After years of uncertainty over reimbursements, the digital therapy industry is beginning to see a new clarity.
In the last year, digital therapies, which are evidence-based treatments delivered through software interventions to treat or manage a condition, have made inroads in both commercial insurers and Medicaid.
Earlier this year, state Medicaid programs in Massachusetts and Oklahoma announced new partnerships to cover certain digital therapies.
And recently, CONDITION reported that high marka nonprofit health insurance plan would cover certain FDA-approved digital therapies, making them the first commercial insurers to cover them.
Most digital therapies, or DTx, are aimed at treating behavioral health conditions. They could potentially give patients and providers another treatment option. These new developments could lead to more widespread adoption of these technologies and impact the future of behavioral health care, industry experts believe.
“This announcement clearly shows the change in attitude towards DTx, from being considered experimental and investigational to being recognized as a legitimate, safe and effective treatment for patients. [by] increasing access to therapy where they are and when they need it most,” Limbix chief medical officer Dr. Benny Alouf told Behavioral Health Business. “It moves this class of therapy from being mass labeled as not covered to creating actual medical guidelines for approval and coverage. Y [it lends] legitimacy to the FDA process, which these products must go through.”
Limbix has created a digital therapy for adolescent depression. The Palo Alto, California-based startup has raised $31 million. It has not yet been approved by the FDA.
Historical reimbursement challenges
The digital therapy industry has made regulatory strides in the last five years. In 2017, Pear Therapeutics landed a FDA de novo approval for Pear ReSET, a digital therapeutic aimed at treating substance use disorder.
Since then, dozens of digital treatments have been approved through the FDA’s 510(K) pathway.
Despite the increasing number of new therapies on the market, the question of reimbursement has been one of the most difficult challenges in the segment.
“If it’s not a pharmaceutical, it’s extremely difficult in today’s world to get broad coverage for novel modalities,” said Eddie Martucci, CEO and founder of Akili, during the Future of Mental Health conference in September.
Akili is a digital therapy focused on cognitive deterioration. It has an FDA 510(K) clearance for its video game-like digital treatment intended to improve cognitive function in children with ADHD. It went public in August through a SPAC Fusion.
Still, the space is drawing attention from both the federal government and the private sector. In April, the Biden administration encouraged new digital therapeutic reimbursement strategies as part of its National Drug Control Strategy report.
“Coverage for the provision of motivational incentives could be considered within health plans,” the report said. “This will require considering billing codes and setting reimbursement parameters.”
But there is still a long way to go before widespread coverage of these technologies. Until then, some industry stakeholders are asking patients and doctors to put pressure on payers.
“We live in a world where we essentially force patients into the mindset, which we know we’ve adopted here in the US, of prescribing a pill to treat our problems because we have no choice,” Martucci said. “We talked about the problems with behavioral therapy and access to care. And we have other prescription software treatments that are available now. … Basically, we’re forcing patients to really have a single option for care, and that’s wrong.”
Others say the onus to prove the value of the technology lies with the manufacturers of digital therapies themselves.
“We should be able to show incredible ROI, which should mean that the commercial [payers] they are trying hard to order our products,” said Peter Hames, co-founder and president of Big Health, on the panel.
Digital therapy company Big Health’s products include Digital Therapy Sleepio for insomnia and Daylight for anxiety.
a way of reimbursement
Payer coverage and new billing codes could lead to more widespread adoption of the technology.
In 2021, the Centers for Medicare & Medicaid Services (CMS) added a new Tier II Health Care Common Procedure Coding System (HCPCS) code for “Behavioral Therapy FDA-approved digital prescription by course of treatment,” facilitating Medicaid and business operations. payers to cover digital therapy.
“I think this is a huge step forward for the space,” Dr. Corey McCann, president and CEO of Pear Therapeutics, said during the panel.
There has also been legislative movement on digital therapeutic coverage. the proposal Access to the Digital Prescription Therapeutics Act of 2022 would expand coverage of prescription digital therapies for Medicare and Medicaid beneficiaries.
McCann’s company, Pear Therapeutics, has been one of the leaders in securing Medicaid coverage for its products. In 2021, the company announced that MassHealth, Massachusetts’ state Medicaid program, would cover Pear’s reSET and reSET-O digital therapies.
In June, Pear announced a value-based deal with Oklahoma Medicaid. Pear is also working with several states to provide her treatments.
“Generally speaking, commercial payers are laggards,” McCann said. “Commercial payers can and will deny care, and that’s where we’ve really leaned in with states to make this reimbursement standard and then force commercial payers.”
While Medicaid stakeholders may have been one of the first entrants into digital therapy, Highmark’s announcement could be a new chapter for commercial payers. Highmark will cover eight FDA-approved digital therapies.
“Highmark took the lead and paved the way for other health plans to recognize these therapies as legitimate, worthy of reimbursement and much needed by their members,” Alouf said. “DTx are reviewed and approved by the FDA through a rigorous process that is no different than other medical devices. This decision indicates that this class of devices is finally being recognized for the potential it has to safely and effectively impact the lives of patients.”
The treatment must be prescribed by a provider “for whom the condition is in their scope of practice.” This can be a doctor, psychologist, licensed mental health social worker, licensed professional mental health counselor, or advanced practice provider.
While this is the first of the commercial insurers to cover the technologies, many in the space see this space as the next frontier for reimbursement.
“I would think of the next part of ‘the state of the state’ around the evidence, and that’s where all the players in the space are prescribing or developing health economic data sets to go to payers to convince them that there is a positive ROI in incorporating these products into their patient populations,” said McCann.
