November 10, 2022
Depression and mental health issues are a leading cause of disability in the world according to the World Health Organization.
About 30% of patients who try two traditional treatments for depression like SSRIs relapse and see no lasting relief. With physical medical issues, insurance coverage generally follows this trend: The more acute the symptoms, the more they’ll cover. With treatment-resistant depression (TRD), the opposite is true; patients who have tried traditional treatments and still have major depressive disorder (MDD) get less insurance coverage as their symptoms become more acute, or as their condition worsens.
Major depression is also extremely costly to the healthcare system. The global economic burden of mental health is projected to be $6 trillion by 2030 (12x that of cancer and the largest across all medical conditions). One reason costs are so high is that mental health is highly comorbid with physical health. Not to mention hidden costs like absenteeism and caregiver costs.
Despite the desperate need, innovative mental health treatments have stalled for the last 50 years due to financial, regulatory, and administrative barriers to implementation and access.
Clinicians on the frontlines carry the brunt of trying to operate amidst a broken system; leading to increased burnout and leaving the profession because the profession can’t meet patient demand.
But there’s a silver lining: We’re seeing an accumulation of real-world evidence supporting the effectiveness of new paradigms like ketamine infusion therapy (KIT) that have been understudied in clinical trials. This evidence is crucial to eventually persuade insurers to increase access to care as this costly treatment modality is out of reach for most. We’ve also observed an increased cultural acceptance of innovative treatments for depression, starting with ketamine—largely due to the easing of the Controlled Substances Act of 1970.
We’re at a unique turning point, where better tech, research, and easing of regulations coalesce to spark the next mental health care renaissance, starting with ketamine treatments.
Ketamine is the first substance with psychedelic-like effects approved for off-label use by the FDA. Therefore, ketamine serves as a barometer for the barriers future innovative treatments may face.
That’s why Osmind surveyed 75 private practices currently offering ketamine infusion therapy (KIT) and/or ketamine-assisted therapy (KAP). The current survey investigates innovative clinicians' top barriers, and offers ways to overcome them.
1. The state of reimbursement for ketamine therapies for depression and anxiety.
2. Tech solutions to give clinicians their time and autonomy back, and enable real-world evidence collection at scale.
3. The future of ketamine and psychedelic-assisted therapies.
Ketamine was formally approved as an anesthetic in 1970. In the early 2000s, medical professionals began noticing ketamine’s effectiveness in treating depression, especially in cases of treatment-resistant depression where other medications failed to maintain lasting positive treatment effects.
In the U.S., clinicians are allowed to freely administer drugs for “off-label” conditions—like depression in this case—as long as they were FDA approved for a different condition and thereby deemed safe to use.
Forward-thinking mental health clinicians saw this opportunity and added ketamine to their treatment toolkit.
For the last 8 years, repeated studies have demonstrated real-world evidence (RWE) for ketamine’s effectiveness in treating depression and other mental health conditions. Despite this, insurance companies are hesitant to reimburse ketamine treatments, citing a lack of randomized-controlled trials (RCT), which the FDA uses to approve treatments for “on-label” use. We’ll explore why RCTs are so hard to run with the TRD patient population later in this series.
Given these constraints, most ketamine treatments for depression are administered in small private cash-only practices.
Over 2.9 million adults in the U.S. alone have treatment-resistant depression, but only those who can afford to pay out of pocket and live near a ketamine clinic can access this life-saving treatment.
Patients are forced to pay out of pocket, and ketamine infusions cost $400-$1,200 per session. Recent research suggests that patients need to receive multiple ketamine infusions to retain a maintenance antidepressant effect, with regular infusions recommended after that at an uncertain cadence. Clinicians in our survey reported losing around 34% of prospective patients because patients can't afford their services.
Clearly, insurance is a huge hurdle to expanding access to innovative treatments. So how do we make the case to insurance companies that these treatments are worth covering?
Beyond wanting FDA approval, insurance companies generally weigh a cost-benefit analysis when deciding what to cover—they weigh the cost of coverage versus the expected benefit .
