Disrupting the Status Quo: Employers’ Emerging Role in Addiction Care

This is an exclusive BHB+ story

Increasingly, employers are paying for addiction care for their staff, disrupting the status quo.

It’s changing the way providers view reimbursement and how they operate by placing new expectations on measurable results, transparency and speed. By stepping into the payer role, employers are reshaping stigma, return on investment and quality of care in a way reimbursement models from traditional commercial or government payers have not.

This trend is here to stay as a “strategic evolution,” Philip Van Guilder, director of community relations at American Addiction Centers, details in a whitepaper he recently published on the topic.

“I think we’re in a transformative period right now,” Van Guilder told Behavioral Health Business. “We’re starting to see across the board that employers that are invested in addiction treatment and recognizing that supporting employees’ mental health is crucial for maintaining productivity and reducing absenteeism – which is 50% greater for addiction than a normal person struggling with regular issues.”

Brentwood, Tennessee-based American Addiction Centers operates inpatient and outpatient substance use treatment facilities across seven states.

Van Guilder is also the immediate past president of the International Employee Assistance Professionals Association’s Lone Star Chapter, based in Dallas.

Employee assistance programs (EAPs) are also becoming a bigger part of the equation, he said.“EAPs are becoming more fundamental to operational health. I’m not talking about the health of the employee, but the operational health of the business and of the employer,” he said. “And I think HR and EAPs will have to start working together a lot more closely than they do today as this trend continues.”

A business necessity

A broad reckoning with the combined loss of ROI due to absenteeism, productivity loss and turnover and recruitment driven by employees who struggle with addiction was really accelerated by the 2020 pandemic.

There was a 16% increase in substance misuse among individuals who had drug use disorders prior to the pandemic, a 23% rise in alcohol abuse and a 26% higher consumption rate of substances among individuals in isolation during that time, according to data from a 2021 study.

One post-pandemic study revealed that the medical costs for individuals with substance use disorders (SUDs) are twice as high as those without, at $15,640 annually per person compared to $7,409 for the average, non-addicted individual. This ultimately costs employer-sponsored insurance plans across the U.S. a total of $35.3 billion each year.

“Employers are recognizing the costs associated with substance use disorders. They’re starting to notice it more transparently in their claims data,” Dr. Suzette Glasner, chief scientific officer at Pelago, told BHB.

COVID-19’s spotlight on the prominence of SUD across the workforce and the slow, but ongoing destigmatization of addiction and mental health care have been “a turning point for the use of telehealth and more of these types of modalities that broaden access to care in ways that we hadn’t seen before, for substance use in particular,” she said.

New York City-based Pelago is a virtual clinic for substance use management for tobacco, alcohol, opioid and cannabis use. Employer payers drive a majority of its reimbursement.

“All those factors and forces together have led employers to become more disruptive in that space,” Glasner said. “I’m hopeful that we’ll see that continue now that it’s sort of become a little bit more normative to offer these types of services in an employer context.”

Changing experience and expectations

Carrum Health is an employer health platform headquartered in San Francisco that works with clients across the country to negotiate with high-value providers how care is delivered and paid for using a value-based framework that connects them to top health providers and hospitals.

For the past year, the company has partnered with an unnamed national Fortune 50 retailer that came to Carrum to rework its substance use treatment offerings after it saw costs spiraling out of control. Since partnering, Carrum gleaned first-hand insights into how the employer health marketplace is taking a more active role in addiction treatment.

Through bundled cost programs and established preset rates with evidence-based treatment centers that track outcomes, Carrum reported that this model led to a 45% reduction in costs for the employer and a downward trend in relapse rates among employees with SUDs.

“Unfortunately, there have been a number of providers in the space that have been set up in substance use treatment that just aren’t doing a very good job. They’re glorified frameworks. They’re set up as fee-for-service, where there’s this continual turn and churn of individuals staying in those facilities,” Mathew Eurey, chief commercial officer of Carrum Health, told BHB. “We’ve had some employers who had enough with that. We think there’s a different way to manage substance use disorders. So we saw an opportunity with what we had built through our musculoskeletal, bariatric and cancer care offerings to apply the same principles of value-based care and put that in place with substance use.” 

Since then, 50% of Carrum’s employer clients and 67% of new clients signed up to include substance use treatment as a benefit, Eurey said.

“If you’re using traditional insurance, you typically have out-of-pocket costs. You’re having to pay co-pays. With all of our employer clients, we try to remove all of those barriers from an out-of-pocket standpoint,” Eurey said. “We also remove all of the prior authorization hoops that are in traditional insurance to make sure that the individual is taken care of. What’s key is the fact that we do have provider skin in the game. When a provider knows that they’re on the hook for those services, they need to make sure that they’re treating that patient holistically, and if they do relapse, they are going to have some financial penalty as a result of that.”

Stephanie Strong, CEO and founder of Boulder Care, a provider of virtual outpatient addiction care headquartered in Portland, Oregon, noted that in the company’s experience, most employers they have seen work with payers to require telehealth SUD care have “woefully insufficient” networks and don’t offer the right services.

“People need a range of comprehensive, high-quality treatment options, including medications for addiction and assessing solutions can be complex,” Strong said.

Boulder Care, like Pelago, also receives a significant amount of revenue from employers as payers, something it expects to continue growing.

“We have seen employers start to become more engaged in this space over the last 5 years and expect the trend will continue,” Strong said. “But Medicaid payers remain the largest funding source for addiction treatment and expect that to be the case for quite some time, for a variety of reasons.”

Still, as employers rise up across behavioral health as more prominent payers, it’s crucial for providers who partner with them to keep a few things in mind.

“Launch with a phased geographic approach and a thoughtful implementation process that helps employers optimize the member experience to their existing systems and culture,” Strong recommended. “Opioid treatment cannot be delivered in the same way in all 50 states, which requires creativity and operational sophistication on the part of the provider. Communicate transparently about this to employers with high-integrity commitments, but make it seamless for their busy teams: partnering with their existing health plan helps reduce their workload.”