ACOs and the Whole-Person Care Imperative

The ACO shared savings model creates a financial incentive to manage the whole person. An ACO is accountable for total cost of care across all service categories, which means that avoidable hospitalizations driven by untreated behavioral health conditions, substance use disorders, or oral disease reduce shared savings whether or not the ACO directly provides those services. The logic is straightforward: conditions that drive emergency department visits, inpatient admissions, and post-acute care utilization generate spending that counts against the ACO’s benchmark.

The evidence base connecting behavioral health, substance use, and oral health to total Medicare spending is substantial. Beneficiaries with co-occurring mental health conditions have hospitalization rates roughly four times higher than those without. Periodontal disease is bidirectionally linked to diabetes management, cardiovascular disease, and stroke risk. Substance use disorders drive ED utilization, hospitalizations, and skilled nursing facility spending. ACOs whose attributed populations include significant prevalence of these conditions bear the downstream cost regardless of whether they have invested in upstream management.

Most ACOs have not invested in this capacity despite the financial case. The integration gap reflects multiple factors: behavioral health reimbursement rates that do not support embedded staffing, provider supply constraints, cultural separation between medical and behavioral health delivery, and the absence of a Medicare dental benefit. Addressing these gaps is not optional for ACOs that want to generate shared savings at scale.

The Behavioral Health Integration Case

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Roughly one in four Medicare beneficiaries lives with a mental health condition. Depression, anxiety, and serious mental illness are associated with increased medical spending, medication non-adherence, and premature mortality. Beneficiaries with behavioral health conditions and co-occurring physical conditions have hospitalization rates that substantially exceed those with physical conditions alone. For patients with chronic kidney disease, co-occurring depression doubles the risk of hospitalization and increases all-cause mortality by 41 percent.

The spending implications are concentrated in categories that ACOs are accountable for managing. Avoidable hospitalizations, emergency department visits for conditions that could be managed in ambulatory settings, and extended post-acute care utilization all count against the ACO’s benchmark. A beneficiary with poorly controlled diabetes whose depression drives medication non-adherence generates spending that the ACO cannot avoid through diabetes care management alone.

Most ACOs have limited behavioral health capacity. Research examining MSSP and Pioneer ACOs found little evidence of integration between behavioral and medical management. The majority of ACOs contracted out behavioral health services rather than embedding them in primary care. Without integration, ACOs cannot systematically screen for behavioral health conditions, coordinate care between medical and behavioral health providers, or track the impact of behavioral health interventions on total cost.

The integration gap persists for structural reasons. Behavioral health reimbursement rates under fee-for-service do not support embedding behavioral health providers in primary care settings. The national shortage of psychiatrists and psychiatric nurse practitioners limits workforce availability. The cultural separation between medical and behavioral health care delivery creates referral patterns rather than collaboration patterns. ACOs operating under shared savings have financial incentive to overcome these barriers, but the operational investment required is substantial.

What integration looks like in high-performing ACOs includes co-located behavioral health providers in primary care settings, systematic screening for depression and anxiety at annual wellness visits, care coordination protocols that connect medical and behavioral health providers, and measurement systems that track behavioral health intervention impact on total cost of care. The Psychiatric Collaborative Care Model, which Medicare covers under behavioral health integration codes, provides a reimbursement pathway for team-based care that includes psychiatric consultation, care management, and systematic treatment adjustment.

CMS has expanded Medicare coverage for behavioral health services in recent years. Beginning in 2024, Medicare covers intensive outpatient program services for beneficiaries who need more intense treatment than outpatient therapy but less than partial hospitalization. The 2023 physician fee schedule introduced billing codes for community health integration services that can be provided by community health workers and peer support specialists. These coverage expansions create new pathways for ACOs to build behavioral health capacity, but the coverage alone does not create the organizational infrastructure required to use it effectively.

Substance Use Disorder as an ACO Priority

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An estimated 1.7 million Medicare beneficiaries live with a diagnosed substance use disorder. The actual prevalence is likely higher given underdiagnosis and the stigma that deters disclosure. SUD drives utilization patterns that directly affect ACO financial performance: emergency department visits for overdose or withdrawal, hospitalizations for SUD-related complications, and extended skilled nursing facility stays.

The opioid epidemic’s impact on Medicare populations has been substantial. Opioid use disorder prevalence among Medicare beneficiaries increased significantly during the 2010s, and the mortality rate for opioid overdose among older adults has risen faster than for younger populations. Beneficiaries with SUD have higher rates of co-occurring chronic conditions, which compounds the total cost of care impact.

Medication-assisted treatment with buprenorphine, methadone, or naltrexone is the evidence-based standard for opioid use disorder. Research demonstrates that MAT reduces ED utilization, hospitalizations, and total healthcare costs. ACOs with MAT prescribing capacity within their network can intervene in the utilization pattern rather than bearing its downstream costs.

