‘Unexpected and Alarming’: Concern Grows as One of the Country’s Largest Insurers Pulls Back on Virtual IOPs, PHPs

Virtual intensive outpatient programs (IOPs) have become a popular way to care for patients in their homes.

IOPs provide an intermediate level of care and can be a step-down from inpatient services and a step-up from traditional outpatient care. Virtual IOPs became sought after during the COVID-19 pandemic because of their ability to treat patients remotely and in a more flexible modality.

While many payers saw virtual IOP care as an opportunity to provide more behavioral health care services to patients, some are beginning to wind down coverage now that the public health emergency has ended. For example, CVS Health Corp’s (NYSE: CVS) payer arm, Aetna, recently revealed that it will end its coverage for virtual IOP and partial hospitalization programs (PHP) in 2024.


Aetna has declined to comment on this story.

When one major payer decides to stop coverage, that can often mean others follow suit, which could threaten to cut off coverage for many accessing IOP care virtually.

“Cutting off telebehavioral coverage is both unexpected and alarming, especially given that it has been an insurance-backed standard of care for several insurance providers since 2016, and for nearly all providers since 2020,” Justin Brown, director of utilization review at Pathlight Mood & Anxiety Center, told Behavioral Health Business. “The treatment itself is evidence-based, with published data showing virtual IOP is as effective as its in-person counterpart.”


Pathlight confirmed that at least one unnamed major payer has announced that it ended coverage for its virtual IOP care, and a small payer has also “terminated coverage effective immediately, without any advance notice.”

Eating Recovery Center and Pathlight Mood & Anxiety Center are mental health systems that treat eating disorders and primary mood, anxiety and trauma disorders. It has 35 centers nationwide and offers in-person and virtual care.

“Choosing to cover only in-person IOP is difficult to understand,” Brown said. “Too many Americans already experience significant barriers in accessing mental health treatment, whether due to transportation constraints, childcare needs, living outside a major metropolitan area where most in-person IOP centers reside, or a disability that constrains mobility. Denying coverage of a proven treatment for serious mental health conditions will only harm policyholders and their loved ones.”

The implications

Access to the appropriate level of behavioral health services can be difficult for many people in America. About 150 million people in the U.S. live in a federally designated mental health professional shortage area. The gap in specialized care, such as IOPs and PHPs, can often be more significant.

Virtual care has become a popular way to remedy this gap in access.

“We have to offer a continuum of care to everyone, regardless of where they live. For most young people, the only options are inpatient, residential or outpatient,” Carter Barnhart, co-founder & CEO of Charlie Health, told BHB in an email. “Patients in crisis, especially with active suicidal ideation and self-harm, can’t go from hospital to home. If there is no brick-and-mortar IOP nearby and/or they don’t have a parent to drive them, then young people are forced to leave the hospital and go to residential.”

Charlie Health is a virtual IOP provider of high-acuity services to teens and young adults. It operates in 25 states and provides tailored programs to teens and young people. Its programs are typically 10-12 weeks long.

Industry insiders pitch the virtual option as a way to help cater to patients who live in rural areas. For example, Brown said that, on average, the 1,000 patients who have received virtual IOP treatment from ERC Pathlight since 2022 lived 194 miles from one of their in-person clinics.

“Unfortunately, removing access will mean that many patients will go untreated altogether, driving costs into other parts of the health care and social services systems, or they will progress in their mental health condition requiring more time-intensive and inconvenient treatment away from their home – often requiring them to relocate to another city for 6-10 weeks to enroll in partial hospitalization, residential or inpatient treatment,” Brown said.

Providers are backing up virtual IOPs with more data.

Universal Health Services (NYSE: UHS) provided claims data of 84,500 PHP and 50,500 IOP visits, with 15% being virtual visits, according to a report from the National Association for Behavioral Healthcare. The data revealed that the proportion of patients whose assessment scores improved was comparable or higher for virtual services than in-person. 

“For the vast majority of people, the ability to be at home means that they can open up more, and they can feel safer,” Peter Loeb, co-founder and CEO of LionRock, told BHB.

LionRock, founded in 2010, provides telehealth for substance use disorder care at the IOP and outpatient level. In 2020, the company raised $7 million in funding.

What’s next?

While the end of the public health emergency could mean payers start to pull back on virtual care, some industry insiders are making the case that it could be a bad business decision.

“Not only are our virtual IOP programs stopping the progression of diseases that are expensive for insurance companies to cover,” Brown said, “but they are also protecting the investment insurance companies have spent on higher levels of care by allowing patients returning home to complete a full course of treatment, reducing the likelihood of recidivism.”

In general, inpatient care costs much more than intensive outpatient care. For example, the Agency for Healthcare Research and Quality reports that the mean cost of a mental health inpatient stay was $7,100 in 2016. In comparison, the average cost of IOP treatment is between $250 and $350 per day, according to American Addiction Centers.

While some payers have pulled back, many others continue covering these programs.

Loeb noted that LionRock is only seeing about 6.5% of verification of benefits coming back to them.

Regulatory hurdles can also add new challenges for virtual IOP and PHP providers. Specifically, many states have pulled back on telehealth flexibility that makes virtual care possible.

“In general, I’ve been disappointed that the regulatory world and, to some degree, the payers have not recognized the value of telehealth as much as they might have,” Loeb said. “Because it is, at the end of the day, just another technology for us to deliver great care.”

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