The $12B Behavioral Health Challenge: Why Health Plans Must Prioritize Care Coordination and Value-Based Care Today

The Challenge: Fragmented Care and Missed Opportunities

Health Plans managing BH, MH, SUD, and reentry programs are grappling with significant challenges:

• 67% of justice-involved individuals are rearrested within three years due to unaddressed mental health needs.
• 30-40% of detox patients are readmitted within weeks because transitions to outpatient programs fail.
• 49% of adults with mental illness receive no treatment, while 169 million Americans live in provider deserts.

These failures aren’t just clinical—they’re financial. Poor coordination drives $12B annually in avoidable costs, jeopardizes state contracts, and undermines progress toward value-based care. This fragmented system represents a challenge and an opportunity for health plans to lead the way in transforming behavioral health outcomes.

Why Health Plans Are Struggling: Seven Core Challenges

To address the $12B behavioral health challenge, Health Plans must confront seven systemic barriers:

1. Strategic Alignment Gaps: Behavioral health initiatives often operate in silos, disconnected from broader organizational goals. Separate funding streams for physical and behavioral health create barriers to integrated care, leaving vulnerable populations disconnected from essential services during critical transitions like reentry from incarceration or detox discharge.
2. Inefficient Concurrent Review Processes: Manual and outdated workflows—spreadsheets, emails, and faxes—dominate concurrent review processes critical for monitoring patient progress. These inefficiencies delay real-time updates and hinder seamless care transitions.
3. Lack of Software: Providers need a software solution that simplifies care coordination without adding administrative burdens. Enabling real-time collaboration across inpatient detox centers, intensive outpatient programs (IOPs), residential facilities, and reentry programs is essential.
4. Fragmented Data Ecosystems: Siloed systems prevent Health Plans from accessing comprehensive data across all levels of care. Without unified platforms for BH/MH/SUD providers to share information seamlessly, patients fall through the cracks during critical transitions—leading to Against Medical Advice (AMA) discharges and avoidable readmissions that drive up costs.
5. Unmeasured ROI: Defining and tracking ROI for behavioral health initiatives remains challenging due to inconsistent quality measures across providers. Metrics like program completion rates, AMA discharges, or recidivism reduction remain underutilized despite their potential to drive accountability and improve outcomes.
6. Reactive Care Coordination: Without proactive strategies for monitoring patient engagement across levels of care, Health Plans remain stuck in reactive modes, addressing crises after they occur rather than preventing them altogether.
7. Provider Satisfaction Risks Star Ratings: Provider dissatisfaction with Health Plan engagement can directly impact Star Ratings—a key metric tied to state contract renewals and competitive bids.

The Value-Based Care Imperative: Turning Challenges into Opportunities

Despite growing consensus on the need for VBC models in behavioral health care, adoption remains slow due to systemic barriers:

• Lack of Infrastructure: Health Plans lack internal systems to establish VBC arrangements or track measurable outcomes in real time.
• Regulatory Reform: Unified benefits packages that integrate physical and BH/MH/SUD services are essential.
• Innovative Payment Models: Payers and providers must co-develop payment models covering physical and behavioral health services for specific conditions (e.g., depression + diabetes).

As VBC becomes an inevitable shift in healthcare delivery, these challenges present an opportunity for Health Plans to lead by prioritizing care coordination strategies that align with long-term goals.

The Cost of Inaction: A $12B Problem with No End in Sight

Failing to address these challenges carries significant risks:

• Fragmented care transitions = $12B annually in avoidable costs 
• Unmeasured outcomes = 33% dropout rates from IOPs
• Provider dissatisfaction = decline in star ratings

Without immediate action, Health Plans risk losing state contracts, alienating providers, and perpetuating crisis-driven care cycles that fail members and taxpayers.

Why Software is the Solution

To thrive in the evolving healthcare landscape—and meet the demands of VBC—Health Plans must adopt strategies that prioritize:

1. Longitudinal Care Coordination: Tracking members across inpatient detox centers, IOPs, residential facilities, and reentry programs ensures seamless transitions and reduces AMA discharges.
2. Real-Time Outcome Measurement: Establishing metrics like program completion rates or recidivism reduction allows Health Plans to demonstrate value while holding providers accountable.

The Time Is Now: Lead the Way with a Care Coordination Strategy

Value-based care is inevitable—but success depends on strategic alignment between Health Plans and BH/MH/SUD providers supported by robust care coordination strategies. By addressing gaps in transitions of care and implementing proven solutions, Health Plans can:

• Reduce costs by preventing avoidable readmissions.
• Improve outcomes through seamless longitudinal coordination.
• Strengthen provider relationships to enhance collaboration.
• Win competitive state contracts by demonstrating measurable success.

Every American pays the price for fragmented behavioral health care—but Health Plans have the power to change it. The time to act is now.

Contact Olio Today to learn how we can help you transform your care coordination strategy—and solve the challenges holding your plan back from delivering measurable results.