By Meena Dayak

SPARC Services & Programs (SPARC) is a behavioral health provider organization in North Carolina that has been providing home and community-based services since 2015. They serve 425 consumers monthly and employ 70 full-time staff. They focus on complex consumers—children and adults with severe and persistent mental illnesses (SPMI) who have not been successful with residential and other traditional treatment services—and work to keep them out of institutional care. Currently, most of their consumers are covered by Medicaid, although they have just started to expand into the commercial insurance space. SPARC’s service array includes outpatient services, home and community-based therapy services, rehabilitation services to help consumers transition from residential treatment to community living, support for daily living activities to help consumers live independently in the community, case management, and enhanced crisis response.

Since its inception, SPARC has operated predominantly through value-based reimbursement (VBR) arrangements with managed care organizations. SPARC’s Co-Founder and Chief Executive Officer, Teri Herrmann, MA, talked to OPEN MINDS about their VBR models and how they have helped to advance the mission of SPARC.

Reimbursement Models

SPARC currently has two VBR contracts with two managed care organizations (MCOs), Cardinal Innovations and Partners Behavioral Health Management. 26% of their consumers receive services under these VBR models, which constitute nearly 48% of SPARC’s total revenue.

Both of SPARC’s VBR contracts are based on per member per month (PMPM) case rates. When a consumer is referred to them, they do an assessment and seek initial authorization for treatment from the health plan. Typically they get a 6-month authorization and bill one unit per month. The case rates range from $2,800 to $3,000 per month.

SPARC’s very first health plan contract with Cardinal Innovations in 2015—for children’s services—was a value-based contract with downside risk. If a child receiving Family Centered Treatment® (FCT) services from SPARC entered into residential care either during the course of treatment or up to a year post-treatment, then SPARC had to give money back to the payer. “It was pretty unheard of in that landscape,” said Ms. Herrmann. After a year, SPARC re-evaluated the contract with the payer and decided that the goal was “too aggressive.” They re-negotiated the contract to make payback contingent on no readmissions within six months of treatment. The health plan was flexible with value-based contracting as it was new territory for them, too, said Ms. Herrmann. So now, if during treatment, or up to six months post-treatment, the consumer enters into residential care or stays in an inpatient setting longer than 10 days, then SPARC is charged back up to 30% of the amount that they have billed. Ms. Herrmann noted that they’ve had to pay monies back to their health plan, especially because the consumers they serve are so complex but SPARC remains committed to value-based contracting because of the longer term potential for revenue growth and the flexibility offered by the model to improve the quality of care.

In a second value-based contract with Partners Behavioral Health, SPARC has an incentive-based payment with upside risk only for children in FCT. If the children—who receive home and community based services from SPARC—are able to remain at home three months and six months after discharge from a residential facility, then SPARC receives incentives.

For one year, SPARC also had a value-based contract with Cardinal Innovations (operating under a North Carolina Department of Justice mandate) to help adults with SPMI—who had been “inappropriately placed” in adult care homes—transition to independent living in the community. This was a value-based contract with upside risk only, where SPARC was rewarded if they could help consumers transition successfully from the adult care homes and keep them in community housing through continuous interventions.

Success Factors For Value-Based Reimbursement

Ms. Herrmann attributes the success of value-based reimbursement to four factors—a strong referral network, the use of evidence-based practices in treatment, robust data integration and reporting capabilities, and a mindset of innovation and risk tolerance.

Value-based reimbursement—and the “willingness to take on consumers that no one else wants”—has strengthened SPARC’s status as a “preferred provider” with health plans and other state entities. They receive referrals from their MCOs, local hospital systems, state social services and juvenile justice departments, residential treatment facilities, and community-based provider organizations. Ms. Herrmann said, “We’ve got a pretty sophisticated referral process that tracks all our referral sources, and then aligns them with the payers. We can see what’s working and see where the holes are so we can put a referral marketing plan in place to address the gaps.” In addition, 85% of referral sources reported that SPARC kept them informed of the status of their referral. This “closed loop” referral approach strengthens SPARC’s appeal in helping to maintain continuity of care.

