Dr Chris Stout on Behavioral Healthcare Spending and Payer Trends

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Hi, I'm from Seersight, calling about your AI powered interview. How are you doing?

I'm good. How are you doing?

Glad to hear that I'm doing well. Thanks for asking. So to get started, could you tell me a bit about yourself and your background?

Sure. My name is Dr. Chris Stout. I'm a licensed clinical psychologist. I have a varied background in medicine, healthcare, education, academia, entrepreneurship, startups, global health for profit, nonprofit areas. I was on faculty for a number of years at Northwestern's Feinberg School of Medicine and then at the College of Medicine at University of Illinois. I helped co found their center for Global Health, started my own nonprofit, the center for Global Global Initiatives, worked with a number of startups. I'm currently consulting with three AI startups. I write a great deal, just have done two second editions of a couple of my books for Wiley and Son. So really kind of a broad diverse area in technology, healthcare startups, private equity, venture capital, etc. So happy to be here today with you and talk about the behavioral aspect of things.

Wow, that's an impressive and diverse background. Dr. Stout. With all that experience, especially in healthcare and startups, I'm curious, how have you seen behavioral health spending change since the COVID 19 pandemic?

That's a great question. For years I was Federal Advocacy Coordinator to the American Psychological association for the State of Illinois. So for 12 years I would go to the Hill and meet with our elected representatives representatives to talk about patient advocacy kinds of things, what was called mental health parity in terms of insurance reimbursement, et cetera, et cetera, and always kind of fighting this tacit stigma against mental health or behavioral health kinds of issues. And I tell you, with the advent, one of maybe the only good thing that came from COVID was it really destigmatized mental health needs and issues. I think a variety of people, celebrities, military, athletes, you know, you name it, anybody from any kind of background and whatnot, you know, who might have typically have kept mental health concerns of their own or their family members kind of behind closed doors, became very public and very full throated about talking about their own experiences, etc. And the COVID 19 circumstance really acted to diminish that stigma much more than the 12 years of me going out to D.C. and along with my colleagues. To your point about the so therefore a result of all that is that behavioral healthcare spend has dramatically increased since the pandemic. And kind of maybe the backlash to that or the flip side of that is really it's caused a lot of payers to pay closer attention to their costs and adjust premiums accordingly. It also did a lot to put a shot in the arm to telehealth before. A lot of payers would not pay for that. I know my practice and in Chicago and consulting with other people and their practices, for example, to pick on Blue Cross Blue Shield for a second. Blue Cross Blue Shield typically wouldn't provide any kind of reimbursement for telehealth services until Covid came along. And then they gave parity in terms of an hour of psychotherapy face to face versus an hour of psychotherapy via telehealth had parity in terms of payment. Both were being reimbursed at the time. Same. The same level. One of the last times that I checked into this was that now there was a concern that they were going to go back to charging less or reimbursing therapists less for their telehealth services, which I've never really heard any good argument as to why that is. I suppose you could kind of say, well, there's less overhead because maybe they're doing it out of their bedroom or something. But I know most people that do have a telehealth component to their practice, other than it being someone in a different state, they still maintain all the expenses of staff and office rental and all those kinds of things. So I think that, you know, we're going to see kind of maybe the pendulum swinging kind of wildly around. But it seems now that third party payers are really starting to get back to paying closer attention to their costs and then start to adjust premiums and co payments, et cetera, accordingly.

That's a really insightful take. Covid definitely shifted the landscape, especially with telehealth becoming mainstream almost overnight. You mentioned payers are now scrutinizing costs more closely and adjusting premiums. What other factors besides telehealth and behavioral health spending do you think are pushing payers to reassess their premiums right now?

Great question. I think there's also, from the data that I track, there's rising hospital costs. There's, you know, GLP1 medications are quite in vogue now. It seems like you can perhaps in some situations even get them, you know, over the counter through certain startups as well. So maybe there's opportunities there for some people, but there's a high expense of those kinds of things, hospital costs and GLP1 meds, et cetera. And when you combine that with increased behavioral health care treatment spending, that that's, I think one of the Things that really kind of caused them to prompt the reassessment. This reassessment.

Got it. So it's a mix of rising hospital costs, the pricey GLP1 meds, and the Surge in behavioral health spending all piling up. With that in mind, what trends do you see driving the increased behavioral health utilization itself? Is it mostly the destigmatization or are there other factors at play?

