Eager for Parity Reform, Outpatient Mental Health Should Expect to ‘Step Up’ Care Quality

Parity reform may heighten clinical and administrative requirements for outpatient mental health providers.

These laws may make in-network agreements simpler and more profitable, as many providers hope. Yet talk of parity is often one-sided, focused on perceived payer wrongs. This overshadows the role of clinicians and their organizations in increasing access to and improving care — the goal of parity.

“The most important thing we can do is create a more affordable system because that’s what allows people from all socioeconomic backgrounds and communities to access care,” Harry Ritter, the founder and CEO of Alma, told Behavioral Health Business.


Alma offers technology to help therapists work in-network with health insurers. Its virtual marketplace connects patients and providers. The company also contracts with health plans and recruits clinics for payer partners’ networks.

Founded in 2017, Alma set up shop at the intersection of several outpatient mental health industry challenges. Most of those problems stem from a collision of the interests of payers and providers. Payers want to limit spending and expect value for money spent. On the provider side, many sniff at in-network rates compared to their related administrative burden. Some opt to charge patients directly.

Meanwhile, 49% of Americans live in federally designated mental health provider shortage regions due to a scarcity and unequal distribution of mental health providers.


Recent survey data on private-practice therapists’ financial practices shows that about three-fourths accepted insurance, with the remainder requiring patients to pay cash. But the required administrative expense to process and collect claims can be a hurdle for therapists and provider organizations.

However, as parity reform again comes to the fore under the Biden administration, sources tell Behavioral Health Business that providers have a role in ensuring mental health parity. They should expect significant changes to achieve parity.

Mental health parity back at the fore

The Biden administration has prioritized increasing access to mental health and addiction treatment services. In his latest State of the Union, President Joe Biden made behavioral health reform a part of his unity agenda.

In July, the U.S. Department of Labor released a proposed rule changing how the federal government assesses non-quantitative treatment limitations (NQTL) comparative analyses and network composition, key elements of the parity law.

It elicited strong public reactions before the federal rulemaking’s official comment period. That 60-day comment period has been extended by an additional 15 days. It will end on Oct. 17, partly at the request of advocates for the insurance industry, such as the Association for Behavioral Health and Wellness (ABHW).

The organization and its members have in the past said that previous rules around parity and NQTLs were too vague to be followed. For example, a 2022 joint report from the Department of Labor, Health and Human Services (HHS), and the Treasury found that none of the health plans they examined could demonstrate that they were in NQTLs regulations.

The proposed rule is detailed and lengthy. At least one expert has deemed it to be creating a “more prescriptive standard” for NQTLs. But that added specificity creates another headache for payers.

“This proposed a real shift; we’ve been going down the road implementing [the parity law] and asking for more information so we can better show our compliance with [the law], and now we’ve taken a sharp left turn,” Pamela Greenberg, the CEO and president of ABHW, told BHB. “So sharp that health plans really need to take a step back to figure out how they’re going to implement something.”

The piled-on complications of the proposed rule take the insurance industry backward in demonstrating its compliance with the parity law, she said.

Greenberg also called it “a little bit of a mistake” to put “all our eggs in the parity basket to solve the large behavioral health problems.” While many cite challenging rates, she argues that even major increases in rates for mental health clinicians won’t change the fundamental dynamics of the shortage of providers.

Kathryn Cohen, senior director of regulatory affairs for ABHW, acknowledged that the fragmented outpatient mental health space is often hesitant to take on the obligation of working with insurance plans.

As many as 90% of therapists are in solo practices, Ritter said. The fragmented nature of outpatient mental health cuts both ways.

“It is burdensome to them, but obviously, it’s burdensome to health plans as well,” Cohen said. “So, I think there’s a shared responsibility that has to happen.”

Expecting more from providers

Greenberg said a standardized tool to report patient outcomes would go a long way toward demonstrating a patient’s health improvements to payers and opening the door to alternative payment models.

The increasing ubiquity of technology in behavioral health has generally led to a greater focus on care outcomes in outpatient mental health. While not the norm, newer and more forward-looking incumbents in the space have looked to what some call outcomes-based care as a vital tool in both clinical and payer discussions.

