collaboration has strengthened financing, service delivery, and provider networks; supported integrated care strategies; and driven continuous program improvement through shared expertise.
- Missouri has a long history of state leadership in fostering collaboration between behavioral and physical health systems and providers to inform both policy planning and the implementation of integrated care programs. Through sustained efforts, the state has worked to integrate care by securing funding, aligning policies, and embedding integration into key initiatives such as health homes. Missouri’s Medicaid program, MO HealthNet, has played a leading role in shaping payment structures that support administrative and provider alignment.
Workforce and Provider Capacity Building
States are employing various strategies to recruit, train, and retain behavioral health professionals while equipping providers to adapt to the workflow, billing, and quality improvement demands of integrated care models. For example:
- North Carolina offers enhanced Medicaid reimbursement rates (120 percent of Medicare) to primary care practices adopting the Collaborative Care Model (CoCM). Additionally, the North Carolina General Assembly allocated $5 million in capacity-building grants to Medicaid-enrolled primary care practices to adopt CoCM, with grants of up to $50,000 for practices not yet using the model.
- New York offers supplemental Medicaid reimbursement to primary care practices implementing the CoCM. Approved sites bill directly to fee-for-service Medicaid for all Medicaid patients, including those in managed care.
- In Texas, health systems have successfully leveraged federal and philanthropic grants to cover start-up and implementation costs for CoCM.
States Advancing the Innovation in Behavioral Health Model
The Innovation in Behavioral Health (IBH) Model is a new initiative designed to bridge gaps between behavioral and physical health care, addressing challenges such as high rates of emergency department visits, hospitalizations, and premature deaths among individuals with moderate to severe mental health conditions and substance use disorders. Led by state Medicaid agencies, the model aligns Medicaid and Medicare payment systems to support integrated care. Michigan, New York, Oklahoma and South Carolina were selected as the first cohort of states to participate. Features of the IBH Model include:
- State-led implementation: Specialty behavioral health practices within each state’s proposed service area will participate, with states such as Michigan focusing on CCBHCs and behavioral health homes.
- Payment design: A monthly payment to specialty behavioral health providers supports care management and coordination activities.
- Care coordination: Providers lead interprofessional care teams to address patients’ behavioral, physical, and health-related social needs, such as housing, food, and transportation, with compensation tied to care quality and patient outcomes.
- Medicare and Medicaid alignment: The model supports integrated care for Medicare fee-for-service and Medicaid populations, including dually eligible individuals.
- Complementary to existing models: The model is intended to build upon and enhance efforts by CCBHCs and other integration initiatives, rather than duplicate them.
As states navigate through the three-year pre-implementation phase, they will identify focus areas such as care coordination and payment alignment. These efforts will generate valuable insights for other states considering ways to strengthen behavioral health integration.
Looking Ahead: Building on State Successes
States are continually evolving their approaches to behavioral health integration, with a growing emphasis on performance measurement and value-based payment models to drive accountability and improve outcomes. In the coming years, states will likely expand their use of behavioral health performance measures in Medicaid and other financing structures to better assess impact and guide investment in integrated care models.
NASHP looks forward to continuing to support states in this work — facilitating peer learning, sharing best practices, and identifying policy levers that drive sustainable and effective behavioral health integration. As states refine their approaches, NASHP will track emerging trends and provide resources to help policymakers navigate the evolving landscape of integrated care.
Acknowledgments
NASHP expresses its gratitude to The Commonwealth Fund for generously supporting the Behavioral Health Integration Workgroup and to the participating states for their active involvement and contributions.
