It’s no secret that patients with serious mental illnesses (SMIs) are costly to care for and often experience significantly worse outcomes than their peers. Traditional fee-for-service care models focus on billable procedures rather than patient outcomes, leaving many patients with SMI underserved. However, value-based care for serious mental illness offers a promising alternative, allowing providers to focus on holistic interventions that improve both health outcomes and cost efficiency.
By tying reimbursement to results instead of the number of visits or procedures, value-based care for serious mental illness encourages providers to implement wrap-around services. These services address social determinants of health, mental wellness, and community support, creating a more integrated approach to care that treats the whole person.
Breaking the cycle of fee-for-service care
“Care that is driven by financial reimbursement is not designed to solve a problem, and it’s designed to continue the cycle of reimbursement,” said Sonia Garcia, co-founder and chief product officer of Amae, at Behavioral Health Business’ VALUE event. “What value-based care does is it breaks that cycle.”
Unlike traditional models, value-based care for serious mental illness provides a financial framework that supports true recovery. Providers can focus on interventions that are meaningful to patients, not just what is reimbursable. This includes integrated physical, mental, and social care that addresses the full spectrum of a patient’s needs.
The human and economic toll of SMI
The economic impact of SMI exceeds $300 billion annually, according to SMI Advisor. Beyond costs, patients with SMI experience a 10- to 20-year reduction in life expectancy, according to the World Health Organization. Despite these staggering figures, traditional healthcare systems often separate mental health and physical care, leaving critical needs unmet.
Christina Mainelli, CEO of Quartet, noted: “It’s a very fragmented delivery system, in particular around individuals with SMI, who often need to be treated on the physical side, the mental health side, and potentially on the social care side. The reimbursement model does not support the care required to get these patients well.”
A whole-person approach to care
Value-based care for serious mental illness encourages a whole-person approach, ensuring patients receive integrated treatment tailored to their individual circumstances. Companies like Quartet use multidisciplinary care teams—including psychiatrists, primary care clinicians, nurse practitioners, peers, case managers, and community support resources—to provide coordinated care.
Similarly, California-based Amae emphasizes addressing physical, mental, and social well-being. The company plans to work with Medicaid and Medicare plans to expand access to holistic SMI care, backed by investors including Virtue, Bling Capital, 8VC, and Able Partners.
Social determinants of health in focus
One of the key advantages of value-based care for serious mental illness is the ability to address social and environmental factors affecting health. Sonia Garcia shared an example from Chicago-based Zing Health, where a spike in emergency room visits coincided with a heatwave. By installing air conditioners in members’ homes, hospital utilization dropped, and patient outcomes improved.
Wrap-around services like peer-support specialists, care managers, and housing or employment assistance can significantly impact recovery for patients with SMI. These interventions help build trust between patients and providers—critical for populations who have historically faced neglect or punitive treatment.
The role of peer support
Peer-support specialists play a crucial role in engaging patients. Samir Malik, CEO of firsthand, explained: “A caseworker will not get that done. A nurse and a doctor, as important as they are to delivering the outcome, are not the right mechanism to build the trust, which is the first door one needs to go through on a longer pathway to recovery.”
Firsthand focuses on Medicaid populations, using peer specialists to build engagement. Patients initially skeptical about traditional care often respond well once trust is established. In fact, seven out of ten patients engaged by peer specialists eventually enroll in firsthand’s program, illustrating the power of peer support within value-based care for serious mental illness.
Overcoming systemic barriers
Traditional fee-for-service models rarely reimburse for coaching, peer support, or non-clinical interventions. By enabling reimbursement for these wrap-around services, value-based care for serious mental illness can free up provider capacity, allowing them to focus on higher-acuity patients.
Malik emphasized: “These interventions are proven, peer-reviewed, double-blinded, all the good stuff. We have just not brought them to market at scale because the contracting mechanisms have not allowed for it. But none of these will get to scale unless we build the economic model around it.”
The future of SMI treatment
Companies like Amae, Quartet, and firsthand are demonstrating that integrated, whole-person care is both effective and scalable under value-based models. By aligning reimbursement with outcomes rather than services, providers can implement innovative strategies—including peer support, social interventions, and multidisciplinary care teams—that improve patient outcomes and reduce costs.
Value-based care for serious mental illness represents a turning point in how patients with SMI are treated, moving beyond fragmented, fee-for-service approaches to a system that prioritizes holistic recovery and long-term well-being.
