Yes, it’s true. Insurance companies are investors in Alma, Headway, Rula, etc. Worse, following the tech platform money trail back to its origins, we uncover the same economic dynamics in behavioral health that now control all of American healthcare. It’s disheartening: mental health parity – in all the wrong ways!
Most of us think of the tech platforms as having emerged seemingly overnight in response to the mental health crisis and urgent need for services via telehealth brought on by COVID. But in reality, that’s not exactly correct. Both Alma and Headway began prior to COVID, in 2018-2019, which means the tech platform money trail stretches back further in time. As in the medical field, there are three concepts which, together, form the paving stones of this money trail.
- Medical Loss Ratio
- Vertical Integration
- Transfer Pricing
Medical Loss Ratio
In insurance-speak, the Medical Loss Ratio (MLR) is the percentage of premium dollars directly used to pay claims and for quality improvement/disease management expenditures. Money the insurance payer collects that isn’t used for these purposes goes to pay their operating costs. And, of course, profit. Wall Street expects a hefty profit on top, to please shareholders. That profit has to come from somewhere.
The government has attempted to ensure consumers and taxpayers are protected by defining the minimum percentage of premium dollars that must be spent directly on healthcare activities:
- ACA-regulated commercial & marketplace plans: 85% MLR is required for “large groups” and 80% for individual & small group plans. (note: states can choose to raise the MLR requirements).
- If you’ve ever received a random check from your insurer referencing a “medical loss ratio rebate,” it’s because your insurance company failed to meet the MLR target. They’re required by law to give back the corresponding percentage of your premiums they failed to spend on claims.
- Medicare “Advantage” requires an 85% or higher MLR.
- Plans with lower than 85% MLR must refund CMS.
- Contrast this with Original Medicare, where in 2021 the administrative costs (since there’s no profit requirement) hovered around 1.3% of Medicare’s budget.
- Medicaid Managed Care also requires the MLR to be at least 85%.
Vertical Integration
Vertical integration describes the acquisition by insurance companies of non-insurance healthcare entities. This can be anything from electronic clearinghouses such as Change Healthcare, to imaging, pharmacy benefit managers, specialty physician practices, ambulatory surgery centers, urgent care, and even consumer-facing information products such as Healthgrades, Medical News Today, and PsychCentral: all owned by RVO Health who’s owned by (you guessed it) United HealthGroup.
United is the most egregious vertical integrator, with 2,694 subsidiary companies. Everyone’s heard the statistic that United employs about 10% of American physicians, but the list of 2,694 subsidiaries demonstrates that behavioral health isn’t exempt. At least 75 large behavioral health practices are listed, including some with familiar names, such as Refresh Mental Health.
But United isn’t the only culprit. Availity, the portal most of us who deal with insurance claims must use (and love to hate), started in 2001 as a joint venture between Florida Blue and Humana. It was then acquired in 2006 by HCSC, owner of 5 Blue Cross/Blue Shield plans. Elevance/Anthem (14 BC/BS plans), and BCBS Minnesota joined as co-owners of Availity in 2009.
The list of Elevance’s (Anthem; Carelon) subsidiaries reveals that they own NGS Federal, LLC, otherwise known as National Government Services, the Medicare Administrative Contractor for 10 states, as well as infusion centers, a sales consultancy for healthcare startups, various Medicaid managed care organizations, even a legal services company focusing on healthcare cost containment (interesting side note: following this hyperlink will take you to a LinkedIn page. If you click on About, and then the company’s website, http://www.4600boehm.com/, you end up at Carelon Payment Integrity). Small world, eh?
Likewise, the Cigna Group has their own healthcare pyramid. Notable subsidiaries of Cigna include one of the largest American Pharmacy Benefit Managers, Express Scripts, which even has its own associated pharmaceutical distribution arm. EviCore, revealed last year by ProPublica to be the AI giant behind “medical necessity” prior authorization denials, is also owned by Cigna.
Transfer Pricing
So what’s to keep United from paying Refresh Behavioral Health’s clinicians more for a 90837 than they would pay you in an independent private practice? What’s to keep them from paying more for a surgery at one of their own ambulatory surgery centers than they would for the same surgery performed at an independent hospital?
Nothing! A study published this month in Health Affairs found that UHG-owned providers were paid anywhere from 17-61% more than those not owned by United.
The phenomenon of paying more for the same service to a company under the same corporate umbrella is known as transfer pricing. The money just moves from one side of the house to the other. But, that money is spent on claims – so it nevertheless counts toward satisfying the government’s Medical Loss Ratio requirements.
As a result of vertical integration, transfer pricing has been the means by which the large insurer-owned conglomerates have gotten around the government’s well-intentioned Medical Loss Ratio requirements. The authors of the Health Affairs study concluded that even just a 1% price increase to wholly-owned subsidiaries could lead to billions of dollars “saved” from having to be rebated back to consumers or the federal government. And where does this money go, instead?
Corporate Profits, of course.
Paving the Tech Platform Money Trail
So, back to our behavioral health corner of the healthcare world. I previously reported on insurance payer investment in the behavioral health practice management tech platforms and am re-posting that blog’s infographic.
January’s deductible season is in our near future. Which brings up a critical question: do clients with deductibles pay more if they see a clinician via a tech platform than they would in a private-practice setting?
Transfer pricing would appear to suggest that yes, clients pay more. Many clinicians openly state that the reason they join a tech platform is because the reimbursement rates are better than if they contracted directly. But do you really think that a tech platform pays 100% of the insurer’s allowed amount to the therapist? It’s doubtful. The venture capital which created the tech platforms is going to to want a return on their investments.
Clear Health Costs recently reported interviewing a therapist working for Alma who obtained Explanation of Benefits documentation from her clients. Alma paid her $79 for a 90834 with Cigna, but Alma received a $125 allowable amount. United’s reimbursement rate for an unspecified CPT code, probably 90837, was $142.80 to Alma, but the therapist was only paid $121.80. Imagine that; both Cigna and United are investors in Alma. Transfer pricing, hard at work.
That therapist’s Alma clients who have deductibles will be paying $142.80 and $125 per visit, not $121.80 or $79. Thereby making it more expensive per session to see a therapist via one of the tech platforms – at least for clients with deductibles.
“But the platforms provide a service! There’s a mental health crisis and a behavioral health clinician shortage!”
“Access” is the stated mission of the tech platforms – because everyone knows insurance companies don’t have adequate provider panels. But has the access problem been intentionally manufactured by insurance companies? I certainly can’t offer any proof of intention – and no one could have predicted the universal adoption of telehealth as a result of the COVID pandemic. But I don’t think it’s unreasonable to conclude that stagnant reimbursement rates over decades, the ever-increasing complexity of administrative overload necessary for practices to get claims paid, audits, pre-payment reviews, clawbacks, and a months if not years-long credentialing/contracting process have all played a role in driving clinicians to say “Enough!” and leave the networks.
Clinicians entering private practice in the 2020’s are facing a daunting landscape of corporate behemoths. It’s easy to feel powerless and overwhelmed, afraid that you have no viable choice but to join the venture capital platforms if you’re to succeed professionally. It’s undeniable that the platforms do provide a means by which newly-licensed clinicians can enter into private practice more quickly – even though this same arrangement clearly also benefits the insurers, who have less credentialing to do.
The choice among various private practice options is always yours, and you may have valid, understandable reasons for choosing to use a tech platform, even if only temporarily. Resources exist which can help you make an informed decision. If you decide to take an alternative path, one that might be harder at the start but more rewarding in the end, I can help with any private practice problem you might encounter.
