Blended Payment Models and Care Transitions: Analysis of a Statewide Payment Reform’s Impact on Transitions in Care and Care Termination From Outpatient Substance Use Treatment

Background: Blended payment models have been hypothesized as one approach to incentivizing service delivery that reduces premature termination of healthcare. In 2019, Vermont implemented a blended fee-for-service and capitated Medicaid payment structure for mental health and substance use treatment provided by community mental health centers. This study assesses the blended payment model’s impact on the odds of premature termination and transitions in care for Medicaid recipients in Vermont’s substance use disorder treatment system. Methods: This study employs a difference-in-differences design with a generalized two-way fixed effects model using Vermont-specific Treatment Episode Data Set-Discharges data for 2017 through 2019. Treatment episodes of adult Medicaid utilizers were compared to episodes of adult non-Medicaid utilizers pre-and-post implementation of the blended payment model. Results: The odds ratio for termination from intensive outpatient and outpatient programs for Medicaid utilizers post-intervention was OR = 0.730 (p < 0.010). Treatment episodes also had higher odds transfer of care for Medicaid utilizers post-blended payment implementation (OR = 1.45; p < 0.001). Conclusions and implications: These results provide evidence that incentivizing co-occurring care through blended payment models may increase the availability of co-occurring mental health and substance use disorder treatment within community mental health centers. This increase in availability may also enable transfers of care from the rest of the substance use disorder treatment system while reducing premature termination from care.