OCA proposes payer‑specific, phased benchmark to increase in‑network outpatient behavioral health spending

The Office of Health Care Affordability (OCA) presented preliminary analyses of commercial claims showing increases in behavioral health spending and proposed a two‑phase, payer‑specific benchmark to push additional investment into in‑network outpatient and community‑based behavioral health services.

OCA staff told the OCA investment and payment work group that the draft approach would use each payer’s 2025 spending as a baseline and require annual increases in per‑member‑per‑month (PMPM) spending for 2025–2029, then reassess and reset longer‑term goals for 2030–2034 based on the first phase’s experience. “OCA’s recommending that its benchmark focus on in‑network outpatient and community based services,” said Debbie Lindes, OCA’s healthcare delivery system group manager.

The proposal follows OCA’s review of Health Care Payments Data Program (HPD) analyses, and parallel work by Covered California and CalPERS, using a Milbank Memorial Fund–recommended code set to identify behavioral health spending in claims. OCA staff summarized that HPD commercial claims show behavioral health growing from roughly 6.6% of total medical expense in 2018 to about 8.2% in 2023, and that in‑network outpatient/community behavioral health PMPM rose at an average annual rate near the mid‑teens across 2018–2023. OCA used an illustrative average PMPM value from HPD (about $20.23) to model how 10%, 15% or 20% annual increases from a 2025 baseline would accumulate by 2029.

Why it matters: OCA has a statutory mandate to measure and promote sustained systemwide investment in behavioral health and to set spending benchmarks. The agency and work group said the benchmark is intended to expand in‑network outpatient capacity, support integration of behavioral health with primary care and social services, and improve access and outcomes while monitoring spending growth consistent with OCA’s broader spending growth targets.

Meeting participants raised several cautions and questions. Multiple work group members noted that the presented HPD results cover only commercial markets (mandatory submitters and some self‑insured plans) and exclude Medi‑Cal, Medicare fee‑for‑service and some non‑claims payments; OCA staff agreed the HPD analyses are preliminary and that methods to convert encounter and capitation data to claims equivalents varied across analysts. “Telemedicine definitely increased access for behavioral health,” said Parnaca Saxena, a geriatric psychiatrist representing the California State Association of Psychiatrists, noting telehealth’s effect on no‑show rates and outpatient visit access.

Hospital and provider representatives asked for more granular location and service breakdowns. “It would be really interesting to know … how much of that was in hospital care versus outpatient,” said Kirsten Barlow of the California Hospital Association, noting facility‑based services and emergency department visits can be high‑cost drivers.

Work group members also emphasized the limitations of measuring only commercial claims: several speakers flagged County behavioral health, Drug Medi‑Cal and out‑of‑pocket spending as large components of behavioral health care that are not captured in the HPD commercial results. Beth (work group member) stressed that total medical expenditures as defined for this measure are a subset of overall behavioral health spending; OCA staff said they are continuing discussions with the Department of Health Care Services (DHCS) about how Medi‑Cal should be considered and measured.

Concerns about equity, feasibility and the proposed growth rate were common. Some participants warned a uniform, high annual growth target (the modeling offered 10%, 15% and 20% examples) could be challenging for payers that already spend more on behavioral health or for funding models used in Medi‑Cal. “I have similar reservations … about a blanket 15% year‑over‑year increase,” said a payer representative (Sarah), noting differences across plans and lines of business and the difficulty of translating a PMPM growth target into county‑funded Medi‑Cal specialty mental health services.

Data and analytic requests: participants requested supplemental analyses to clarify drivers of the increase — service categories, diagnoses, price versus utilization effects, distribution across payers, telehealth versus in‑person care, and demographic or geography‑based disaggregation where feasible. OCA and HPD staff indicated some of these analyses are possible through HPD but may require additional time and resources.

Next steps and timeline: OCA plans to present a draft recommendation for public comment in June, brief the advisory committee the same month, present the benchmark and public comments to the OCA board in July, and return to the board for possible adoption in August. OCA said phase‑one performance years would be 2025–2029 (using 2025 as the baseline) and that OCA would reassess in 2029 using 2027 data to inform a 2030–2034 benchmark period. Staff emphasized the two‑phase approach is intended to allow recalibration after the first period of experience.

What was not decided: the work group did not adopt a specific annual growth rate or a single final benchmark. There were no motions or votes recorded; OCA staff solicited further written feedback and supplemental analysis requests.

Ending: OCA will collect and (as capacity allows) run the supplemental analyses requested by the group, continue discussions with DHCS about Medi‑Cal measurement approaches, and share updated datasets and revised benchmark proposals at upcoming meetings and the public comment period in June.