Opioid use disorder (OUD) disproportionately impacts Medicaid beneficiaries, yet structural barriers – including lack of available clinicians – often keep this population from receiving treatment.
Virtual OUD treatment provider Ophelia has expanded its Medicaid reach by inking new reimbursement contracts that cover the lives of 3 million New Jersey residents.
“We’ve been live and treating patients in New Jersey now for more than two years but we hadn’t focused on building out our insurance coverage, which meant that patients in New Jersey were, for the most part, forced to pay out of pocket,” Zack Gray, founder and CEO of Ophelia, told Addiction Treatment Business. “We know that that is an irresponsible way to care for patients.”
New York City-based Ophelia provides medication-assisted treatment (MAT) to people with OUD. Roughly 70% of Ophelia’s patient population uses Medicaid to pay for services, Gray said.
The provider had previously established a large network of insurance provider coverage in New York and Pennsylvania, including in-network relationships with most major Medicaid managed care organizations (MCOs).
Ophelia then set its sights on New Jersey as the next state to expand its Medicaid coverage.
Ophelia aims for 70% Medicaid penetration before entering into a state, Gray said. The provider’s new relationships with New Jersey Medicaid plans, including with Horizon BlueCross BlueShield, UnitedHealthcare and Wellpoint, bring Ophelia’s Medicaid coverage well over that mark, to 89%.
A peer-reviewed study published in Health Affairs found that patients with in-network coverage were 50% more likely to continue treatment with Ophelia for six months. Forging contracts with Medicaid plans improves access to care, and therefore outcomes, Gray said.
Operating a Medicaid-based business
Establishing contracts that cover a high percentage of Medicaid beneficiaries in a geographic area has business benefits, too.
“In order to make the business work, we need to know that we have enough Medicaid coverage within a market to be able to sustainably serve enough people who are responding to our ads to run a business that can keep its lights on,” Gray said. “That starts with having adequate coverage among Medicaid.”
Crafting these relationships with Medicaid payers, however, is a long and slow process that comes with specific challenges.
For one, for Ophelia to reach a critical penetration of 70% Medicaid coverage in a state, the company may need to forge “a lot of contracts” depending on how fragmented a state’s Medicaid programs are, Gray said.
New Jersey operates a program called Office Based Addiction Treatment (OBAT) Care Coordination Services which reimburses prescribers for MAT and OBAT through managed care contracts. Ophelia became a certified OBAT provider and was able to get in-network with health plans that bill OBAT codes.
“Because the standards have already been created by the state, there’s a lot less bespoke negotiation to be done with the health plans and it makes … getting to market a lot easier,” Gray said.
Another challenge Ophelia faces when establishing relationships with payers involves its treatment model, which includes care coordination and asynchronous medical care outside of regular medical visits. In order to get paid for these services, the company must negotiate bundled, value-based contracts.
Once these contracts are established, Ophelia’s care is less expensive and more effective than treatment through a fee-for-service treatment plan via brick-and-mortar buildings, Gray said.
Being the more cost-efficient option when compared to traditional treatment avenues isn’t enough for Gray. He also aims to beat other value-based OUD treatment providers on cost.
“Many of our peers are direct to employer, which is commercial only; others are commercial only, direct to consumer. We want to show that it is possible to treat the Medicaid population, to structure contracts that align incentives between health plan and provider, and to be the low-cost provider, such that we’re not counting on them to pay us a lot up front and hope for cost savings down the line,” Gray said. “They can see cost savings immediately because, when you add up the charges, what they would be paying an alternative program on month one is higher than what they would be paying Ophelia.”
Ophelia plans to continue to expand its New Jersey payer contracts by expanding its relationship with commercial payers into the state within the next few months.
The provider plans to then expand its geographic footprint by leveraging the national footprints of payers it is already in network with.
Some states won’t be feasible for Ophelia to expand into anytime soon, Gray said. The Medicaid landscape and legal regulations of some states make it “untenable” for the provider to operate there. Still, Ophelia has about 30 states it can grow into, according to Gray. He plans to start with the states where Ophelia can most efficiently establish insurance coverage.
“If we are able to prove out the efficacy of our partnership strategy with health plans and grow health plan by health plan, then we can be in whatever states the health plans are,” Gray said. “We’re not necessarily serving the entire state, because we don’t have contracts with all of the other health plans in that state. … So the map starts to look less like one that is delineated by state lines and much more like one that is delineated by payer network lines.”
Two of Gray’s top priorities for the next year are further collaborating with payers and partnering with organizations, including correctional facilities and other providers.
He also aims to demonstrate Ophelia’s financial self-sufficiency.
“We’re on our way to achieving long-term profitable growth without reliance on outside investors,” Gray said. “My goal would be to show that we don’t need investors unless we want investors, but then also to show that there’s a good reason to want investors because we can grow more quickly and scale our impact faster than we’ve been able to do through our own organic financing.”
