The experience of the addiction treatment industry in the five years since the onset of the COVID-19 pandemic illustrates the resilience of the industry. The industry is best defined by its ability to adapt to a constantly changing environment. 

COVID changed so much in American society and the economy nearly overnight; the addiction industry, in particular, has seen significant shifts in technology use, an increase in the acuity of its patient population, and faced down inflation and payer retrenchment on rates. 

“There were disruptors before COVID, there’ll be disruptors after COVID,” John Driscoll, CEO of the addiction treatment nonprofit Caron Treatment Centers, said during a webinar hosted by Addiction Treatment Business to preview the Addiction Treatment Forum. “It’s important for us to understand what we need to do to continue to advance the science of treatment and help people move from active addiction to active recovery.”

Driscoll oversees operations at a nonprofit addiction treatment provider whose operations are anchored by inpatient facilities in Wernersville, Pennsylvania, and Delray Beach, Florida. The organization generated $114 million in revenue and treated 3,307 patients during its 2024 fiscal year, according to its latest annual report. 

The latest disruptor the addiction treatment industry faces was one that once had provided notable, albeit temporary, stability: Medicaid.

Through the acute phases of the pandemic and for several months afterward, state governments were able to pause eligibility redeterminations. On top of that, the federal government sent states that supported the continuous enrollment period. That, combined with several temporary COVID relief-related and other new but temporary funding efforts, lent significant consistency to Medicaid programs, to the point that some took a different approach to contracting with addiction treatment providers.

“There was this steadiness in Medicaid for about three or four years, both in terms of funding and the population, that gave the plans more predictability in terms of who their membership was,” Rachel Sokol, senior vice president of payer contracting for Groups Recover Together, said on the webinar. “I think it really let them invest in population health programs because they knew that they would see the benefit of that versus the environment that we might shift to.

“With much more turbulence in the Medicaid market, it can be harder to have some of those long-term, value-based discussions when it’s just not clear what membership we’re going to be talking about in the next six months.”

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Groups Recover Together, which is backed by venture capital firms such as Oak HC/FT, offers a hybrid of digital and in-person group therapy and medication-assisted treatment (MAT). It operates 114 locations in 14 states, according to its website.

At least in some parts of the U.S., health plans have recognized the impact that COVID had on increasing the utilization of behavioral health benefits. That, in some cases, has made plans more willing to engage in collaborations with addiction treatment providers, Jaime Vinck, president of Phoenix-based Meadows Behavioral Healthcare, said during the webinar.

“We’ve come a long way as an industry in terms of measurement-based care and being able to provide outcomes and to be able to have data behind our success,” Vinck said. “In my experience, they are much more willing to listen — as long as we meet them more than halfway in showing data … and a willingness that we will stand behind our care — to what it actually costs to deliver quality co-occurring care.”

Meadows Behavioral Healthcare announced a partnership with Blue Cross Blue Shield of Arizona, which includes in-network status, a value-based care element and participation in the national BCBS BlueCard program. 

. Many health plans have included measures defined by the National Committee for Quality Assurance’s (NCQA) HEDIS measures as part of their contracting agreements. Payers are increasingly interested in getting those in crisis to a supportive level of outpatient treatment, the time it takes to get support after an emergency department visit, increased use of physical health care services and access to medication after treatment.

For Groups Recover Together, six-month retention in care serves as a proxy for assessing the total cost of care and reductions in the use of residential treatment settings. For residential care, Vinck said payers are interested in making sure discharged patients have care plans and follow-up appointments before they leave. They also consider readmission within a specific time frame. She didn’t say which.

The level of interest and discourse around value-based care and other payment innovations has increased in the last five years, Sokol said. When Groups Recover Together first introduced the model in 2020 and 2021, they were one of the pioneers of the value-based movement in addiction treatment. But now, most plans have considered the idea with some specificity before they connect with Groups.

“Previously, we were much more commonly sharing our perspectives, and the health plans would either accept the terms of the value-based agreements that we offered or they wouldn’t,” Sokol said. “Now, the health plans are coming in with much more of a perspective on how they think that a value-based agreement could work; there’s much more of a dialog there.”