Yeah, I think destigmatization really has played a key role with that. People aren't as inhibited people. We've moved, I think we're moving away, if not hopefully totally moved away from the blaming the victim kind of mentality. The old, you know, just pull yourself up by your bootstraps or people not having an understanding or at least not an empathy with regard to what anxiety, depression, et cetera is like. I think there's also somewhat of an uptick of it. It's sort of hard to tell epidemiologically. Is it just that people are more comfortable with talking about it, seeking treatment for it, et cetera, or is there actually, you know, epidemiological increase in these kinds of things? You can see in a variety of other areas that there's a concern that social media has increased these kinds of things, that maybe there's a Gen Z factor, that there's higher levels of anxiety, depression, things like that. But I do think that since therapy has gotten a bit more of a mainstream acceptance, that it's not embarrassment or stigmatized kinds of thing, and that people are saying that therapy is beneficial. I mean, a lot of times when people do talk about engaging in treatment or going into a rehabilitation facility or whatever, that things have gotten better. Cognitive behavioral therapy demonstrates very good outcomes that are robust short term levels of care, let's say, and that has staying power, that, you know, every things happen to people, so sometimes they may have to go back into therapy and et cetera, but get a booster, so to speak. But, you know, the sustainability of people's impact on their mental health status after being in care is very robust. And it's wonderful to see. There's a lot of published studies, you know, that indicate that. I think all of those things lower the bar in terms of people wanting to get behavioral health care services, even those without a formal diagnosis. I think also think about, you know, how healthcare is reimbursed for most people. Some people pay out of pocket, but for most people it's by virtue of their insurance. How do they get insurance? They have jobs, those jobs, those employers. One of the things to attract the kinds of employees that they want that are high quality, high caliber and to keep those, those employees that are high quality, high caliber. They need to have not just good salaries, but part of their good benefits package is a very comprehensive third party payer insurance package. So that makes it incumbent upon employers to provide good care and levels of service by virtue of the insurance. But then also insurance companies need to be able to, you know, they're, they're a for profit company so they need to maintain their profitability to their shareholders. But they also, I think there's still kind of maybe a backlash vis a vis managed care and those kinds of things where people found that they were not getting adequate levels of care. And that was pretty much more so pre Covid kind of thing that hopefully has gotten a little bit more rationalized today.

That's a really thorough perspective. So it's a mix of destigmatization, some possible real increases in anxiety and depression, plus employer driven demand for better behavioral health benefits. You mentioned therapy's lasting impact and how employers play a role in pushing for coverage. Do you think payers see therapy for all as a sustainable model or is that raising red flags for them?

Well, you know, it's sort of like why, why separate out behavioral health care as healthcare for all? I mean, it's sort of like would someone, if they were diabetic, would they not get care for their diabetes? If they were, you know, had a cancer diagnosis, would they not get care for their cancer. If they had a depression diagnosis, would they not get care for their depression? It's still by virtue, and I understand this tell things people think there's still this body mind separation. There's also a great robust literature called medical cost offset. I was just reviewing a study for a group that I'm consulting with and that showed there was a study done by Evernorth and they were showing that, you know, when you provide behavioral healthcare services, you have downstream medical cost offsets, medical cost savings that can more than cover the cost of the behavioral healthcare aspects, if not, then some. So I think that we need to quit having this sort of separation of the behavioral health from health care insurance. It should just be overall healthcare insurance and then depending upon, you know, if it's HMO or PPO or fee for service or whatever kinds of models, you know, maybe we go to more shared risk kinds of contracts, maybe we go to more capitated kinds of models. I think there needs to be more of a perspective of looking at more robust payer models that provide, I understand Profitability for insurance companies, but let's call it fair profitability. And then also being able to provide ultimately good care for anybody in need of whatever kind of care they have, psychological, biological, medical, you name it. And then also being able to provide good reimbursement for the whoever it is that's providing that level of care.

I love that. Breaking down the artificial divide between behavioral and physical health makes so much sense, especially with evidence showing behavioral care can actually reduce overall medical costs. Given that, how do you see therapy for all differing from therapy only for those with a formal diagnosis?

Well, I think the, the I, when I hear the thing, the term therapy for all, I presume it's because people need care. It's not something that's just cosmetic, it's not something for personal growth, etc. All of those kinds of things, you know, can be handled a variety of different kinds of ways. And my personal opinion is that if you have a clinical diagnosis and you need a professional licensed person to provide that care, that should be covered by your insurance, period, full stop. If you have issues around personal growth, then maybe you need to get a life coach or if you have issues around consultation or things like that with your job, then maybe you need to get specialty areas in that. But otherwise the whole aspect of getting psychotherapy means that you have a diagnosis and that you need to have care. Sorry, sorry about the dogs in the background.

