Over the past few years, digital behavioral health services have emerged as a promising solution to meet the growing demand for mental health and addiction care. As more people seek accessible and affordable options for behavioral health, virtual care providers have stepped up, offering telehealth services, digital therapeutics, and asynchronous communication tools to meet a wide range of needs. Despite the potential benefits, however, many digital behavioral health companies continue to face significant challenges when it comes to payer reimbursement, especially from government and commercial insurers.
As industry insiders agree, one of the biggest hurdles is the difficulty in securing reimbursement for the full array of services offered by digital behavioral health companies. While traditional virtual mental health care has gained significant popularity, many services still remain outside the scope of coverage provided by payers, and new, innovative tools face an uphill battle in landing payer reimbursement. As a result, virtual care providers are often left to cover costs on their own or rely on patient payments, which places additional strain on the overall sustainability of these services.
This blog post delves into the challenges faced by digital behavioral health companies in securing virtual care contracts, the role of advocacy in overcoming these obstacles, and how payers and providers are evolving their relationships to address the growing need for accessible, affordable behavioral health services.
The Struggles with Payer Coverage for Digital Behavioral Health Services
Despite the growing interest in digital behavioral health services from payers, many of these services still face significant barriers to reimbursement. Government payers like Medicaid and Medicare, as well as commercial payers, often fail to cover a wide range of services that digital providers offer. These gaps in coverage are a major concern for behavioral health companies and their ability to sustain their operations and deliver comprehensive care.
Stacy DiStefano, CEO of Consulting for Human Services (CFHS), highlighted the difficulty in securing reimbursement for new service lines, especially in the behavioral health space for individuals with intellectual and developmental disabilities (IDD). At Behavioral Health Business’ INVEST event, she pointed out that remote support and other digital tools designed for IDD populations are not covered by programs like Medicare and Medicaid. This leaves providers with the financial burden of delivering these services on their own, even though they may be critical for improving patient outcomes.
DiStefano also noted that even commercial payers, who typically offer more flexible coverage, often fail to reimburse for essential services unless specific models, such as the Certified Community Behavioral Health Center (CCBHC) or per-member-per-month models, are in place. In these models, providers are responsible for figuring out how to make the financials work without clear reimbursement pathways for these services.
For companies trying to innovate in the digital behavioral health space, these reimbursement gaps can be particularly challenging. As digital therapeutics (DTx) have gained prominence as effective tools for improving patient engagement and outcomes, companies like Pear Therapeutics and Akili Interactive have faced significant reimbursement challenges. Despite showing promise in clinical outcomes, digital therapeutics have struggled to secure widespread payer coverage, leading to difficulties in maintaining a sustainable business model.
Digital Therapeutics and Virtual Behavioral Health Tools: An Uphill Battle
Digital therapeutics are a relatively new category in the behavioral health market. These software-based interventions are often FDA-approved and have demonstrated impressive results in treating conditions like depression, anxiety, and substance use disorders. However, despite the clear benefits of digital tools, securing reimbursement has been a significant challenge for many companies in the space.
Erin Boyd, Chief Growth Officer at Talkspace, explained the difficulty of getting digital tools covered by commercial payers. While government payers have somewhat more flexibility in covering FDA-cleared digital therapeutics, commercial insurance plans are often more resistant. The lack of a clear pathway for reimbursement for these types of services presents a major roadblock for companies trying to bring innovative tools to market.
Boyd’s comments reflect a broader trend in the industry: the growing recognition of the effectiveness of digital therapeutics is not always enough to convince payers to cover them. While many insurers are open to reimbursing for virtual mental health services like telehealth sessions, more specialized services like digital therapeutics often require additional advocacy and regulatory efforts to gain widespread acceptance.
Advocacy and Industry Support: A Key to Expanding Coverage
As the digital behavioral health market continues to evolve, advocacy will play a crucial role in overcoming reimbursement challenges. Providers, technology companies, and patient advocates must work together to raise awareness about the value of these services and push for policy changes that will allow more services to be reimbursed by insurers.
Arpan Parikh, Chief Medical Officer at SOL Mental Health, emphasized the importance of advocacy from both the industry and patients themselves. At the INVEST event, Parikh noted that many companies are deploying technologies and tools that improve patient outcomes, even though they are not currently reimbursed for these services. At SOL Mental Health, the company invests in deploying innovative care options because they believe in the potential to improve patient care, even if those investments are not immediately covered by payers.
Parikh highlighted that while reimbursement for digital tools and services remains a challenge, patients and providers alike can advocate for changes that lead to expanded coverage. Over time, as more evidence emerges showing the effectiveness of digital interventions in improving outcomes and reducing costs, insurers may be more inclined to cover these services.
Additionally, Parikh pointed out that payers are increasingly drawn to digital providers because of their cost-effectiveness. Virtual care, by its very nature, is often more affordable than in-person care, and payers are motivated to explore cost-saving options as the demand for behavioral health services continues to rise. This growing focus on cost-effectiveness could provide a significant opportunity for digital behavioral health providers to push for greater coverage, especially if they can demonstrate the impact of their services on long-term health outcomes.
Member Demand: The Key to Securing Coverage
Ultimately, the future of digital behavioral health reimbursement will depend largely on member demand. As the demand for behavioral health services continues to increase, payers will face pressure to meet the needs of their members by expanding coverage for virtual care options.
Parikh stressed that payers will be driven by clinical outcomes and patient demand. If virtual care can be shown to provide outcomes comparable to or better than traditional in-person care, insurers may become more willing to expand coverage. Moreover, as more patients “vote with their feet” and choose virtual care options, insurers will likely have to respond by adapting their reimbursement strategies.
In the end, payers’ focus on optimizing their medical loss ratio (MLR)—the ratio of healthcare spending to premiums—may make them more inclined to invest in virtual care solutions that are both cost-effective and clinically effective. If digital behavioral health services can demonstrate that they deliver positive outcomes without driving up costs, this could serve as a powerful argument for expanding coverage.
Moving Forward: The Path to Comprehensive Coverage
While the challenges of securing reimbursement for digital behavioral health services are significant, the growing demand for these services offers a glimmer of hope for the future. Providers, technology companies, and advocates must continue to work together to overcome barriers and push for policy changes that will make comprehensive digital behavioral health coverage a reality.
As the healthcare industry evolves and the benefits of virtual care become increasingly apparent, it is likely that more payers will begin to cover a broader range of digital behavioral health services. Until then, however, digital health companies must continue to balance their commitment to improving patient outcomes with the financial challenges of providing services that are not yet widely reimbursed.
In conclusion, the relationship between digital behavioral health companies and insurers is in the process of evolving, but significant challenges remain. Securing reimbursement for digital therapeutics and other virtual care tools requires ongoing advocacy and collaboration between industry stakeholders. As the market for behavioral health services continues to grow, both payers and providers must adapt to ensure that patients have access to the care they need—when they need it.