SPARC was built on the foundation of the family-centered treatment (FCT) model, an evidence-based practice (EBP) with a trauma treatment model of home-based family therapy that Ms. Hermann was involved in developing in the early 2000s. She underscored that using FCT helped to achieve the improved outcomes that value-based models demand. The use of EBPs is accompanied by relevant training and certification for staff using the model, which replaces some of the prior mandated state training that was not always relevant to the services staff delivered.

Ms. Herrmann describes herself as a “data nerd” focused on assimilating and continuously monitoring outcomes data to examine the potential to improve services. She said, “We don’t just want to measure if the person showed up. We want to objectively look at each person and if they are getting better.” They have built their electronic health record system to produce the key data and desired reports and are continuously working with their developers to manipulate and learn from the data. SPARC applies this data-informed approach across their value-based as well as fee-for-service programs so they can improve performance all around. Ms. Herrmann noted that the health plans are primarily looking for data on avoidance of emergency department utilization and avoidance of inpatient services or residential care for the consumers that SPARC serves. She said, “We’ve had a pretty long placement culture here in North Carolina that we’re slowly changing the tide on. If someone really needs those more acute levels of care, there is a place in the continuum for them. But we don’t want those services to be overutilized for the wrong reasons. And so that’s where we’re really focused for outcomes measurement right now.”

SPARC was proactive from the outset and proposed value-based contracting to their health plans. Ms. Herrmann elaborated, “As we were brainstorming and envisioning the concept for this company, we wanted to serve those niche individuals whose needs weren’t being met. And we were hearing from stakeholders and payers that they were really struggling to figure out what services to get to them. So we saw that we had to be innovative. We knew that starting a company and immediately jumping into value-based contracts was a little risky. But we also knew it would say a lot about us. As a new provider organization, we said to the health plans, ‘Let’s take this walk in value-based work together and learn.’ And this pitch for risk-based contracting opened doors that may not otherwise have been opened.”

Services & Outcomes

For 2019, SPARC reported the following outcomes from its range of services covered by value-based contracts (see SPARC Services & Programs: 2019 NC Outcome Data).

Family-Centered Treatment: Family-centered treatment (FCT) is an evidence-based practice with four phases of treatment—joining and assessment, restructuring, valuing changes, and generalization. FCT is targeted toward consumers at risk for higher levels of residential service—those with extensive histories of using acute services without successful outcomes; those who’ve been hospitalized with little prior treatment and are being recommended for residential services; and those currently in residential treatment where discharge is delayed because of lack of family systems.

Services are intensive with a minimum of 10 hours per month provided to the family. FCT incorporates trauma treatment and coordination with other systems, such as the school, justice, primary care, and social service systems as well as 24/7/365 crisis intervention services. FCT seeks to confirm and capitalize on internal changes within the family so that the family is not dependent on the therapist once services terminate. Families also have the opportunity to give back to their communities and share what they have learned with other families.

While starting FCT at SPARC, 57% of referrals were in some form of an out-of-home placement and 43% were at home with their family. After treatment, 81% of consumers receiving FCT were able to remain with or be reunified in the community with their family or another caregiver. 100% of families were engaged in treatment, participating in five or more sessions in 30 days. And 96% of families reported that treatment improved their family life.

In-Home Therapy Services: In-home therapy services (IHTS) is a combination of motivational interviewing and care coordination provided in the home and community to children and their families where there are complex clinical needs that traditional outpatient therapy cannot adequately address. IHTS is a time limited service, approximately 6 months, in which a therapist and the case manager work with the child and their family to meet the therapeutic needs as well as provide linkage to professional and natural supports. The case manager works with the various systems involved with the child and family, such as the school, primary care, social services, and justice systems. Upon discharge from IHTS, children and their families can continue to receive outpatient therapy to ensure continuity of care.

85% of families successfully completed treatment and 97% of consumers were either at home with family, or in other family placements, at the time of discharge from treatment.

Transition management services: Transition management services (TMS) is a rehabilitative service intended to increase and restore a consumer’s ability to live successfully in the community by maintaining tenancy in community housing. TMS increases the consumer’s ability to live as independently as possible, managing their illness, and reestablishing their community roles related to emotional, social safety, housing, medical and health, educational, vocational, and legal services. TMS provides structured rehabilitative interventions and works in partnership with the individual’s behavioral health service provider.

90% of members participating in services were able to both obtain and maintain their housing in 2019. Only 5% were discharged from the program because they needed a higher level of care. And the program is working with 98% of consumers are on four or more social determinants of health in addition to their housing needs.

