In recent years, the push for more integrated health care systems has become a hallmark of Medicaid reform across the United States. The idea behind this shift is simple but ambitious: by integrating behavioral and physical health services under one managed care organization (MCO), states could improve outcomes, reduce inefficiencies, and deliver more holistic care to Medicaid enrollees. But a new study published in JAMA throws cold water on the notion that integration alone is enough to move the needle when it comes to Integrated Managed Care and Behavioral Health access and utilization.
The study analyzed a cohort of over 145,000 individuals between the ages of 13 and 64 to evaluate whether Integrated Managed Care and Behavioral Health models—those that do not carve out behavioral health services—led to improved service utilization, health-related outcomes, arrest rates, employment, or reductions in homelessness. The findings were revealing: there was no statistically significant improvement in these metrics under integrated models when compared to traditional carve-out approaches.
The Carve-Out vs. Integration Debate
Traditionally, many Medicaid MCOs have used a “carve-out” model, in which behavioral health services are handled separately from physical health services, often by different plans or administrative systems. This separation was designed to allow behavioral health specialists to focus specifically on the unique and often complex needs of individuals with mental illness or substance use disorders. However, in an era increasingly focused on value-based care and cost efficiency, the carve-out model has come under scrutiny.
Over the past decade, many states have moved toward Integrated Managed Care and Behavioral Health models that fold behavioral health services into the same managed care contracts that oversee physical health. The goal has been to create a more coordinated care experience—one that recognizes the deep interconnection between physical and mental well-being. In theory, this approach should streamline administrative processes, eliminate gaps in care, and improve overall health outcomes.
However, the new JAMA study suggests that the benefits of Integrated Managed Care and Behavioral Health may be overstated—or at least not guaranteed.
What the Numbers Say
For individuals with serious mental illness (SMI)—a population that often requires frequent and specialized behavioral health services—the study found that the number of outpatient behavioral health visits under carve-out programs averaged 805.6 per 1,000 member months. After transitioning to an Integrated Managed Care and Behavioral Health model, the number of visits decreased by 33.9 per 1,000 member months. Importantly, that drop was not statistically significant.
In other words, integrating behavioral health into Medicaid MCOs did not measurably increase access to services for those who arguably need them the most. Furthermore, across other measures like employment status, housing stability, or encounters with the criminal justice system, the researchers found no clear advantage to Integrated Managed Care and Behavioral Health models over carve-out ones.
This suggests that financial integration alone does not ensure better access or outcomes for behavioral health populations—a finding that may come as a surprise to stakeholders who have championed integration as a panacea for Medicaid’s structural challenges.
Integration Requires More Than Merging Budgets
The lackluster results point to a deeper issue: Integrated Managed Care and Behavioral Health is not just a matter of merging budgets or contracts. As the researchers note, “States aiming for clinical integration may need to combine financial integration with investments in workforce recruitment and training and strengthen contracting and data analytics expertise for performance monitoring and oversight.”
In other words, achieving meaningful clinical integration—where providers truly coordinate care across mental and physical health domains—requires significant infrastructure, staff, and oversight. Simply changing payment structures isn’t enough. Without robust systems in place to support care coordination, integrated models may fall short of their intended goals.
A Continued Push Toward Value-Based Models
Despite these findings, many leaders in the health care industry remain committed to breaking down the silos between behavioral and physical health. Value-based care models, which reward providers for improving outcomes rather than increasing service volume, are driving much of this momentum.
Dr. Katherine Knutson, former senior vice president at UnitedHealth Group and CEO of Optum Behavioral Care, emphasized this point at Behavioral Health Business’ 2022 VALUE event. “We can eliminate the carve-outs,” she said. “That is the work that we’re doing. We’re pushing very hard at [UnitedHealth] with a lot of promising models to really move forward with a total cost of care approach.”
For large payers and policymakers, the appeal of a unified, value-driven care system is strong. Integrated Managed Care and Behavioral Health models may still hold promise if they are paired with the right supports and innovations. However, the path forward is more complex than once believed.
Lessons from Pennsylvania’s Carve-Out Success
Interestingly, some states that have maintained carve-out models are seeing positive results through alternative strategies. Pennsylvania stands out as a notable example. The state continues to operate a carve-out behavioral health system, but it does so through a county-level management approach that tightly integrates behavioral health with other social services such as housing, child welfare, and criminal justice support.
Dr. Matthew Hurford, president of Community Care Behavioral Health Organization and vice president of behavioral health for UPMC Insurance Services, explained why this model works. “There was a recognition early on that people with serious mental illness and substance use disorders … are often overly represented in the human service systems like housing, criminal justice, child welfare,” he said. “Since many of those services are managed at the county level in Pennsylvania, it made sense for the behavioral health Medicaid funding also to be managed at the county level.”
By giving local entities control over behavioral health and related services, Pennsylvania has created a model that is responsive to community needs and capable of delivering wraparound support. In some ways, this localized approach offers the coordination that Integrated Managed Care and Behavioral Health models aspire to—without fully merging behavioral and physical health under a single financial contract.
Moving Forward: Integration with Intention
The take-home message from this latest research is clear: Integrated Managed Care and Behavioral Health is not a magic bullet. While combining behavioral and physical health services under one MCO may offer administrative efficiencies and align with value-based care goals, it won’t automatically translate to better outcomes for patients—especially those with the most serious behavioral health needs.
To truly improve access, quality, and outcomes, states must look beyond financial structures and invest in the systems that make clinical integration possible. This includes building a qualified workforce, enhancing data and analytics capabilities, and fostering local partnerships that address the full spectrum of a person’s needs—from health care to housing to community support.
As Medicaid programs continue to evolve, policymakers and payers will need to strike a careful balance between integration and customization. Only then can they deliver on the promise of whole-person, equitable care for some of the nation’s most vulnerable populations.
