The rise of minimum wage and the sharp decline in unemployment rates have sparked changes across various industries, with labor shortages becoming a common theme. The behavioral health care sector is no exception. Yet, the challenges facing this industry are amplified by a long-standing issue: low reimbursement rates for behavioral health services.
While physical health services are reimbursed at much higher rates, behavioral health providers continue to struggle with the financial difficulties tied to low payments. This dynamic is making it harder for behavioral health organizations to compete with other sectors, especially when trying to recruit and retain qualified staff. Experts in the field say that this problem could exacerbate existing worker shortages, limit access to care, and ultimately impact the overall quality of services.
The Behavioral Health Care Labor Shortage
Chuck Ingoglia, President and CEO of the National Council for Behavioral Health Care, discussed the challenges behavioral health organizations face at the Payer’s Behavioral Health Management and Policy Summit. He emphasized that a significant barrier to attracting and retaining skilled professionals in the public sector is the inability to offer competitive salaries.
“We would love for our members to hire more psychologists,” Ingoglia said. “But can you imagine what’s the biggest obstacle to them? Being able to pay them competitive salaries that would compel them to want to work in the public sector.”
Behavioral health care organizations, which often rely on Medicaid for reimbursement, face financial constraints that make it difficult to offer the kind of salaries that would attract and retain qualified professionals. This issue is especially pronounced in mental health fields, where salaries typically lag behind those in physical health care settings, in large part due to the reimbursement disparity.
The National Council, which represents more than 3,300 members, many of whom are safety-net providers serving Medicaid beneficiaries and the uninsured, is focused on understanding how other health professions manage to encourage individuals to enter their respective fields. Ingoglia suggests that offering competitive wages is key to tackling the workforce shortage within the behavioral health sector.
Low Reimbursement Rates: The Core of the Problem
A significant factor contributing to the labor shortage in behavioral health care is the difference in reimbursement rates between physical and behavioral health services. Behavioral health services are often reimbursed at lower rates than physical health services, despite the fact that both play crucial roles in the overall health and wellness of individuals.
In fact, a study published in Health Affairs found that in 2014, commercial insurers paid 13-14% less for in-network mental health services compared to the reimbursement rates provided by fee-for-service Medicare. On the other hand, commercial insurers paid up to 12% more for non-mental health physician specialties compared to Medicare. This reimbursement gap has persisted, and it remains a critical issue for behavioral health providers who depend on payers like Medicaid, as well as those operating in the commercial insurance market.
The consequences of these low reimbursement rates extend beyond just workforce shortages. Providers may be hesitant to partner with insurers due to insufficient payment, leading to increased out-of-pocket costs for patients. The gap also creates significant access issues for individuals seeking care for mental health conditions.
The Impact on Patient Care and Outcomes
Arthur Evans, CEO and executive vice president of the American Psychological Association (APA), spoke on the implications of low reimbursement in behavioral health care during the summit. He pointed out that, while financial compensation for mental health professionals is important, how services are reimbursed can also have a profound impact on patient care and outcomes.
“If we want to get good outcomes, we have to pay for it,” Evans said. “It’s not only how much we pay, but it’s how we pay.”
Evans advocated for the shift from fee-for-service reimbursement models to more value-based payment systems. He argued that fee-for-service models often incentivize providers to focus on the number of services rendered rather than the quality or effectiveness of care. In contrast, value-based models reward providers for improving patient outcomes and meeting specific care goals, such as successfully managing chronic mental health conditions or helping individuals recover from substance use disorders.
Evans used the example of opioid use disorder treatment to illustrate his point. For opioid treatment to be effective, providers need to focus on long-term recovery and comprehensive care, including medication-assisted treatment and counseling, rather than just episodic interventions. Under fee-for-service, the reimbursement structures often fail to incentivize the broader, more holistic approach required for successful outcomes.
By adopting value-based payment models, Evans argues, providers will be better equipped to deliver high-quality care while also attracting and retaining skilled professionals. In turn, this could help address the workforce shortages and improve access to care for individuals with behavioral health needs.
Certified Community Behavioral Health Clinics (CCBHCs) and the Role of Higher Reimbursement
The National Council for Behavioral Health Care has highlighted Certified Community Behavioral Health Clinics (CCBHCs) as an example of how higher reimbursement rates can make a difference. CCBHCs are relatively new types of Medicaid providers that offer a broad range of mental health and substance use disorder services, regardless of a patient’s ability to pay.
CCBHCs were created to address financing shortfalls in the behavioral health sector by providing clinics with higher-than-usual Medicaid reimbursement rates. These increased payments are designed to account for the costs of expanding services and treating more patients. According to Ingoglia, when providers are able to pay competitive wages, they can hire more staff, and as a result, serve more patients.
“When you’re able to pay competitive salaries, you can hire staff,” Ingoglia said. “When you hire staff, you can actually serve more people. When you serve more people, you could actually do creative things.”
In practice, CCBHCs have seen significant increases in the number of patients they can serve, allowing them to offer more comprehensive care and improve patient outcomes. The success of this model highlights the potential benefits of higher reimbursement rates and how they can lead to better care for individuals with mental health and substance use needs.
Moving Toward a Sustainable Future
Addressing the behavioral health care workforce shortage and the reimbursement challenges facing the industry will require systemic changes. Experts like Ingoglia, Evans, and others agree that improving compensation for behavioral health professionals and shifting to value-based payment models are crucial steps toward achieving sustainable, high-quality care.
As the U.S. continues to grapple with rising mental health concerns, particularly in the wake of the COVID-19 pandemic, ensuring that behavioral health providers can attract and retain qualified professionals is more important than ever. With the right financial support, including higher reimbursement rates, the behavioral health care system can begin to address its workforce shortages, improve access to care, and achieve better outcomes for patients.
Ultimately, a reimagined system that values behavioral health care providers, compensates them fairly, and prioritizes outcomes over volume could create a healthier and more resilient society.
