Payer partnerships have always been a cornerstone of scaling a successful behavioral health organization. They help ensure that services are reimbursed and accessible to patients while also allowing organizations to thrive financially. As the behavioral health landscape evolves, however, the dynamics of these partnerships are shifting. With a rising demand for mental health services and the increasing popularity of value-based care contracting, these relationships are becoming more complex, requiring a rethinking of how providers and payers collaborate to meet the needs of both patients and healthcare systems.
Historically, payers utilized a carve-out model for behavioral health services. Under this model, behavioral health was separated from other health services, often leading to disjointed care and a lack of communication between payers and providers. This separation meant that payers missed out on the valuable intelligence and resources available within the behavioral health sector. Jenny Welling-Palmer, Chief Strategy Officer of Thriveworks, highlights that this traditional approach has quickly become outdated as the pressures on both payers and providers have increased. According to Welling-Palmer, the carve-out model was inefficient and ultimately detrimental to the quality of care delivered, especially as the behavioral health field evolved to meet the growing demand for services.
“The carve-out model meant a loss of resources and intelligence for the sector,” Welling-Palmer explained, “but with more payer groups and providers involved, we’ve seen a shift towards more integrated approaches.” She emphasized that these changes are happening in tandem with the rise of value-based care, a model that encourages payers and providers to focus on delivering high-quality care while controlling costs. However, the move toward value-based care is making the relationships between payers and providers more complicated. Payers are no longer only concerned with managing claims and access to care; they must now also focus on improving patient outcomes and managing total medical expenses.
Welling-Palmer also pointed out the growing complexity within the payer landscape. With so many provider groups measuring quality in different ways and offering a range of services, it has become difficult for payers to navigate the marketplace. There are varying opinions on the balance between in-person and virtual therapy, the appropriate ways to measure quality, and what constitutes effective care. This has created a confusing environment for payers, who must decide which providers to work with and how to align them with their quality goals. According to Welling-Palmer, a close and continuous dialogue between payers and providers is critical in these uncertain times. “Having a very close relationship with payers is really key,” she said. “You can’t afford to be disconnected, especially as behavioral health is becoming more critical in the healthcare system.”
Shifting Focus: Mergers and Acquisitions
As payers grapple with these challenges, many health plans are turning to mergers and acquisitions (M&A) as a way to scale their behavioral health efforts. For example, UnitedHealth’s health services division made headlines in 2022 when it acquired Refresh Mental Health, a move that signaled a strong commitment to expanding behavioral health services. Welling-Palmer noted that one of the driving forces behind this trend is the increasing recognition of behavioral health’s impact on overall healthcare costs. “Health plans are recognizing that behavioral health can no longer be treated as a separate entity. They need to integrate it with broader healthcare initiatives to control costs and improve care,” she said.
Many health plans have spent the past several years focused primarily on improving access to behavioral health care. But as the strain on healthcare systems intensifies, particularly due to rising medical costs, there’s a shift toward making behavioral health an integrated part of a health plan’s overall strategy. Health plans are no longer solely focused on ensuring that people have access to behavioral health services; they’re also looking at how to optimize the care provided and reduce unnecessary expenses. Welling-Palmer notes that payers are now asking, “How do we find high-quality providers that align with the broader goals of improving care and managing costs?”
The Importance of Payer Partnerships in Provider Relationships
This shift in focus is pushing payers to reassess their relationships with providers. According to Welling-Palmer, many health plans are now evaluating providers based on their ability to offer high-quality, cost-effective services, particularly those that can deliver both in-person and virtual care. This approach aligns with the growing trend of digital health solutions, which have proven to be effective in reaching more people and improving access to care. However, this also means that payers and providers must engage in ongoing conversations about what constitutes quality care in the digital age.
Despite these changes, the foundational relationships between traditional providers and payers remain a vital part of the ecosystem. These behavioral health payer partnerships are often the key to ensuring that an organization can successfully navigate new markets and expand its reach. As Anthony DeSena, CEO and Co-Founder of PAX Health, explained, payer relationships play a significant role in shaping the types of companies that organizations like his target for acquisition. “For us to expand into a region or state, we have to ensure that we have psychiatry, psychology, workers’ compensation services, and access to both federal and commercial payers,” DeSena said. “Once we’ve secured those relationships, we then look to acquire provider groups that already have established commercial contracts. That’s the playbook we use to grow.”
PAX Health, formed through the acquisition of Behavioral Medicine Associates, Workers Comp Psych Net, and Reservoir Health, has a strategy that highlights the importance of established payer relationships. DeSena’s approach is a clear example of how behavioral health payer partnerships are not just about financial reimbursement; they’re about creating the infrastructure necessary to scale services, reach new patients, and build sustainable, high-quality care delivery systems.
The Future of Behavioral Health Payer Partnerships
The landscape of behavioral health payer partnerships in the behavioral health sector is changing rapidly, but the core principle remains the same: collaboration is key. As value-based care continues to grow, payers and providers must work together more closely than ever before. The future of behavioral health will depend on how these partnerships adapt to meet new demands, optimize care delivery, and reduce costs. As the industry continues to evolve, staying ahead of these changes and maintaining strong, strategic relationships with payers will be essential for providers who wish to thrive in this new environment.