Enhanced crisis response: The enhanced crisis response (ECR) service is intended to put supports in place as quickly as possible for youth with behavioral health needs that are at risk for abandonment, crisis episodes, or being placed in restrictive levels of care. With timely assessments and supports, ECR is intended to keep youth in their environment—such as non-therapeutic foster homes, kinship placements—or minimize needs for long stays in residential treatment. Services last 60 to 90 days on average. SPARC staff work with consumers and families to diffuse the imminent crisis and get the family linked to appropriate community-based services that allow the consumer to thrive and meet their goals.

71% of youth who were discharged from the program in 2019 were able to be discharged into the community with community-based services.

Overall, SPARC’s services received an average customer satisfaction rating of 4.6 stars on a 5-point scale. The net promoter score (based on consumers and families sharing the likelihood that they would refer others to SPARC services) was 4.3 stars.

Benefits Of Value-Based Reimbursement

Ms. Hermann explained that value-based treatment has incentivized service quality and built more staff buy-in for outcomes-driven treatment, afforded flexibility, and proved to be good for business development. She said, “We knew that the landscape of health care is shifting to value-based care, we want to jump in with both feet and have skin in the game. It forced us to say doing ‘A-level’ work isn’t good enough, we need to do ‘A-plus’ work. We committed to a pretty aggressive value-based contract because without that, we knew this would not be a sustainable model.”

The value-based model drives performance-based compensation incentives for staff, which increases their buy-in for achieving better outcomes. Ms. Hermann elaborated, “If a client is in crisis, the therapist response at eight o’clock at night is not just ‘Well go to the emergency room.’ Sometimes that’s a needed intervention but often it’s not. They know that once somebody goes to the emergency room, the whole treatment plan can get derailed. And so our clinicians want to go the extra mile, not only because it’s the right thing to do but also because we have some skin in the game. It creates just a little shift for them at the frontline level, so that they’re committed to providing unique services and really engage in creative problem solving.”

The services SPARC delivers under value-based contracts are labeled “in lieu of services” and have been designated by MCOs to meet an unmet need in their communities. Therefore service definitions afford more freedom and flexibility and avoid the need to fit the treatment model into a state plan amendment service definition which sometimes can be like “fitting a square peg in a round hole.” The VBR model is also designed to reduce administrative burden on provider organizations and payers. For example, given that FCT as an EBP is known to typically discharge families with successful outcomes after six months of treatment, six months of services are authorized at the outset. So instead of wrangling submissions for authorization, clinical professionals can focus on delivering needed services. And the intensity of treatment can be increased or decreased depending on current needs. “If a crisis happens and we need to increase the intensity and frequency of services, we don’t have to go back to that payer and request more time and risk potential denial. That is a huge difference between some of our fee-for-service vs. value based contracts,” said Ms. Herrmann.

Value-based contracting has created opportunity for SPARC to expand its mission to keep consumers out of institutional care. And it has allowed stakeholders to see their innovation and that creativity and to come to them when there are new needs. “It has allowed us to have opportunities that I’m not sure we would’ve had if we’d come in as a provider saying we want to do regular fee-for-service contracting,” Ms. Hermann said.

What’s next? As SPARC moves into providing more services for mild and moderate mental illnesses and pursues contracts with commercial insurance, value-based contracting will continue to define their business development efforts. They plan to work with their MCOs to move from an individual consumer focus to applying a population health lens in their VBR models. They are also looking to focus more on whole-person value-based care and to and certify and train staff to become a “care management agency” as part of North Carolina’s Medicaid transformation (see North Carolina Extends Deadline For Tailored Plan Care Management Applications To June 1, 2021). In addition to Cardinal Innovations Healthcare and Partners Behavioral Health Management, SPARC has entered into contracts with five more managed care organizations appointed by North Carolina Medicaid—WellCare of NC, AmeriHealth Caritas of NC, Blue Cross and Blue Shield of NC, United Healthcare of NC, and Carolina Complete Health, Inc. As these new MCOs get ready for value-based care—once they understand their new consumers and the needs—SPARC is well-poised to leverage their experience and hit the ground running. “We’re really committed to continuing to learn more and doing more in the value based space,” summarized Ms. Herrmann.