No worries about the dogs. Add some charm. That distinction you make is really clear. Therapy covered by insurance should be for clinical needs, while personal growth or coaching falls outside that. How do you think payers are responding to this kind of differentiation? Are they open to covering therapy strictly for diagnosed conditions or is there pressure to broaden coverage?

I think that, you know, honestly, with diagnosable conditions, there's still a concern that there's not enough ad, there's not enough or adequate coverage for that. You could say that depression is covered, but that, that. So that's great diagnosis. Depression therapy provided. But how much therapy? What type of therapy? Is it just going to be medication? Is it just going to be psychotherapy? Is it going to be combined therapy? Is it going to include innovative kinds of therapies? In terms of transcranial brain stimulation, is it going to include ketamine? Is it going to include psychoactive kinds of medications or psychedelics? Is it going to include inpatient? Is it going to include partial hospitalization, intensive outpatient, residential, all of those, the more hospitalized kinds of things, more residential kinds of services, institutionalized kinds of services, are going to have Much greater costs. But the length of stay in a number of Those facilities today versus what it was 10, 15, 20 years ago are much, much shorter. And again, we're looking at tracking outcomes so we can kind of see if someone gets hospital or if someone gets residential care. You know, they. It's incumbent upon them to demonstrate that the quality of care and services that they provide is what's, you know, is necessary and eventually then creates a greater, you know, benefit. If someone stops using substances because they've been in rehab, then their healthcare costs will. Or their, their subsequent biological health care costs will diminish because they won't have all the comorbid problems that come along with substance abuse, for example. So I think that it's. I don't know of any insurance company that pays for any kind of personal growth, for example, because there's no diagnosis to go with personal growth for therapy, so to speak. And I don't really, in my own head, think of that as therapy. I think of it as, you know, personal growth, enrichment, philosophical discussion, things like that. So in that auspice, I think really the issue comes down to type of care. How managed is that care? Is there going to be a burden to the therapist that they need to send in their clinical notes every third session to demonstrate that the patient is showing progress but and still needs care? Those are the kinds of things and shenanigans that a lot of times insurance companies will play games with, with therapists. I'll give you another quick example. Historically, in the state of Illinois, this is something that we worked with through the Illinois Psychological Association. Insurance companies were not promptly paying. So we actually had to institute what was called a prompt payment act, that had to be approved, that was approved by the Illinois legislature saying that if an insurance company got a, what was called clean claim, meaning that the billing was all done correctly, that they had a clock put on it of 45 days, that they needed to reimburse the therapist. 45 days. Think about any other kind of profession out there. You know, anything your mechanic, you know, at the time you get your car fixed, you pay the mechanic. The, the issues of having to actually have legislation to force insurance companies to pay within 45 days. You've got an accounts receivable account that's, you know, out there for 45 days to finally get paid. And it's very hard to maintain a solo independent practice if that's what's happening with you. So I think the issue really boils down to if people need therapy, it should be covered. Is my Bias and it should be covered at a level that is adequate with what the literature says in terms of type of care and duration of care. Care

that's a powerful breakdown. So even when therapy is covered, the type, duration and reimbursement delays create real challenges for providers and patients alike. You mentioned innovative treatments like ketamine and psychedelics. Do you see payers warming up to covering these newer approaches or is that still a tough sell?

It is still, it is still a very tough sell. Again, the, there's promise to it. You know, we, there's, it's interesting because it seems like there's a lot of clinical application to it, even though there's kind of not a fully robust built out science behind it like you would think, maybe with other kinds of psychotropic medications and antidepressants, etc. So a lot of these kinds of things might be off label use or might be not reimbursed by an insurance company. So there's a lot of, you know, additional kinds of issues to consider with that. I think that, you know, honestly, if we were to find that XYZ treatment, no matter what it is, biological, psychological, technological, if XYZ treatment showed really good treatment outcomes that had good durability to them, you know, and could be done, done in a cost effective kind of way that insurance companies would be, you know, making a line to their door to be able to, to provide that. And perhaps my fantasy would be to, you know, maybe pay a premium for that. I mean, economically, in terms of medical economics, to me it would make perfect sense to say if I could provide, even though it might cost a little more to provide this care, if this person's relenting, suicidal ideation might occur for a period of 18 months, which they've never had that long a period of time before by virtue of having this XYZ treatment, that that would be a huge cost benefit to be able to do that, to keep that person alive. Or to my point earlier about medical cost offset, if someone had their anxiety, had their depression treated, et cetera, et cetera, and then that showed downstream cost savings. Then that XYZ treatment, which I would say we have it now, it's not xyz, it's cbt. Cognitive behavioral therapy would show all these kinds of cost effectiveness. And from a medical economics perspective, you know, is quite viable and quite important and should be from a humanitarian perspective for insurers, from a business perspective, important