Still, another vital challenge remains. Another survey released by Alma finds that 87% of clinicians use standardized assessments in their practice, but only 40% say the assessments are useful in tracking their patient’s progress over time. About three-quarters of therapists said they don’t understand how payers will use the outcome data. A similar proportion are fearful that these data will be used to restrict care.

But these data and gathering outcomes are key to improving payer negotiations as well as clinical care, Brightside Health CEO Brad Kittredge told BHB. Further, payers have acted mostly rationally within the confines of the American health care system.

“It’s too convenient of an answer to just point the finger at the payers and say, ‘Well, payers should pay more for these services,'” Kittredge said. “The reality is that for decades now, they’ve been asked to pay billions of dollars for mental health claims with little idea whether that care is working because the provider side of the equation hasn’t done enough to add rigor, measurability and transparency to the way mental health care is provided.

Brightside Health, a San Francisco-based digital behavioral health company, measures outcomes for all patients and typically has six longitudinal measures of the patient’s care within 12 weeks.

“In many ways, it’s not too surprising that payers have used the only levers available to them, which are rates and utilization rules, to try to manage their sort of loss on behavioral health spend,” Kittredge said.

While Kittredge said that the government is doing its job to correct issues that the marketplace can’t solve with access via parity, he contends that “providers need to step up and do better to show payers the impact of the care being delivered so the payers can understand their business case and the ROI on those expenditures.”

Many payers are looking for higher care quality and meaningful movement toward value-based care, Kittredge said. Gathering outcome data has enabled Brightside Health to have discussions that have revealed an interest in population-specific collaborations for specific populations, especially for those with the most acute needs.

This is an area of collaboration in which payers acknowledge the need to better address behavioral health issues to reduce other health care costs. Earlier in the year, Evernorth Health Services, a division of The Cigna Group (NYSE: CI), released an analysis of its own data that showed treating people with newly diagnosed behavioral health conditions led to $3,300 in savings over about two years.

Despite the knowledge of the wider impact of behavioral health on health care spending, payer rates rarely reflect its value in fee-for-service reimbursement arrangements. Even in value-based care settings, attributing a positive impact on health and spending is difficult for complex patients, Kittredge said.

But interventions like parity rules compel payers to overcome the common bifurcation of behavioral health benefits and medical benefits within payers, Kittredge said.

Dealing with challenges in outpatient mental health

The market demand for greater administrative sophistication can be challenging for small and solo practices. Behavioral health was excluded from the massive federal investment that led to widespread electronic health records and other technology adoption, Greenberg notes. While early congressional efforts seek to rectify that, the current environment leaves the industry lacking public support.

Several companies have made sweeping moves to consolidate the space, promising clinicians the opportunity to offload administrative burdens while still taking insurance so they can focus on what they want: caring for patients.

Large previously private equity-backed practices such as LifeStance Health Group Inc. (Nasdaq: LFST) and Refresh Mental Health, ostensibly the two largest outpatient mental health providers in the U.S., grew by leaps and bounds by buying and integrating independent practices.

LifeStance Health now employs 6,132 clinicians and operates in 34 states after going public in 2021. Refresh Mental Health was sold to Optum in March 2022 and employs over 1,500 clinicians in 37 states, according to its website.

Others have tried to attract providers to technology-centered companies such as mental health marketplaces and tech platform companies such as Alma or telehealth clinical practices such as Brightside Health.

Parity impacts these different types of companies slightly differently.

For telehealth or hybrid providers, therapists can get access to similar tools with the added security of being an employee who is obligated by law to get certain benefits.

On the tech side, Brightside Health rolled out a service specifically designed for patients who demonstrate suicidality earlier this year. Independent practitioners and even other telehealth mental health providers often aren’t equipped to care for those who are actively suicidal.

Alma, a tech and service provider, would still benefit from higher rates paid to therapists and/or more patients who can access care through their health plans because of parity. Alma generates revenue through fees for handling transactions and through membership fees to use their practice management software and other services.

“The more that there is parity, the more human beings in the United States can use their insurance to access care through providers that we enable,” Ritter said.

“The more that parity rules also ensure that our payer partners create the conditions necessary for providers to succeed in delivering in-network care, the better job we can do at bringing providers into the platform to service that increasing demand for [outpatient mental health services.]”

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