Digital point solutions could have an advantage in the move toward value-based behavioral health care contracting.
Tech-backed behavioral health providers have a leg up in collecting data to prove outcomes, and their virtual front-door approach could also lend itself to preventative behavioral health services. But for value-based contracting to take off in this space, payers, providers and employee assistance programs (EAPs) will need to work together to hammer out what “value” means.
“We have to be very careful and … create the right alignment between multiple payers to be able to say, ‘This is what we mean in terms of value,’” Melissa Reilly, chief growth officer at Evernorth Behavioral Health, said at Behavioral Health Business’ VALUE conference. “Because I think what we don’t want is our partners, the digital health companies or network providers, having to do one thing for us and something else down the road because that’s just going to create a ton of waste – and a ton of confusion in the system.”
Evernorth is the health services division of The Cigna Group (Nasdaq: CI). The St. Louis-based company has partnered with a number of behavioral health point solutions, including OCD-focused digital health company NOCD, substance use disorder provider Bicycle Health and addiction treatment platform Quit Genius.
The opportunity
Payers and EAPs are looking at value-based contracts to improve costs and quality.
And point solutions are quickly jumping on board as they strive to differentiate themselves in a crowded marketplace.
“The industry is going [toward value-contracts] for cost reasons,” Katie DiPerna Cook, senior vice president of partnerships at Headspace Health, said at VALUE. “As we see the growth in different solutions and provider types, we’re going to need to be able to demonstrate outcomes, demonstrate member satisfaction and demonstrate quick access to care. Payers and employers should ask digital mental health care companies for more outcomes and value-based contracts.”
Formed in 2021, Headspace Health is a virtual behavioral health platform that offers a continuum of services. It was created when telebehavioral health company Ginger and mental wellbeing startup Headspace merged. At the time, the combined company was valued at more than $3 billion.
As economic headwinds continue to shake the market, many payers and providers prioritize the financial return in value-based contracts.
“Given the amount of vendors that are inundating employers, what we really look for and encourage our portfolio companies to do is to focus on shifting beyond improving access,” Candace Richardson, principal at General Catalyst, said at VALUE. “I think we’ve made a lot of progress in the market, and moving toward demonstrating better quality and actual cost reduction in tandem with that.”
General Catalyst is a venture capital firm with several behavioral health investments, including Eleanor Health, Elemy, Rippl and SonderMind.
This is particularly important as companies transition from focusing on recruitment and retention to shoring up their bottom line.
But ROI is just one part of the conversation about value-based care, and improving outcomes and “whole-person health” is another primary focus.
Specifically, digital behavioral health companies could also fit into the value-based care paradigm by offering preventative services to patients.
Specifically, these services could provide an early upstream approach to care, allowing patients to access lower-acuity care digitally, escalating to possible in-person services when needed.
“Moving to value is not much different than what we talked about for many years in physical health, which is giving people the right level of care at the right time,” Cook said. “I think having a [platform-type] solution allows us to be … part of the broader health care ecosystem. Not create more fragmentation, but actually augment many of the great things that payers and employers already have in place.”
The challenges of a value-based contract
While there are many opportunities for value-based point solution contracts, the competition is fierce.
This can up the ante for digital companies looking to secure contracts and demonstrate value.
“I think there’s a lot of fatigue from buyers whether you’re selling to a payer and their ASO channel, or whether you’re selling to employers,” Richardson said. “You really have to stand out and be able to deliver a tailored solution that meets their needs.”
It can be challenging for companies to tailor their solutions to every single client. And while behavioral health companies may be ahead of the game with collecting data, tailoring that data to each contract could be challenging.
“One employer might be really focused on one metric value, and another employer will be focused on the other. That’s really hard, especially if you’re a fairly early-stage company to be nimble like that,” Richardson said. “Also, getting to a point where you’re collecting the data and you’re able to report it to prove that you’re actually driving that value isn’t easy.”
That’s especially true if operators haven’t built their company “on that chassis” with the right team in place, she continued.
“So there’s some retrofitting that often has to happen as well,” Richardson said.
Not every digital point solution is ready for value-based care contracting.
Reilly said that the industry should be mindful of that. She noted that Evernorth looked at 200 providers or vendors last year interested in partnership opportunities.
“We do know from looking at 200 companies that not all are in a stage of being ready. There’s probably 15 to 25 that can actually do it,” Reilly said. “And what I think we want to be careful of is that we don’t disadvantage the others so that we further exacerbate the access challenges.”
While value-based contracts aren’t right for everyone, if the industry can work together to create more standardization in what value means, these types of arrangements can scale.
“I think the next five years are going to be tremendously exciting in this space in terms of people on all sides of the value equation starting to agree on what value means for them,” Reilly said, “and how we want to share that definition, even if it shapes differently for each stakeholder.”
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