If the improvement in outcomes from a medication/treatment can drive down healthcare costs (e.g. fewer hospital admissions), then insurance companies are more likely to cover that treatment.
Let’s say the total cost of care for a patient with non-TRD is about $12,476, whereas the cost of care for a patient without any form of depression is $5,688. If a patient were to receive a course of ketamine infusion therapy (KIT), which would cost about $3,000 according to our survey, and retreat to a less severe form of depression (which studies show is likely), the insurance company would save about $9,500 per year. This equates to a 3x ROI in year 1 alone!
Using this framework, it SHOULD BE a foregone conclusion for insurance companies to cover innovative treatments such as ketamine.
Beyond ketamine, additional studies demonstrate the economic benefits of innovative mental health treatments. A recent analysis of MDMA assisted-therapy (currently in Phase 3 trials), resulted in both a substantial clinical benefit for patients with severe or extreme chronic PTSD and cost savings for payers.
From a purely ROI perspective, ketamine and other innovative treatments can drive down costs. Still, insurance companies have lingering fears about ketamine addiction. Osmind will examine this by looking at dosing and long-term outcomes data.
While insurance companies need buy-in, how do private practice clinicians feel about accepting insurance in the future?
Our survey found:
If ketamine were to be covered by insurance, patient access would certainly improve, because more patients would get the treatment reimbursed rather than having to pay out-of-pocket.
This would result in better overall patient outcomes! It may also result in better business outcomes for clinicians, given the higher volume of referrals they would get. In fact, the average clinic we surveyed is only at 60% capacity, due to patients not being able to afford their services. Expanded access means more patients, and this is likely why clinicians would be interested in taking insurance.
For those who aren't interested in taking insurance, there are many reasons why they’re hesitant.
Among those “Maybe” and “No” respondents, there is a fairly even split between two reasons:
1) billing hassle
2) concerns about reimbursement
Given these clinics tend to be cash pay only clinics, they likely haven’t had to develop the operational expertise necessary to properly get credentialed, negotiate, code, submit, and receive payment from insurance companies. Reimbursement rates could also be low, which is a current concern for providers who administer Spravato (the branded, FDA-approved version of ketamine).
Even though patient access would be improved, clinicians would face legitimate administrative and financial hurdles if insurance were to cover generic ketamine.
With a lack of insurance coverage, empathetic and motivated clinicians are still finding alternate routes to expand access.
Patients may be able to fetch some level of out-of-network (OON) reimbursement, depending on their insurance plan. Patients must ask their provider for a “superbill,” which is essentially a coded receipt, to submit to the patient’s insurance company.
Reimbursement depends widely on the patient’s plan and the codes used by their provider. There’s a high probability that the patient won’t receive any reimbursement, either because their plan doesn’t offer out-of-network (OON) reimbursement—or because the insurance company doesn’t recognize the off-label use of ketamine as a valid reason for reimbursement.
If patients’ providers use Osmind EHR, we automate the superbill creation process. The Osmind patient app also can electronically submit superbills free of charge for patients.
Clinics eager to expand access to those who can’t afford upfront payments may offer sliding scales and other financing options such as “financial hardship agreements.” However, clinics need cash flow to survive, and often need to invest in marketing to find enough patients to keep the lights on, creating a chicken-and-the-egg scenario: they need more patients to have enough revenue to expand access to more patients.
Our survey found:
There are also a number of treatments currently in clinical trials for depression. Patients can visit https://clinicaltrials.gov/ to see if any are recruiting near them. Without insurance coverage, this is what many patients resort to.
These alternate routes to care often require extra time and investment, putting the burden on clinicians and patients to navigate financing. In the absence of insurance reimbursement, better tech can streamline these out-of-pocket workflows, and let clinicians reclaim their time and peace of mind.
In part 2 of “The State of Innovative Mental Healthcare”, we’ll explore the administrative barriers clinicians on the frontline face, and the transformations in the industry that give clinicians their time back.
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