The uncertainty and isolation of the pandemic has taken a heavy toll on mental health.Over a third of adults are currently experiencing anxiety or depression—more than three times as many as early last year. And with access to behavioral health services already challenged before the pandemic, many patients have been turning to telemedicine for support.
Health insurer Cigna found that while use of virtual care for both non-behavioral and behavioral healthcare services peaked in spring 2020, consumers have continued to use telemedicine for mental health needs, while demand for other virtual services tapered off. As of December, about 70 percent of behavioral health claims were for care rendered virtually, compared to just 20 percent across all other services.
The recent surge in demand for virtual mental health services has spurred an influx of investment into digital solutions. A recent Rock Health analysis found investments in the space have more than tripled since 2015. The injection of funds extends to both “generalist” companies (focused on a wide range of virtual services, including behavioral health) and “specialist” companies (focused solely on virtual behavioral health solutions).
Virtual behavioral health not only provides much needed access to care, but patients also prefer the privacy and ready access offered by telemedicine. Moving forward, telemedicine may become the preferred alternative for patients seeking support for mental health needs.
Virtual care company Doctor on Demand and clinical navigator Grand Rounds have announced plans to merge, creating a multibillion-dollar digital health firm.
The goal of combining the two venture-backed companies, which will continue to operate under their existing brands for the time being, is to integrate medical and behavioral healthcare with patient navigation and advocacy to try to better coordinate care in the fragmented U.S. medical system.
Financial terms of the deal, which is expected to close in the first half of this year, were not disclosed, but it is an all-stock deal with no capital from outside investors, company spokespeople told Healthcare Dive.
The digital health boom stemming from the coronavirus pandemic resulted in a flurry of high-profile deals last year, including the biggest U.S. digital health acquisition of all time: Teladoc Health’s $18.5 billion buy of chronic care management company Livongo. Such tie-ups in the virtual care space come as a slew of growing companies race to build out end-to-end offerings, making them more attractive to potential payer and employer clients and helping them snap up valuable market share.
Ten-year-old Grand Rounds peddles a clinical navigation platform and patient advocacy tools to businesses to help their workers navigate the complex and disjointed healthcare system, while nine-year-old Doctor on Demand is one of the major virtual care providers in the U.S.
Merging is meant to ameliorate the problem of uncoordinated care while accelerating telehealth utilization in previously niche areas like primary care, specialty care, behavioral health and chronic condition management, the two companies said in a Tuesday release.
Grand Rounds and Doctor on Demand first started discussing a potential deal in the early days of the coronavirus pandemic, as both companies saw surging demand for their offerings. COVID-19 completely overhauled how healthcare is delivered as consumers sought safe digital access to doctors, resulting in massive tailwinds for digital health companies and unprecedented investor interest in the sector.
Both companies reported strong funding rounds in the middle of last year, catapulting Grand Rounds and Doctor on Demand to enterprise valuations of $1.34 billion and $821 million respectively, according to private equity marketplace SharesPost. Doctor on Demand says its current valuation is $875 million.
The combined entity will operate in an increasingly competitive space against such market giants as Teladoc, which currently sits at a market cap of $31.3 billion, and Amwell, which went public in September last year and has a market cap of $5.1 billion.
Grand Rounds CEO Owen Tripp will serve as CEO of the combined business, while Doctor on Demand’s current CEO Hill Ferguson will continue to lead the Doctor on Demand business as the two companies integrate and will join the combined company’s board.
Centene has entered into a definitive agreement to acquire Phoenix, Arizona-based Magellan Health for $2.2 billion, or $95 per share, the payer said Monday. Magellan will operate independently under the Centene umbrella.
Executives said the combination will result in one of the nation’s largest behavioral health platforms as the two will provide behavioral services to about 41 million members in the U.S.
The deal also boosts Centene’s already established footprint in government sponsored health plans with the addition of 5.5 million lives and another 2.2 million to add to its pharmacy benefit management platform.
The deal is designed to boost Centene’s ability to market a “whole health” approach for its members. The COVID-19 pandemic has underscored the need to care for more than just a member’s physical health by also caring for their mental health, the company said Monday.
“This has become even more evident in light of the pandemic which has driven a dramatic rise in behavioral health needs,” Centene CEO Michael Neidorff said in statement. Both boards unanimously approved the deal.
Magellan Health provides managed care and pharmacy services for an array of clients that include health plans, unions and third-party administrators. Centene has been a client of Magellan’s in years past.
Magellan leans on analytics and other technologies in an attempt to improve health outcomes and lower costs. In addition to behavioral health, Magellan focuses on high-cost or complex patients for its clients. In its presentation to investors on Monday, Centene said 71% of total healthcare costs in the U.S. are spent on complex patients, illustrating the need for the deal.
For its healthcare management services, Magellan typically enters into risk-based contracts with its clients where it assumes all or a substantial portion of the risk in exchange for a per member, per month fee. Or, Magellan will enter into an administrative services only agreement in which it reviews utilization and claims administration and manages provider networks, according to its latest 10-Q filing.
The deal is expected to close in the second half of the year pending regulatory approvals. CEO Ken Fasola and other Magellan executives will continue their leadership roles.
Last year, Centene completed its blockbuster acquisition of rival WellCare, a $17 billion deal that catapulted the company to the fourth-largest insurer by membership when including Aetna, which is now part of CVS Health. The deal also doubled Centene’s Medicare Advantage footprint. Centene’s core business is Medicaid managed care and it is the largest insurer on the Affordable Care Act exchanges.
