Phil Herschman, PhD CCO CRC Health Group WCSAD May 29,2014

1. Addiction Treatment Programs in the 21st Century—The Habits of Successful ProgramsThriving in the age of Parity and ACA Phil Herschman, PhD CCO CRC Health Group WCSAD May 29,2014

2. Two Major Federal Activities Impacting our Field: The Parity Act (MHPEA) Federal Healthcare Reform (ACA) 2

3. Insurance plans offering mental health and substance abuse treatment can no longer offer coverage that differs in dose, frequency, or quantity from coverage for physical health services such as diabetes or cancer. What is “Parity” anyway?

4. Notice the wording – “insurance plans offering mental health and substance abuse treatment..” The Parity Act doesn’t require that plans cover Substance Abuse and Mental Health treatment But…

5. That’s OK Because….. Healthcare Reform mandates the inclusion of substance use disorder treatment as one of the TEN Essential Benefits. It must be included by all companies offering health insurance (along with the 9 other Essential Benefits: Emergency Services, outpatient and inpatient services, pediatric and lab services…)

6. Estimates on Healthcare Reform Unprecedented increase in the potential market for mental health and addition treatment services In total, the CBO (Congressional Budget Office) estimates that the ACA will cover 27 million previously uninsured individuals 12 million more in Medicaid and 15 million in marketplace insurance plans

7. Estimates on Healthcare Reform Unprecedented increase in the potential market for mental health and addition treatment services MHPAEA and the ACA expected to expand behavioral health coverage for 62.5 million people 30.4 million individuals will have expanded behavioral health coverage and benefits. 32.1 million individuals could access substance abuse benefits for the first time 7

8. Implications of ACA and Parity—Lot’s of unintended consequences Implications of the Parity Act • The Final/Final rule was promulgated in November—it contained new language that supported the “intermediate levels of care” in behavioral healthcare (not implemented until July 2014) • However, the potential repercussions of the Final Parity Bill have not been fully vetted in the marketplace • What does intermediate care mean? • How will Payers (Public and Private) interpret this? • Parity will dictate what is covered as an essential benefit in the exchanges; however--Medicaid was “exempted” from Parity

9. Implications of ACA and Parity—Lot’s of unintended consequences Implications of ACA • The ACA will offer new markets for treatment services. New populations previously not served will have access to services but not necessary in the inpatient setting • As exchanges evolve, manage costs and adopt outcome driven models- more patients will likely be directed into lower levels of care, shorter lengths of stay and new forms of contracted reimbursement—this is a trend evolving now • There will be impacts on Medication Assisted Treatment—parity assures that these services will be covered for the expanded Medicaid populations, however exchanges will decide the scope

10. The Treatment Market Today ? Neither Parity nor ACA create demand In treatment: ~ 2,300,000 Abuse/Dependent ~ 23,000,000 Harmful Users 40,000,000 Low Level Use Little or No Use

11. Most People in Need of Addiction Treatment Do Not Receive It

12. More detail on the scale of the current market 23,000,000 --met criteria for substance abuse dependence… 2,300,000 --received treatment… 20,700,000 -- needed treatment but did not receive treatment 800,000 -- who say they tried to get treatment and could not. (Will ACA help?) 19,900,000Didn’t try to get treatment (Do we understand why? And will ACA help?)

13. So what’s the state of the field and why are we not reaching more people in need? • Highly fragmented and dominated by treatment techniques developed in the 1950s • Many providers do not deliver Evidence-Based Treatment • Many staff in the treatment field overall have few credentials and little education and no consistent credential for Counselors or Managers • Limited use of technology • Poor coordination of service with the medical community • Little use of data and research • Limited consumer knowledge of treatment—patient admission decisions based on perceptions not fact • Patients are marginalized, stigmatized and lack advocacy and currency with payers Despite this, we are dealing with the single most important public health problem in our nation We now have the potential for significant growth in the long run and the opportunity to fully leverage favorable law and regulation

