State Licensing And Reimbursement Barriers To Behavioral Health and Primary Care Integration: Lessons From New Jersey

Integrating behavioral and physical health care is a promising development that is gaining momentum in states across the country-and with good reason. A solid research consensus demonstrates that integrated care that treats the “whole person” results in improved health outcomes for patients, while lowering the cost of care.

Historically, physical health care and behavioral health care have been regulated and financed differently and provided through separate delivery systems.

Changing this well-entrenched paradigm will enhance health equity and improve outcomes for those with physical and behavioral health conditions. However, making change in this arena is challenging.

In the past few years, projects have been launched in New Jersey to improve integration in publicly financed systems of care. Through this process, many stakeholders have come to recognize that among the most significant barriers to success is the lack of a clear understanding of the state's licensing rules and financing mechanisms and how they affect integration. Each state has its own unique policies that create particular challenges for integration. By learning from our experiences in New Jersey, those in other states working to facilitate integration will be better prepared to assess and address those barriers in their states.

Mapping the Licensing and Reimbursement Landscape

The Nicholson Foundation realized the need to address these barriers through its experience funding care integration pilots at five primary care clinics throughout New Jersey. (The state also funded several pilots to integrate care at behavioral health sites during this same timeframe.) The foundation initially anticipated that its pilot projects would focus mainly on leadership, cultural, clinical, and workflow issues, with a goal that the clinics would be able to bill for these services through current reimbursement systems-thus enabling them to become self-sustaining within one to two years.

However, as pilot primary care sites sought reimbursement for the combined services that were previously unavailable in their clinics, their efforts were significantly impeded by New Jersey's complex and confusing policies. We realized that to be successful at service delivery integration, a clear plan for identifying and addressing the legal, financial, and regulatory barriers to integration was needed.

To create this plan, we needed an accurate “map of the landscape” for New Jersey to use. Therefore, The Nicholson Foundation commissioned Seton Hall University School of Law to examine and clarify the state's policy environment and deliver a detailed report with findings and recommendations made available to all stakeholders, including the state. The Seton Hall team examined the literature on behavioral health and primary care integration and delved into the details of New Jersey's regulations on licensure and reimbursement. They also had extensive conversations with practitioners and administrators, state regulators, academics, and advocates. In particular, they developed close working relationships with state government officials who manage the responsible agencies.

In New Jersey, behavioral health and primary care providers are licensed and funded by different departments within the state's government (the Department of Human Services and Department of Health, respectively). A similar situation also occurs in other states (such as Massachusetts), and this means that those attempting to integrate services must navigate a complex array of policies overseen by multiple authorities.

Having multiple authorities with intersecting responsibilities in the Garden State hinders the reimbursement of crucial services and exponentially increases confusion. Interviews conducted by the Seton Hall team revealed that staff at both primary care and behavioral health centers often didn't know which regulations applied as they moved toward integration. And as there was no previous systematic examination of how existing policies might apply to integrated models of care, even the regulators and the payers were sometimes unsure of what the letter of the law required.

Here is just one example that emerged from the research: Some clinics reported that they were told by state licensing officials that they would have to construct separate break rooms and bathrooms for primary care staff and behavioral health staff in order to be licensed to provide integrated services. However, the responsible state agency later affirmed that there is no such requirement for licensure.

Charting a Path Forward

The Seton Hall report identified a host of small and large obstacles throughout New Jersey's financing and licensing landscape, and it closed with recommendations for specific steps that the Garden State can and should take to facilitate the integration of primary and behavioral health care.

Of course, there is a big difference between providing recommendations and providing actionable recommendations that will lead to substantive change. That is why the Seton Hall team worked closely throughout the process with state officials from multiple agencies who helped to conceive the workable solutions offered in the report.

This strategy is already showing signs of success. The two departments responsible for licensing recently announced the joint creation of a “Shared Space Waiver,” which allows providers to offer both behavioral and primary care in the same facility. This move, which is consistent with the recommendations in the report, demonstrates the state's openness to making further advances to accommodate integrated care.

Lessons for Other States

Several states (including Colorado, Maine, Missouri, Oregon, and Texas) are advancing new models of integrated care payment and delivery, and they are at different places in their journey. We know that our situation in New Jersey is analogous to what many states are facing and offer the following suggestions based on our experiences:

• Carefully scrutinize your regulatory environment. Knowing the letter of the law is not enough. It is important to know both the law as written and how it is interpreted and applied. Both are key to understanding the regulatory environment in any state.


• Identify and involve a wide group of partners. Truly understanding the barriers to integration in each state's context requires seeing the issue from many perspectives- from consumers, to physicians, to mental health and substance use specialists, to government regulators, to advocacy organizations, and industry trade associations. Furthermore, once the barriers are identified, the relationships built with these partners can encourage champions for change, who can ease the process of building models of integrated care.


• Work with, and not against, government agencies. Issues surrounding health care reform-and behavioral health care reform in particular-can be sensitive, especially for many veteran state employees accustomed to long-established ways of doing their jobs. Seeking to change licensing and reimbursement strategies that do not reflect current best practices may be viewed as an attack against those employees, since they may have drafted and/or reinforced the current practices. It is important to be sensitive to this dynamic and take a collaborative approach.


• Focus on the needs of the patients. Every change process has perceived winners and losers, and people and organizations may have vested interests in maintaining the status quo. To lessen resistance to change, it is helpful to stress how integration helps patients and their families live healthier and more productive lives-this reinforces why primary care and behavioral health providers were drawn to their work in the first place. Improving the overall health outcomes of their patients is also important to the financial health of their organizations at a time when reimbursement is moving toward value-based payment models.


• Base policy changes on clinical experience. Efforts to support integration at the clinic level may not fully succeed and be sustainable if the licensing and financing obstacles are not addressed-especially if a project is seeking reimbursement from public sources. Likewise, it is important that proposed new policies be based on the experience of clinical integration efforts taking place on the ground in both primary care and behavioral health settings. Therefore, efforts to reform state policies and to transform clinical practice should guide each other and be undertaken concurrently.

Related reading from the GrantWatch section of Health Affairs Blog:

“Advancing Integrated Behavioral Health Care In Maine And Texas: Lessons From The Field,” by Becky Hayes Boober of the Maine Health Access Foundation and Rick Ybarra of the Hogg Foundation for Mental Health, August 11, 2015, Health Affairs Blog.

“Bridging The Gap Between Behavioral And Primary Health Care For Low-Income Patients,” by Rachel Wick of the Blue Shield of California Foundation, May 16, 2015, Health Affairs Blog.