for employers, that makes a lot of sense. Payers want solid proof that new treatments deliver lasting results and Cost savings. Before jumping in, you mentioned CBT as a proven cost effective approach. How do you see alternatives to traditional therapy like digital health solutions or triage tools fitting into the behavioral health landscape?

Oh, I think they're huge. I think they're huge. I think they help get people engaged in care much earlier. I think technologies like CBT informed chatbots can be a nice prelude or a nice bridge to the time until a person can get a regular appointment, be it face to face or telehealth or pharmacological intervention with a licensed healthcare professional. So I think those are all very, very, very beneficial kinds of things that should be part and parcel. They're also hugely cost effective. I mean the whole digital aspect of, of these kinds of things, I haven't seen a, in an economic breakdown, I think that'd be a very interesting article or paper. But I can't help in my heart of hearts think that, you know, the cost of that, the scalability of that, the economics of that, the economic benefit of that are just huge. So I think there's great potential there. I think that, you know, with startups and et cetera or even existing practices doing this to augment it's great, great area of promise.

Absolutely. Digital tools can really lower barriers and speed up access to care. You mentioned chatbots and tech bridging the wait for appointments. Do you see payers or providers investing more in these tools to manage the rising demand? How are they balancing cost and quality?

I don't see payers doing this. I see this as just being maybe the cost of doing business for innovative practices. I think probably we will see if there's enough volume out there that these might become best practices for facilities. You might see it maybe start off with being hot housed in academic clinical settings, for example, where they can research it as well as kind of seeing, you know, kind of what's what with it. So, and I don't know, I mean, I think it'd also be kind of hard to associate reimbursements for that because it's really again, the cost of doing it would be so minimal. Like a insurance company is not going to pay a clinician for their electronic medical record, that having a subscription or purchasing an electronic medical record system is all kind of part and parcel of having your practice. So I see those kinds of digital tools that we've been talking about as being part and parcel of a person's practice depending upon the size of it, the scale of it, the type of patients they see. If it's a group practice, if It's a clinic setting, hospital setting, you know, what have you. I also would imagine that the cost of, of those tools are not hugely prohibitive and that as time and technology improves, time passes and technology improves, that those price points will be driven down. Better quality for less cost.

That's a solid point. Digital tools might just become standard practice expenses rather than reimbursable services, at least for now. Shifting gears a bit, what role do you see community programs playing in behavioral health care? Are they helping ease the pressure on payers and providers?

Well, gosh, I was chief of psychology for the state of Illinois for about five years and one of the problems at that point in time was that community mental health centers, and I don't know under the current administration that this has gotten any better, were going out of business because they just, they had long lags of getting reimbursed through Medicare, Medicaid, state funding system. So I think it's more and more difficult for community service provision to be able to do that. And when I say community, I presume from your question you mean like community mental health centers, things along those lines. Maybe even centers that are parts of public health departments, not private practices or private hospitals. So I'm a little worried right now in terms of access, in terms of having adequate amounts of staff because there's funding and budgets are always a problem. But right now, by virtue of what's going on with Medicare, Medicaid and other kinds of state funding sources being diminished, not increased or even held stable, it's going to create a backlash in terms of demand is not going to diminish, but supply is going to diminish in terms of treating them. I think what has happened in the county where I was on the Board of Health, what we saw was that basically Department of Corrections became the de facto service providers because a lot of times these folks, when they don't get care and don't have any place to go, become unhoused and then oftentimes find themselves in precarious positions with law enforcement and then wind up and go off meds, don't get good, adequate care and wind up as a Department of Corrections problem. And then you're going to have those knock on effects of over population, not enough staffing, maybe not the adequate type of staff for that. You get people just kind of warehoused and it just creates a cuckoo's nest, a bedlam kind of situation. Unfortunately,

that's a sobering reality. Community programs are struggling financially, which shrinks access just as demand grows and the system ends up Funneling people into corrections instead of care. Given that, how do you see employers roles evolving in behavioral health care? Are they stepping up to fill some of these gaps?

