The Office of Health Care Affordability (OCA) presented an initial framework for defining behavioral health spending and setting an investment benchmark, telling the board the work will be phased and will begin with commercial and Medicare Advantage data while DHCS and other state partners are engaged for Medi‑Cal and other public programs.

Margarita Brandt, assistant deputy director, introduced the behavioral health investment work stream and said the work aims to measure the percent of total health care expenditures allocated to behavioral health and to set a spending benchmark that advances statewide priorities such as access, equity and integration with primary care. Debbie Lindes, health care delivery system group manager, walked the board through a three-module proposal: claims‑based behavioral health spending, non‑claims payments, and a separately measured behavioral health‑in‑primary‑care module that counts toward the behavioral health total.

OCA emphasized statutory constraints and timing: the office must measure behavioral health as a share of total health care expenditures (THC) and may use that measurement to inform an investment benchmark. Staff recommended beginning with commercial and Medicare Advantage markets because OCA’s current data collection covers those payers, and noted they are actively talking with the Department of Health Care Services (DHCS) about adapting methods for Medi‑Cal and county behavioral health funding.

Staff described several tradeoffs board members will need to decide on, including whether to restrict the behavioral health definition by diagnosis codes (the route used by other states), by care setting (for example tracking telehealth or residential care separately), or by provider type (using taxonomies to identify behavioral health clinicians). OCA said diagnosis-based definitions make it possible to separate substance use disorder from mental health spending and to capture services delivered by non‑behavioral clinicians (for example in emergency departments), but that approach differs from OCA’s primary care measurement, which is provider/service based.

The office also acknowledged data limitations. OCA staff and consultants noted HPD (the state’s all‑payer claims database) has promise but currently misses some populations (notably many self‑insured lives), and HPD encounter data have gaps that complicate outpatient intensity measurement. As a result, staff proposed relying on audited HCAI annual financial data for inpatient measures while developing methods to incorporate HPD and other sources for outpatient spending. OCA plans a deeper HPD presentation in Q1 2025 and will publish technical specifications and offer technical assistance for behavioral health data submissions.

Advisory committee feedback so far urged outreach to additional stakeholders (clinical organizations, emergency medical personnel, people with lived experience), cautioned that increases in institutional care do not necessarily improve outcomes, and urged attention to telehealth, capitation, peer supports and community‑based preventive services. Several board members and commenters pressed OCA to study out‑of‑plan (self‑pay) behavioral health spending and to consider how benchmark design can direct investments to high‑value outpatient and community care rather than institutional care.

Next steps: staff said they will continue work with the investment and payment work group and the advisory committee, run supplemental analyses with sibling state purchasers and the HPD where feasible, and return with interim updates in early 2025. The office suggested it will bring a recommended behavioral health investment benchmark to the board for consideration in May 2025.