For decades, value-based care has been a buzzword in the behavioral health industry—frequently discussed but rarely implemented at scale. Despite the clear benefits of tying payments to outcomes instead of services, the majority of providers continue to rely on fee-for-service models. However, the tide is beginning to shift. Payers are now signaling a stronger commitment to innovative behavioral health care models, and that may be enough to start reshaping provider-payer dynamics and how investors approach the space.
As value-based contracts begin to gain traction, the behavioral health sector could see a dramatic evolution. While some investors are cautiously optimistic, others are still hesitant due to the complexities of attribution and reimbursement. Nevertheless, venture capital firms have already poured hundreds of millions of dollars into startups and providers willing to lead the way. Eleanor Health, for instance, has secured over $82 million in funding, operating entirely under value-based frameworks. Virtual SUD provider Pelago and opioid use disorder network Groups Recover Together have also raised tens of millions. These organizations are among the pioneers championing innovative behavioral health care models that prioritize outcomes over volume.
Growing Pains and Operational Setbacks
Despite this surge in funding, the journey hasn’t been smooth. Workforce reductions at companies like Cityblock and Eleanor Health underscore the operational challenges of pivoting away from traditional payment models. Layoffs often highlight the growing pains of scaling innovative behavioral health care models, especially in a system still dominated by fee-for-service reimbursements. Even so, these temporary setbacks haven’t deterred investor interest. Many see them as part of the trial-and-error phase that will ultimately shape the future of behavioral health delivery.
Attribution Challenges and Measuring Success
A fundamental hurdle in expanding value-based behavioral health lies in measuring success. When improved mental health outcomes reduce overall medical costs, who gets the credit? That’s the attribution dilemma—one that makes many payers hesitant to fully endorse innovative behavioral health care models. As Terry Hyman of Northwood Healthcare Partners points out, the inability to determine the exact driver of savings complicates the entire business case. If a patient’s physical health improves due to stabilized mental health, how do you quantify and reward that?
Integration with Primary Care: Still a Work in Progress
At the core of the issue is the integration—or often, the lack thereof—between primary care and behavioral health. Primary care has led the charge in value-based care, making it the obvious area for innovation and investment. But bringing behavioral health into the fold presents new challenges. Collaborative care models have started to bridge this gap, but fully integrated, innovative behavioral health care models that align incentives across disciplines remain the exception rather than the norm. Christina Farr of OMERS Ventures highlights that while momentum is building, most care is still fee-for-service, and there’s much more ground to cover.
The Role of Payviders and Payers in Driving Change
One promising solution could come from “payvider” organizations—hybrid entities that act as both providers and payers. In 2022, UnitedHealth Group’s Optum acquired Refresh Mental Health, signaling a strategic move to experiment with innovative behavioral health care models that span payer and provider functions. These organizations can pilot new care arrangements without immediate financial risk, making them ideal test beds for bundled payments and shared-savings contracts.
Corbin Petro, founder of Eleanor Health, notes that payers are increasingly able to administer these kinds of models. From 2019 to 2024, there’s been a significant uptick in both Medicaid and commercial payers experimenting with case rates and bundled payments. This shift marks a vital turning point—without payer readiness, even the most ambitious innovative behavioral health care models are destined to remain on the margins.
Federal Support for Value-Based Care Expansion
Meanwhile, the federal government is also encouraging this transition. The Center for Medicare and Medicaid Innovation (CMMI) has set a goal to have 100% of traditional Medicare beneficiaries and most Medicaid members in accountable care arrangements by 2030. CMMI’s pilot program, the Making Care Primary Model, reinforces the value-based trajectory. While focused on primary care, it lays the groundwork for future behavioral health integration and supports the development of innovative behavioral health care models.
Early Stage Risk Models and Shared Savings
Still, the path forward isn’t simple. Most investors and providers remain hesitant to engage in full two-sided risk models, where providers could lose money if outcomes aren’t met. Instead, early efforts are likely to focus on shared savings and enhanced reimbursement for improved outcomes—less risky, but still aligned with the core principles of value-based care.
Looking Ahead: The Future of Innovative Behavioral Health Care Models
As the sector matures, innovative behavioral health care models will need to address not only clinical efficacy but also the mechanics of attribution, risk management, and integrated care. The ability to tie behavioral interventions to measurable physical health improvements will be crucial in convincing both payers and investors of their value.
The next few years will be pivotal. If payer readiness continues to improve and providers can show meaningful outcomes, innovative behavioral health care models could finally move from fringe experiments to mainstream delivery systems. With federal policy support, growing investor interest, and rising demand for mental health services, the stage is set for a transformation in how care is paid for—and more importantly, how it’s delivered.
