Emerging clinical commissioning groups could learn a lot from the way mental health services are being incorporated into an overall model of healthcare by independent practice associations in California, say Beacon Health Strategies colleagues Dr Emma Stanton and Brian Wheelan.

30 years ago, Californian psychologist Dr Randy Davis wondered how his clinical practice would survive following disruptive developments in the California healthcare market. He was not alone.

In response to commissioners (mostly large employers) and insurance companies’ desire for lower cost healthcare, doctors were rapidly grouping together to form independent practice associations. IPAs gradually took over the clinical gatekeeper role, previously performed by US insurance companies. This resulted in a new model of healthcare commissioning whereby IPAs were given a fixed sum of funding per enrolee adjusted for risk, similar to NHS proposals for clinical commissioning groups.

The haste with which Californian doctors formed IPAs was not without significant cost. As with CCGs, there was no clear evidence base regarding exactly what kind of medical groups could successfully accept risk and effectively manage care.

In California, this unknown ultimately came to a head in the late 1990s when some IPAs started to become insolvent. One group left California physicians with more than $100m in unpaid medical bills.

Since then, there has been considerable consolidation among IPAs and a model of what makes a successful IPA in California is emerginghas emerged: defined not only by a large practice or large number of doctors in the IPA but crucially a mix of GPs and specialists (see table 1, attached right).

Quality and cost

Risk delegation to IPAs was ultimately successful in achieving its lower cost objective. As a consequence, some of the largest purchasers of Californian healthcare, such as the California Public Employees Retirement System and the Pacific Business Group on Health, were able to reduce their total insurance premiums by 7 per cent in 1995 and an incremental 4 per cent in 1996.

As significant as these savings were, what was most important for the large commissioners was knowledge that patients were receiving higher quality care. This led to the first systematised collection of outcome measurement in US healthcare history.

Through directly linking collection and measurement of quality indicators to financial compensation, commissioners incentivised IPAs to strive for care improvements as well as cost savings. Consequently Californian IPAs are twice as likely to report outcome data and patient satisfaction as other medical groups across the US, (see table 2, attached right).

Delegating risk to medical groups proved to be a successful model; Californians receiving care under a delegated risk IPA arrangement spend considerably less time in hospital than the national average (an average of 139 inpatient days per 1,000 people versus the US average of 277).  Consequently, California remains a lower cost healthcare market today compared to other US states.

Integration of mental health and physical health care

While most Californian IPAs accepted physical health risk, many refused to accept mental health risk. This left specialist practitioners, such as Dr Randy Davis and colleagues, to create specialist mental health IPAs that contracted directly with large commissioners and non-mental health providing IPAs.

This led to mental health existing in a silo of care, failing to achieve the benefits of an integrated care approach, particularly for patients with both physical and mental health comorbidities. Ignoring mental health was also a short sighted decision by IPAs bearing financial responsibility for the cost of patient care, as mental health co-morbidity is a major driver of medical costs. 

Recent studies by the Centre for Health Care Strategies in US have found that Medicaid patients with disabilities frequently have multiple chronic conditions (c.67 per cent have three or more) and very high rates of mental illness (c.49 per cent). Although beneficiaries with disabilities make up only c.25 per cent of total Medicaid patients, they account for c.70 per cent of Medicaid program spend. Claims data illustrating the impact of a comorbid mental health condition on overall health spend is shown in figure 1.

In response to the market need for cost-effective, quality mental health careintegrated with IPAs,Iin 2010, Dr Randy Davis joined forces with Beacon Health Strategies in 2010 to expand the breadth and depth of his IPA business. Beacon developed Dr Davis’s IPA into an integrated physical and mental health IPA. Dr Davis’ new model of care built on his existing mental health expertise to provide speciality case management to individuals with co-morbid chronic medical and mental health illness at a competitive price level. 

Dr Davis, together with Beacon, invested heavily in informatics to enable him to identify, assessand intervene with co-morbid patients quickly. In addition, his informatics enabled him to put the relevant patient information (bio-psycho-social assessment results, prescribing information, and socialsupport structure) in the hands of the whole treatment team.

Important lessons for CCGs from the California IPA experience are that they must invest in identifying and treating individuals with poor mental health, especially those with co-morbid physical health conditions, to improve overall health outcomes and lower overall costs. Targeting the majority of resources on physical health conditions, leaving mental health care in a separate silo, is unlikely to meet the Nicholson challenge.

Lessons learnt in California

  1. Successful IPAs have a mix of GPs and specialists and have partnered with external expertise for specific areas such as mental health.
  2. Improved integration between physical and mental health care is necessary to improve overall outcomes for patients and reduce overall cost for commissioners.
  3. Mature, high performing IPAs tend to be large practices with a large number of doctors.
  4. With direct budgetary responsibility, IPAs needed adequate tools and expertise to manage the financial and risk management requirements.
  5. Good data collection and measurement of quality indicators enabled purchasers to distinguish between services on a non-cost basis.