Health tech companies focused on behavioral health are confident that reimbursement trends favor them in 2025.
Payment flexibilities for telehealth, hospital-at-home care and remote prescribing have been temporarily extended until March 31. The changes will prolong COVID-19-era payment for remote care across all specialties.
Related: CMS deals telehealth a win, but sector still needs Congress' help
For many in mental health tech, new reimbursement codes from the Centers for Medicare and Medicaid Services’ November physician payment rule are an even bigger deal.
The codes reimburse providers for using digital mental health treatment applications or devices that have been cleared or granted De Novo authorization by the Food and Drug Administration.
While the codes are narrow in scope, analysts said the move signifies a larger recognition among CMS and commercial insurers that virtual platforms treating mental health should be reimbursed.
“There has been a shortage of good mental health providers, and it is easy to argue that mental health services can be delivered in a virtual environment. No examination is needed,” said Carrie Nixon, co-founder and managing partner of Nixon Gwilt Law, which works with digital health companies. “Those factors have made mental and behavioral health the obvious jumping off point for all types of virtual, synchronous and asynchronous methods of delivering care.”
Digital therapeutics companies, which develop programs that can treat patients primarily through smartphone applications, have struggled because of a lack of reimbursement, said Andy Molnar, CEO of industry trade group the Digital Therapeutics Association.
The codes will be a lifeline for many behavioral health-focused digital therapeutics companies such as Big Health. The company has two FDA-cleared apps for treating insomnia and anxiety and is in line to benefit from CMS’ new codes, said CEO Yael Berman.
There has been demand for Big Health’s apps from providers looking for first-line treatment for sleeping disorders but no reimbursement, she said. The lack of reimbursement has limited its growth opportunities.
“Reimbursement has really been the key barrier because we've had providers reaching out over the years, but there was no way to get them to be able to offer it to their patients unless it was free,” Berman said.
Joe Perekupka, CEO of digital therapeutics company Freespira, said the shortage of mental health providers requires a more progressive approach from the federal government in treating the mental health crisis. Perekupka said with these codes, he hope CMS is starting to recognize this need.
Freespira, which offers a mobile health to reduce symptoms of panic disorder, panic attacks and post-traumatic stress disorder, is unsure its services fit within the scope of CMS’ codes, Perekupka said. Still, he predicted the codes will open the door to expand for broader digital mental health treatments.
“It’s a monumental shift in the philosophy at CMS,” Perekupka said. “And it’s a big shot of adrenaline into the arm of digital mental health treatment.
Outside the therapeutics space, companies such as Brightside Health and Talkspace have seen a shift in mentality from the federal government. In May, virtual mental health company Talkspace began rolling out its services to Medicare members. The company is expecting Medicare members to adopt the program this year when it starts marketing their services, said Erin Boyd, chief growth officer.
In addition to changes at the federal level, more commercial insurers are actively engaging with mental health tech companies, Boyd said. Talkspace has shifted its focus over the past few years from a direct-to-consumer payment model to working with commercial insurers and employers. The payer business accounted for more than 65% of its revenue through the first nine months of 2024.
“After COVID, it just made sense to be in as many networks as possible,” Boyd said. “We changed our marketing focus two years ago to really emphasize that you could use your insurance to get Talkspace, and that's been significant in changing the amount of registered users we have on the platform.”
With the opportunities increasing for reimbursement, companies must prove their worth to CMS and commercial insurers, said Molnar at the trade group. If the codes aren’t used or the outcomes data isn't showing a strong return on investment, CMS will move slowly to expand coverage, he said.
