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Data Brief: Behavioral Health Spending in California’s Commercial Market

In 2023, behavioral health spending, which includes both mental health spending and substance use disorder spending, accounted for 8.2% of total claims payments in California. The share of spending on behavioral health has been steadily increasing as a share of total spending: from 6.6% in 2018 to 7.2% in 2020 and 7.7% in 2022.

Introduction

Mental illness and substance use disorder conditions affect millions of Californians. Increasing prevalence in recent years, exacerbated by the COVID-19 pandemic, has focused attention on access to services. The State of California has launched several initiatives to address this issue, including major investment in behavioral health (BH) care delivery system infrastructure and a number of new benefits and programs for Medi-Cal members. State and federal requirements for parity of BH benefits with medical/surgical benefits have also been expanded in recent years. HCAI’s Office of Health Care Affordability is charged with setting a statewide benchmark for BH investment.

Despite growing attention to BH services, data on statewide spending is lacking. This analysis from the Healthcare Payments Data System (HPD), California’s all-payer claims data, helps fill that gap. Payment data from commercial health plans in California for the years 2018 through 2023 were analyzed, using the approach recommended by the Milbank Memorial Fund. BH services claims are defined as those that have a primary diagnosis of a BH condition or that include mental health (MH) or substance use disorder (SUD) screening or assessment services regardless of diagnosis; prescription drug claims are included if the national drug code (NDC) is a BH treatment. The analysis focuses on claims-based payments; capitation and other non-claims payment is excluded.

Services and associated payments are organized into reporting categories and subcategories for analysis based on revenue codes, procedures codes, and place of service codes per Milbank’s Technical Specifications.

Reporting Categories:

  • Outpatient and community-based: subcategories are professional primary care (e.g., care management services for BH conditions, medication management), professional non-primary care (e.g., psychotherapy, psychiatric evaluation, alcohol screening), outpatient facility, mobile services
  • Inpatient: subcategories are facility and professional
  • Emergency Department / Observational (no inpatient admission), includes both facility and professional
  • Long-term Care and Residential Care
  • Prescription Drug treatments for MH and SUD conditions based on National Drug Code
  • Other Services

For additional information about the HPD, including details on data sources, populations included, and data elements available, see HPD Public Reporting FAQ and HPD Resources.

Key Findings

  • In 2023, BH spending, which includes both MH spending and SUD spending, accounted for 8.2% of total claims payments. The share of spending on BH has been steadily increasing as a share of total spending: from 6.6% in 2018 to 7.2% in 2020 and 7.7% in 2022.
  • A much larger share of BH spending goes toward MH services compared to SUD treatment. In 2023, 7.2% of claims spending was for MH services, while 1% of spending went to SUD. That translates to 88% of 2023 behavioral spending on MH services, similar to the ratio in years 2018-2022.
  • In 2023, total claims spending for BH services as reported to the HPD was $5.1 billion.
  • Spending on BH has risen steadily since 2018, the first year for which data is available. In 2018, claims-based spending on BH services was $3.1 billion, increasing to $4.3 billion in 2021 and $5.1 billion in 2023.
  • The largest service category of BH spending in 2023 was outpatient professional non-primary care, at 43% of spending. The next largest service category was prescription drugs, at 18% of spending. Inpatient facility spending accounted for 10% of the total, and all other service categories collectively comprised 29%.
  • Fastest growing service categories were outpatient professional non-primary care (from 33% to 43% of BH spending) and residential facility services (from 4% to 9% of BH spending).
  • The distribution of spending by service category is very different for SUD services than it is for MH services. In 2023, SUD spending was predominantly for residential and inpatient care (60%, compared to 13% of MH spending), while MH spending was predominantly for outpatient professional services and prescription drugs (70%, compared to 10% for SUD spending).

Visualization

Related Resources:

Notes:

  • In 2023, 20% of medical claims for BH services were capitated (24% for the period 2018-2023); those claims are excluded from this analysis. None of the retail prescription drug claims for BH treatments reported to the HPD were capitated, and all are included in the analysis.
  • The “Other Services” subcategory captures claims without a primary BH diagnosis but that includes BH CPT codes and claims with a primary BH diagnosis that do not fit into any of the other subcategories.
  • Payment data includes both the amount paid by the health plan and any member cost-sharing (copayments, coinsurance, deductibles). Both in-network and out-of-network payments are included; payments made directly from individuals to providers without relying on insurance are not captured.

How HCAI Created This Product

Additional Information

Topic: Cost Transparency
Source Link: Cost Transparency – Healthcare Payments Database
Citation: HCAI – Healthcare Payments Database – Behavioral Health Spending in California’s Commercial Market
Temporal Coverage: 2018-2023
Spatial/Geographic Coverage: Statewide
Frequency: Annually

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