14. Payer Response

15. What do Payers Want in this new market? • Ranked on patient experience • Quality of Documentation • Patient Safety • Outcome Measures

16. Provider Response

17. Who do we Treat? From Here: Treating only the most acutely impaired clients Acute Problems Notable Problems Little or No Use

18. Who could we Treat? To Here: Continue with our current clients Acute Problems Notable Problems Add treatment options for less severe clients Little or No Use

19. Six Habits of the Highly Effective Treatment Program Six Critical things for Treatment Programs going forward: • Programs must be “fleet of foot” • Develop financial sophistication • Establish a “Continuum” • Data Driven • Compliance is important • Evolve out of the “Residential” moniker Or…Who’s going to thrive in the New World……

20. Six Critical areas for Treatment Programs going forward 1. Programs must be “Fleet of foot”: • Program rigidity, resistance to change and failure to adopt evidence based treatment will limit a programs involvement in the new market • Deliver effective (Evidence-Based) Practices • New services to meet the new demand • Organizations must have an ability to change critical components of their clinical and operational structure • Clinical and financial flexibility

21. Implications for Treatment Programs • 2. Programs must be financially sophisticated • Financial Manger will be key member of the Program Team • Billing and collecting is a given provided- additional requirements for documentation and processes • Understand “risk” • New levels of analysis and data management • Cost management • Contract evaluation • Programs will need to document and bill like all other healthcare providers

22. Six Habits of the Highly Effective Treatment Programs 3. Establish a Continuum: • Integrate the concept of Chronic Care • Disease management – Continuing Care critical • Ability to transition to lower and higher levels of behavioral healthcare within the community • Ability to transition data and records to the broader medical community and the payer • Develop a portable EHR for patients • Not necessary to be a one stop shop—but an integral part of the care system in a community

23. Partner with Other Healthcare Providers From Here: Bricks And Mortar WHERE DO WE WANT TO PROVIDE SERVICES?

24. Partner with Other Healthcare Providers To Here:

25. Six Habits of the Highly Effective Treatment Programs 4. Programs Must be Data Driven: • Three Key areas of data : • Management Data • Operational and management performance reports (financials and critical operating metrics, KPI’s) • Internal and external benchmarks • Dashboards • Operational Analytics—the deep dives • Outcomes/Performance Data • Measure our performance/show value • Patient satisfaction • Educated, credentialed staff • Clinical interactions and measurements • Failure rates • Participation in the continuum

26. Six Habits of the Highly Effective Treatment Programs • Market Data • Is your organization a market out organization? • Demand data • Competitor data • Payers (Public and Private) market penetrations • Rates and Pricing

27. Six Habits of the Highly Effective Treatment Programs 5. Rigorous Compliance Program: • Playing in the public markets and new commercial insurance markets will demand a higher degree of compliance and consistency of documentation • Private Insurers are demanding more documentation and support of claims and compliance with standards • Utilize the concept of medical necessity and supporting criteria in support documentation • Programs will need to support a robust compliance program • EHR will be a critical component of a compliance program • Rigor of Compliance will be a factor supporting the of the quality of a program the eyes of third party payers

28. Six Habits of the Highly Effective Treatment Programs 6. Evolve out of the “Residential” Moniker: Part of the issue resides in the definition for “residential care” • Widely perceived as social model or therapeutic community • Limited understanding of services provided in the residential level of care • Insurance contracting practices often shift contracted services to residential from inpatient despite significant overlapping services: The “residential model” Detox is medically supervised Physician services 24 Hour Nursing coverage Credentialed and licensed staff • Residential Care evolved as a licensing artifact and does not reflect actual scope of service: detox, rehabilitation/inpatient, and partial services

29. It is estimated that 20-40% of substance abuse treatment programs will not be ready for healthcare reform. Healthcare Reform & SA Treatment Don’t be one of those programs!

30. Questions