/Upstarts are shunning insurance in favor of cash for mental-health treatment

Upstarts are shunning insurance in favor of cash for mental-health treatment

  • Digital-health companies want to capitalize on the rising demand for mental-health care.
  • Some say they offer cheaper, easier access to online therapy and medication by taking cash.
  • Critics say they risk leaving out vulnerable people and worsening care.

America’s mental health is suffering, and digital-health companies that eschew insurance in favor of cold hard cash think they have the antidote.

On Tuesday, Ro, a $5 billion startup, said it was wading into the business of mental-health care with an online service offering people medication for anxiety and depression for $65 a month.

Earlier this month, the

telehealth
company Hims launched virtual therapy visits for $99 a session.

Neither company takes insurance for the service it’s offering. But they say they’re making it easier and often cheaper to find much-needed care online.

Critics, however, say these startups help people who have the means to pay higher costs out of pocket while ignoring lower-income and underserved people who need care.

“Cash-pay products, or even a lot of the employer products geared toward higher-income businesses, are solving an access challenge for folks that already had OK access and not really getting to the broader population that I think needs it,” said Harry Ritter, the CEO of Alma, a startup that focuses on helping independent mental-health-care providers get paid by insurers.

Cash-pay upstarts think they can make mental-health care cheaper and easier to get

Four people in line on a sidewalk wearing protective face masks.

The pandemic harmed Americans’ mental health.

NickyLloyd/Getty Images


The trauma of the COVID-19 pandemic worsened America’s mental-health crisis.

Demand for therapy and other mental-health treatment exploded, overwhelming the professionals able to help. Venture-capital firms salivated.

Investments in teletherapy totaled $2.9 billion in the first half of 2021, compared with $1.1 billion in the first half of 2020, according to CB Insights.

Young technology startups addressing mental health through virtual therapy or medication management as well as more established telehealth companies like Teladoc grew quickly during the pandemic. While many people are seeing their primary-care doctors in person again, demand for virtual mental-health care has stuck around.

The startups hoping to profit from that demand are trying different payment models. Some, like Ro and Hims, accept only cash for their services. They say that by sidestepping insurers, they can offer cheaper, easier access to mental-health care.

“The brain damage associated with trying to find a provider who will take insurance and then get reimbursed is just so mind-bogglingly brutal,” Hims CEO Andrew Dudum told Insider.

Many providers don’t take insurance, and a lot of people have weak coverage that makes care “wildly expensive,” he said. So Hims chose not to deal with it, at least for now. Dudum envisions a future in which Hims accepts cash and takes insurance for those who have “really great insurance.”

It’s offering both virtual visits with therapists and medication management by psychiatrists, and it’s doing so at prices that are lower than or equal to what many people would pay if they were using insurance, Dudum said.

A headshot of Saman Rahmanian.

Saman Rahmanian, the cofounder and chief product officer of Ro.

Ro


Saman Rahmanian, the cofounder and chief product officer of Ro, similarly said that by using technology to drive efficiency and going directly to patients, Ro had reduced the cost of care so that its services are cheaper than an insurance copayment for most people.

With Ro’s new mental-health offering, Ro Mind, the company is connecting people with primary-care doctors who can diagnose and prescribe medicine for anxiety and depression over the internet. It doesn’t offer teletherapy — at least, not yet — but provides educational videos and self-guided exercises to support patients.

Insurance-based mental-health services have failed lower-income and underserved people “by limiting the networks of available providers, hiding costs, and denying or delaying claims,” Rahmanian told Insider.

When providers take insurance, they’re more focused on serving the insurance company than patients — but when patients control the money, providers are encouraged to lower costs and innovate, he said. “The businesses and the health institutions actually have to work to get the patients and to retain the patients,” he said.

Some experts question whether cash-pay companies leave out the most vulnerable people

Psychiatrists and other experts agreed that venture-backed cash-pay startups are improving access for some people, and that’s a good thing.

It is notoriously difficult to find treatment for mental illnesses in the US, and that’s in large part because many therapists, psychologists, and psychiatrists don’t take insurance. Insurers pay mental-health professionals so little that they often opt out of accepting insurance altogether.

The result is that people are forced to go out of network for care. A 2019 Milliman analysis of insurance claims from 37 million people with commercial insurance found that 17% of behavioral-health office visits were to an out-of-network provider, compared with just 3% of primary-care visits. By going out of network, people are often stuck with higher bills.

A typical visit to a therapist in the US can cost $150 to $200 a session, while a session with a psychiatrist could cost $300 or more, said Dr. Ravi Shah, a psychiatrist and professor at Columbia University who cofounded the tele-mental-health startup Mantra Health.

Cash-pay startups generally charge lower rates, he said. Still, by not taking insurance, the startups are in some ways contributing to the persistent problem of out-of-network mental-health care rather than fixing it, Shah said.

Getting insurers to pay for mental-health care would make it even more accessible and put the care on par with treatment for physical conditions, he said.

Dr. Paul Goering, a psychiatrist and former vice president of mental-health and addiction services at the Minnesota hospital system Allina Health, said that, in general, there’s no objective data evaluating venture-backed startups, so it’s a mystery which companies provide services that improve health.

Avoiding insurers doesn’t help matters. Companies that get paid by insurers have had to demonstrate that their services work. But taking cash requires only that a provider meet the minimum standards for a license — a lower bar, he said.

Direct-to-consumer models could worsen the shortage of mental-health-care providers

Russell Glass, the CEO of Ginger, a digital mental-health company, said the direct-to-consumer model could exacerbate the shortage of providers.

Ginger started off selling directly to people online before pivoting to working with big companies that offer its mental-health coaching and teletherapy services to their employees as a benefit.

It’s now striking contracts with commercial health insurers like Cigna and Oscar Health, and that’s dramatically expanding the number of people it’s reaching, Glass said.

Ginger no longer sells directly to patients paying cash, because it learned that solving the imbalance between the people who need mental-health care and the professionals who provide it requires treating people and then getting them out of the system as soon as they’re healthy and able to manage their own care, Glass said.

Attracting customers under a cash-pay model is too expensive to do that, so companies selling directly to people “likely have to keep those people around for longer than they need therapy for,” Glass said.

“Every hour of therapy that’s going to somebody who doesn’t need it is in a misallocation of medicine,” Glass added.

Dudum of Hims disagreed.

“I don’t think a business that is succeeding at helping more people is a problem because it’s creating an imbalance” in supply and demand, he said. “The reality is that the imbalance exists already, and we just need to solve that collaboratively.”

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