You know, it's really not employers role to do that. To be honest, employers are in business to do whatever their business is and that's, you know, and if people are employed and have, you know, good gainful employment and good kinds of benefits, then they're very unlikely to be unhoused. They're very unlikely to hopefully not have be without any kind of insurance coverage that's helped out with being provided by their employer. I see more cost sharing around those kinds of issues because employers want to manage their health care spend so they make it more part of a burden, if you will, on their employees. So maybe there's higher deductibles, maybe there's higher co pays, maybe there's fewer options, less PPOs, more HMOs, those kinds of things. So it really, I think again just the current environment, you know, we'll see what happens in the next couple of years if things start to change or get back to a certain level of balance. But I think it's going to be a very challenging time in the near term.

Makes sense. Employers want to offer coverage but also keep costs manageable, which often means shifting more expenses onto employees. With all these pressures on payers, providers and employers, do you think better behavioral health care can actually lead to lower overall medical spending?

Oh yes, yeah, absolutely. That's. That was the point I was making with the medical cost offset. It does no one any good. It does not do an employer, it does not do a community. I don't know, it probably doesn't impact an insurance company unless maybe does someone doesn't get care and they wind up with hospitalization. And the insurance company can certainly deny payment of those, that kind of care, of course, or maybe it's not even part of their benefit package. But you know, those are the, these are the kinds of things that aren't as vague and gray and hard to see nebulous as maybe they were some years ago. Because we have much better outcome studies, we have much better tools to assess these kinds of things. A lot of clinicians are baking this in with their electronic medical records and evidence based practice and treatment guidelines. So I think we're in a much better position for these kinds of things. And I think part of it is just sort of honestly just kind of doing a job of education that if anybody is looking to, you know, have cost savings nowadays, that seems to be quite the Popular thing. Typically you think about a cost savings is diminishing a service or getting rid of it altogether. But then it becomes pennywise and pound foolish. You know, it's sort of the old joke of pay me now or pay me later. So that I think there could be also knock on effects of, you know, more absenteeism, more presenteeism, higher turnover, that then results in poorer productivity, that results in the diminished bottom line to whatever the business is. Then they're having to spend more money and resources on recruiting and onboarding. So you know, if you, if you have a high turnover, it usually speaks to other kinds of issues, perhaps when your business or your company. But it also certainly can be an aspect depending upon the nature of healthcare service provision to your people as well too. If they're not healthy, if they're not functioning well, you know, in their personal lives, their personal life comes to work. And if it's a problem at home, it's going to be a problem at work too.

Absolutely. That pay me now or pay me later idea really hits home. Investing in behavioral health isn't just humane, its smart business reducing costly hospitalizations and boosting productivity. Given all this, how do you think the pandemic specifically changed the way behavioral health care is approached by payers and providers?

Well, like I mentioned earlier, I think the aspect of being able to provide payment parity, reimbursement parity to providers with telehealth on par with what it was with traditional face to face therapy. I think there has been more of a full throated voice and expectation from employees that this is a benefit that needs to be a standard, not an exception, not a frilly nice thing to have. It's a must have, not a nice to have kind of thing. So I think the expectations of that, and again as we see more issues around medical cost offset that, that will just add to the emphasis of that and then the expectation of that,

that shift to telehealth parity really changed the game. Making behavioral care more accessible and expected as a standard benefit. Do you think this therapy for all approach is sustainable for payers in the long run or will we see limits creeping back in?

Oh yeah, it will. We'll see limits creeping back in. We're already seeing that the aspects of that I think are critical. That we then need to put our advocacy hats back on as providers and you know, whoever advocates to make sure that we don't go back to an era in which it's a nice to have, it needs to, it is a must have, it needs to continue to be a must have, and then it's incumbent upon us to make the business case for it as well as the humane case for it.

Absolutely. It sounds like ongoing advocacy is key to keeping behavioral health a priority and preventing rollbacks. Before we wrap up, do you have any questions for me?

No, thanks. I appreciate the thoughtfulness of all of your questions and bringing things all together in this area. I think it's really important. It may not be kind of a top issue kind of thing, but I think when people take a look at where the marketplace in behavioral healthcare in particular is vis a vis impacts of private equity, impacts of investments, impact on employer sustainability and profitability are all key. So I appreciate your thoughtful questions and for your time today.

Thanks so much for your time and insights today. Take care.

Sam.