From EMILY EVANS
Emily Evans is a health policy guru with a stock research firm Hedge eye. She regularly emails these reports to her clients, but (since I asked nicely) she allowed me to post this on THCB late last week. You can meet Emily in person on the “How much are these companies really worth? The IPO & SPAC panel “ at Policies | Techies | VCs – What’s Next for Healthcare, the conference that Jess Damassa and I will take place on 7th-8th-9th-10th September direct – Matthew Holt
P.politics. President Biden will have more important things to do this week than worrying about the mask / vaccine wars. At some point, probably soon, however, Biden will need a scapegoat with the CDC. Several reversals in the guidance on masks for vaccinated and unvaccinated people have puzzled local governments and angry people, especially parents of school-age children. The spread of the delta variant does not help.
While there may be political motives for some of the CDC directors, Dr. Rochelle Walensky. A better approach, this last week at least, would never be attributed to the ruse that can be explained by incompetence.
It is not an easy matter to reconcile a large, sprawling bureaucracy after it has been considered irrelevant for a decade or more. This is made particularly difficult by the remote location of the agency in Atlanta, to which Dr. Walensky commutes.
The CDC’s failures are initially overshadowed by a chaotic outcome in Afghanistan, but also by longtime supporters of the agency such as the former Food and Drug Commissioner Scott Gottlieb. As the delta variant follows the same summer path from south to north as alpha and breakthrough infections are identified more frequently than previously thought (albeit mild for those vaccinated), the pressure to reorganize the CDC will increase.
The good news is that despite the vitriol about wearing masks and vaccine regulations, the assumption underlying the CDC’s guidelines on masks / vaccines is that children go to school and college students go to class. It is, as we can all hope, the first step in realizing that there is no such thing as zero COVID; no magic bullet; just adaptation and adaptation, something in which man excels.
Politics. Last week the Ministry of Labor filed and processed simultaneously a legal action against UNH for violating the Mental Health Parity and Addiction Equity Act of 2008. The dollar value of the settlement was negligible, however United HealthGroup (UNH) has agreed to take substantial corrective action.
We have known for decades that insurers rarely reimburse mental health care providers at rates that make an on-line status viable. As a result, non-medical psychologists and counselors work largely outside the network.
The lawsuit alleges that UNH reduced reimbursement for non-medical psychotherapists outside the network more than for medical / surgical providers. Using the Department of Labor as an example, a psychologist can charge $ 110 for a 45-minute session. However, UNH would use the Medicare fee table to determine the base rate of $ 106.00. Due to the provider’s OON status, this price would be reduced by 25% to $ 79.00 UNH would pay $ 79.00 and the beneficiary of the plan would be liable for the remaining $ 31.00
Would have UNH using the reimbursement approach as used with off-grid medical / surgical services such as psychiatric services – a minimal reduction in the base fee – the beneficiary of the plan should have paid $ 4.00.
As part of the settlement, UNH has committed to ending the violation and communicating more clearly to the sponsors and beneficiaries of the plan.
It is time. The federal government’s longstanding tendency to ignore insurance practices is egregious. The industry has so flaunted the requirements of MHPAEA that even ACA’s plans fail to meet the parity standard.
Power. The long-standing bias against reimbursement for mental health services has deep roots. For decades, mental health care was provided on an inpatient basis by the state or local government. When this system was disbanded in the 1960s after numerous scandals and reports of abuse in state hospitals, it was to be replaced by outpatient community services. This replacement never came about.
What has evolved since then is a triage system. Common mental illnesses such as anxiety, depression and their travel partner, substance abuse, are not treated due to stigma. Improper training of caregivers, educators, and employers to identify signs and symptoms lead to complicated conditions. In addition, inadequate access to health care was a major contributor to getting to where the mental health system is; Many sick people are only treated in an emergency room after an accident.
While we must acknowledge that Americans’ collective mental health declined prior to the COVID-19 pandemic, reducing social interactions to zoom calls and scaring people, especially the young, has and will continue to take its toll.
That leaves employers and other plan sponsors between a rock and a tough place. Mental health staff operate outside the insurance system, making their income model less secure and leading to fewer doctors. However, all major MCOs report over the phone that mental health solutions are the most requested change in performance design. The accounting of the Ministry of Labor with UNH will only move this priority up the chain of command.
The really exciting thing about reorganizing mental health services, given the overwhelming demand and limited supply, is the ability to run the mental health services efficiently. The sad truth is that inpatient mental health services are the most common referral from an emergency room and have a very poor track record.
Hybrid models and digital solutions emerge quickly that can make employees more productive until enough practitioners realize that the new paradigm can support investment in education and training. Most are private but are growing fast like PursueCare, Soundermind and Lyra and all will be leaving Universal Health Services (UHS) and Acadia Healthcare ACHC in the dust.
A long time ago, but still welcome.
Emily Evans is a Managing Director at equity research firm HedgeEye
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