The coronavirus pandemic and the resulting economic downturn have persuaded Americans of the importance of behavioral health care services. In the last half of August, a National Council for Behavioral Health poll (PDF) found that the gap has widened considerably between demand for mental health and addiction treatment services and the financial viability of organizations that provide them. Over half of NCBH member organizations reported that in the three months before the survey, more Americans sought their services even as these providers lost, on average, 23% of their annual revenue.
Mental health parity laws “have existed in both state and federal law for years, but insurers have used a complex determination of ‘medical necessity’ to deny care” for mental health issues and substance use disorders, Sigrid Bathen wrote in Capitol Weekly. (A recently published CHCF paper by researchers at Georgetown University’s Center on Health Insurance Reforms assessed California’s progress in enforcing the 2008 federal Mental Health Parity and Addiction Equity Act.)
The new state law requires commercial health plans and insurers outside of Medi-Cal (which is regulated by different standards) to provide full coverage for treatment of all mental health conditions and substance use disorders. This includes treatments for post-traumatic stress disorder, generalized anxiety disorder, and opioid use disorder, Sophia Bollag wrote in the Sacramento Bee. The new law also establishes specific standards for what constitutes medically necessary treatment and criteria for the use of clinical guidelines.
Creating a Certification Process for Peer Support Specialists
Under SB 803 by State Senator Jim Beall (D-San Jose), California will create a system to certify peer support specialists, define their roles, and help to scale up the Medi-Cal workforce.
In 2019, CHCF’s Lisa Aliferis visited Washington State to learn about its innovative statewide peer support program. A certified peer support specialist “identifies as having a significant life-altering mental health [or substance use] challenge and has been in recovery for at least a year,” Aliferis was told by Patti Marshall, the peer support program administrator for the Washington Health Care Authority’s behavioral health and recovery division.
Last year, California had not adopted a similar program — even though the US Centers for Medicare & Medicaid Services issued Medicaid reimbursement guidelines for peer providers in 2007. Now, research has shown that peer support for those with co-occurring mental health and substance use diagnoses prevents rehospitalizations and facilitates their ability to live in the community. “When we say [peer support] saves lives, it’s not hyperbole,” Michelle Cabrera, executive director of the County Behavioral Health Directors Association of California, told Jocelyn Wiener in an article about peer support specialists. “It really is a linchpin in moving people [with mental health and substance use disorder issues] into recovery and stabilizing them long-term.”
Expanding Community Paramedicine
Community paramedicine is a locally designed, community-based, collaborative model of care that leverages the skills of paramedics and emergency medical services (EMS) systems to take advantage of collaborations between EMS and other health care and social service providers. Among other expanded roles, community paramedics are trained to handle behavioral health needs and, depending on the locally designed program, can transport intoxicated patients to sobering centers or mental health treatment, and help frequent 911 callers to obtain behavioral health, medical, housing, and social services. All of these protocols take pressure off hospital emergency departments that traditionally have been the only permitted destinations for patients cared for by EMS agencies.
In 2015, California began testing the model of care through 13 community paramedicine pilot projects across the state. An external evaluation conducted by the Healthforce Center at UCSF found that “community paramedics are collaborating successfully with physicians, nurses, behavioral health professionals, social workers, and outreach workers to fill gaps in the health and social services safety net.”
AB 1544 by Assemblymember Mike Gipson (D-Carson) will expand the pilot projects by authorizing local EMS agencies to develop alternative destination programs.
Making Substance Use Disorder Treatment More Accessible
One-third of adults who receive county services for serious mental illnesses have a co-occurring substance or alcohol use disorder, according to Assemblymember Sharon Quirk-Silva (D-Fullerton). She authored AB 2265, which will authorize counties to use Mental Health Services Act (MHSA) funds — historically limited to mental health services — to treat Californians with co-occurring mental health and substance use disorders.
The CEO of North Tampa Behavioral Health did not meet the requirements to lead the Wesley Chapel, Fla.-based psychiatric hospital, according to a report cited by the Tampa Bay Times.
Bryon Coleman Jr., the former CEO of North Tampa Behavioral, is no longer leading the hospital. Instead, he is in another position within Acadia Healthcare, the Franklin, Tenn.-based parent company of North Tampa Behavioral.
In October, lawmakers called on federal officials to look into North Tampa Behavioral after the Tampa Bay Times published an investigative report that found Mr. Coleman had no healthcare experience. The report also raised quality concerns, claiming North Tampa Behavioral boosted revenues by using a loophole in Florida’s mental health law to hold some patients longer than a 72-hour limit. The hospital rejected the claims.
In November, federal inspectors discovered serious problems at the psychiatric hospital, according to the Tampa Bay Times. Inspectors said medical staff hadn’t been held accountable for poor care. Inspectors also found “no evidence” that Mr. Coleman “met the education or experience requirements defined in the position description” for the CEO role. Officials threatened to end the facility’s federal funding if the issues aren’t addressed by Feb. 19.
Mr. Coleman became CEO of Tampa Behavioral Health in 2018. Prior to that, he quarterbacked for the Green Bay Packers practice squad, managed sales for a trucking company and oversaw employee benefits at an insurance firm, according to the Tampa Bay Times.
In a statement to the Tampa Bay Times, a spokesperson from Acadia denied that federal officials threatened to cut public funding from the hospital and said officials didn’t find Mr. Coleman lacked requirements for his job.