Building SUD management capacity requires operational investment. SUD screening must be integrated into care management protocols so that beneficiaries with undiagnosed conditions are identified. Providers within the ACO network must be trained and waivered to prescribe buprenorphine. Care coordination workflows must connect beneficiaries with treatment resources. Recovery support services, including peer support specialists and case management for housing and employment, address the social determinants that affect treatment retention.

The stigma surrounding SUD creates barriers to integration. Providers may be uncomfortable screening for or discussing substance use. Beneficiaries may not disclose use. The federal confidentiality requirements for SUD treatment records (42 CFR Part 2) create data sharing complexities that ACOs must navigate. Despite these barriers, the financial logic for ACOs is clear: untreated SUD generates avoidable spending that counts against the benchmark.

Oral Health as Cost Management

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Medicare does not cover routine dental services. The statute excludes payment for services in connection with the care, treatment, filling, removal, or replacement of teeth. This exclusion has been in place since Medicare’s enactment in 1965 and has not been modified by Congress despite decades of evidence connecting oral health to overall health outcomes.

The exclusion creates a paradox for ACOs. An ACO whose attributed population includes beneficiaries with untreated periodontal disease, dental infections, or edentulism bears the downstream medical spending driven by these conditions without any reimbursement pathway for prevention or treatment. The costs appear in hospitalization for dental infections, exacerbation of diabetes due to periodontal inflammation, cardiovascular events linked to chronic oral disease, and aspiration pneumonia in nursing home residents with poor oral hygiene.

The clinical evidence connecting oral health to systemic disease is extensive. Periodontal disease is associated with increased risk of cardiovascular disease, stroke, and poor glycemic control in diabetes. The relationship with diabetes is bidirectional: diabetes increases susceptibility to periodontal disease, and untreated periodontal disease interferes with diabetes management. Research estimates that treating periodontal disease in Medicare beneficiaries with diabetes could save billions in downstream medical costs.

For ACOs, the strategic question is whether to invest in dental screening and referral even without Medicare reimbursement for the services themselves. The investment thesis depends on the prevalence of dental disease in the attributed population, the relationship between dental treatment and avoidable medical spending for that population, and the ACO’s ability to connect beneficiaries with dental care even though Medicare does not pay for it.

Dual eligible beneficiaries represent a pathway for ACO-dental integration. Many state Medicaid programs cover adult dental services, and dually eligible beneficiaries can access this coverage. ACOs serving significant dual eligible populations can coordinate with Medicaid dental providers even though Medicare itself does not cover the services. FIDE SNPs that integrate Medicare and Medicaid benefits can include dental coordination in their care management protocols.

CMS has modestly expanded Medicare dental coverage in recent years. The 2023, 2024, and 2025 physician fee schedule rules defined clinical scenarios where dental services are inextricably linked to Medicare-covered procedures and therefore covered. These include dental examinations prior to organ transplant, cardiac valve replacement, head and neck cancer treatment, dialysis for end-stage renal disease, and chemotherapy. These exceptions benefit a small number of beneficiaries and do not constitute a general dental benefit, but they represent a shift in CMS interpretation that may expand over time.

Quality Alignment

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The MSSP quality measure set includes depression screening and follow-up, creating direct alignment between ACO performance requirements and behavioral health integration. ACOs that systematically screen for depression and document follow-up care satisfy quality measure requirements while also identifying beneficiaries whose behavioral health conditions may be driving avoidable utilization.

For ACOs that contract with Medicare Advantage plans or operate their own plans, Star Ratings create additional incentive alignment. The depression screening measure in Star Ratings affects plan quality scores and therefore rebate revenue. An ACO that implements systematic depression screening can share the quality improvement with its plan partners, creating value beyond the direct ACO shared savings calculation.

HIDE SNP (Highly Integrated Dual Eligible Special Needs Plan) requirements for behavioral health integration have implications for ACOs that partner with D-SNPs or operate their own special needs plans. HIDE SNPs must demonstrate high levels of integration including behavioral health coordination. ACOs with existing behavioral health integration infrastructure are better positioned to meet these requirements than those that would need to build capacity from scratch.

The emerging quality framework for the LEAD model, which launches in 2027, includes Prevention and Quality Plans that require ACOs to focus on at least one prevention intervention. Behavioral health screening, SUD identification, or oral health referral could serve as the prevention focus, aligning LEAD participation requirements with whole-person care investment.

The financial case for behavioral health, SUD, and oral health integration is embedded in the ACO total cost of care accountability structure. ACOs that invest in these capabilities position themselves to capture savings that those without integration cannot access. The barriers are real, including workforce constraints, reimbursement gaps, cultural separation, and the absence of a Medicare dental benefit. But the ACOs that figure out how to address these conditions will outperform those that continue to treat medical and behavioral health as separate systems.

Related Reading

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MCR-08_01 Behavioral Health Coverage Reform: MA Cost-Sharing Caps, New Provider Types, and the Telehealth Permanence Question MCR-08_05 Oral Health as Primary Care: What ACOs, AHEAD, and MA Plans Should Do Now MCR-01_06 MAHA ELEVATE: Lifestyle Medicine Enters the Medicare Payment Lexicon