A growing number of Blue Cross Blue Shield insurers have agreed to pay for patients to use prescription digital therapeutics, paving the way for broader coverage among carriers kick-starting an emerging sector.
At least 17 Blues plans now offer at least one prescription digital therapeutic as a standard pharmacy or medical benefit for some members, according to an analysis provided to Modern Healthcare by PalmHealthco, a firm that helps digital therapeutics companies commercialize their offerings.
Prescription digital therapeutics are software applications that must be prescribed by clinicians. Unlike for nonprescription digital health services, health insurance companies have been slow to cover these tools over concerns over liability, a lack of clinical evidence and slow Food and Drug Administration approvals.
Highmark Health announced last month that it would cover eight prescription digital therapeutics for 6 million commercial enrollees in four states. The Pittsburgh-based integrated health system is the first insurer to cover prescription digital therapeutics as a class. STAT was the first news outlet to report Highmark’s coverage decision.
The lack of insurance coverage has limited patients’ ability to access these tools, Akili Interactive CEO Eddie Martucci wrote in an email. Akili Interactive has FDA approval for its EndeavorRX video game, which is billed as a treatment for children with attention deficit hyperactivity disorder.
“Families of children with [attention-deficit/hyperactivity disorder] and adults with ADHD are struggling and need more options,” Martucci said. “Hopefully, we see a greater and faster shift given Highmark has shown a path to a formal policy.”
The same month as Highmark’s decision, Blue Cross and Blue Shield of North Carolina added Pear Therapeutics’ substance abuse disorder prescription digital health service as an option for self-insured employers. Other Blues insurers will pay for prescription digital therapeutics in Florida, Illinois, Kansas, Minnesota, Montana, Nebraska, New Jersey, New Mexico, Oklahoma, Texas and Washington state, according to PalmHealthco.
“I am a big believer in optimism. This is a new therapeutic modality,” said Dr. Matt Fickie, senior medical director at Highmark Health. “We have durable medical equipment, surgeries, medicines, radiation therapy, implantable devices. This is in the same league to me. If you're in this business and you want to try to make the best possible early therapeutics available to people, this is where you need to be.”
A path to coverage
The FDA has approved 10 prescription digital health tools, including three from Pear Therapeutics. Medicaid plans in Massachusetts and Oklahoma led the way and rolled out Pear Therapeutics’ digital substance abuse services to enrollees this year.
In April, the Centers for Medicare and Medicaid Services paved the way for commercial coverage of FDA-approved digital products by introducing a billing code for “prescription digital behavioral therapy,” which made it easier for private health plans to process payments for these services.
Fifteen Blues carriers have added Pear Therapeutics’ products to their commercial formularies, said CEO Corey McCann. The company's tools will also be covered by Salt Lake City-based Intermountain Healthcare’s SelectHealth and Oakland, California-based Kaiser Permanente.
Evidence-based studies on the clinical effectiveness of Pear’s Therapeutics’ tools targeting opioid use disorder, chronic insomnia and substance use disorder have compelled health insurers to cover its products, McCann said. “We’re at a coverage inflection standpoint,” he said. “Many payers generate financial returns by limiting access to patient care for just about everything, which includes prescription digital therapeutics. You only overcome those objections with real-world data.”
Pear Therapeutics’ clinical studies led Blue Cross and Blue Shield of North Carolina to add its substance abuse services as an optional covered benefit for self-insured employers this year, said Laura Moran, a team leader for commercial formulary and utilization management at the insurer. The nonprofit company will work with its pharmacy benefit manager, Prime Therapeutics, to measure hospital inpatient stays, healthcare costs and provider engagement associated with Pear Therapeutics’ tools, she said. Blue Cross and Blue Shield of North Carolina has not decided whether to publicly disclose its findings, Moran said.
“It's such a new frontier,” Moran said. “I bet as demand and the real-world evidence continues to evolve, other plans may change their tune.”
Blue Cross and Blue Shield of North Carolina added the prescription digital services to its formulary Oct. 1, so it is too soon to reveal how many employers cover Pear Therapeutics products for their workers, Moran said. The insurer's behavioral health team is notifying employers about the new benefit and the company's customer service employees are trained to field patient questions about Pear Therapeutics, she said.
Highmark Health also updated its operations to accommodate prescription digital therapeutics. The company will work with any FDA-approved digital tools to generate real-world data on costs and patient outcomes if its provider arm can test the services in a clinical setting, Fickie said.
As such, the company committed "significant scrutiny” to how the data are stored and how they are accessed by third-party developers, Fickie said. Highmark Health also expanded its list of providers who may prescribe digital therapeutics. In the behavioral health field, for example, psychologists, licensed clinical social workers and licensed professional counselors can do so, he said.
“The idea is to try to push these out as a therapeutic modality to where people can find care,” Fickie said. “Access to pure psychiatrists is more difficult. So if you push through all the different mid-level professionals in the behavioral health ranks, then you can have more chances of getting that goal.”
Why the Blues?
Blue Cross and Blue Shield plans may have been faster to adopt these tools is because they share coverage decisions, Fickie said.
At the same time, Blues plans tend to be more autonomous than larger, for-profit insurers, which allows them to make decisions that are tailored to local markets, said Antonio Ciaccia, CEO of drug pricing research firm 46brooklyn Research and president of 3 Axis Advisors consultancy. Blues companies also may face more pressure to innovate than their larger competitors, he said.
Many for-profit insurers have vertically integrated by buying providers. Blues plans have generally eschewed this strategy, which disadvantages them, Ciaccia said. Because the Blues’ main value proposition is their large hospital networks, they may be hesitant to acquire providers and upset their clinical partners, he said.
The absence of proof that these digital tools have long-term benefits is the biggest barrier vendors face to insurance coverage, Ciaccia said. Elevance Health, formerly known as Anthem, and CVS Health’s Aetna have issued policies concluding these tools have not yet proven their worth. Elevance Health and Aetna did not respond to interview requests.
“It’s been tough sledding in terms of formulary coverage of these products,” said Alex Kilgore, a life sciences analyst at Xcenda, a consulting arm of the pharmaceutical wholesaler AmerisourceBergen. “But there’s been a lot of momentum with Highmark’s decision and state Medicaid policies. We’re seeing more digital therapeutics get coverage for reimbursement.”
FDA approval plays a big role in the growing acceptance of these therapeutics. A Xcenda survey of executives who oversee health plans, integrated delivery networks and pharmacy benefit managers found that 64% are more likely to cover prescription digital therapeutics if they meet FDA requirements and have sufficient clinical evidence.
The FDA could improve its communications with digital therapeutics companies to make the review process more transparent, Kilgore said. “A third of payers said they were very familiar with the FDA regulatory approval process, a third said they were somewhat familiar and a third weren’t familiar at all,” he said.
Prescription digital tools also face more skepticism than non-prescription digital health services. Cigna’s Evernorth and Aetna, for example, have curated lists of covered digital health tools available to members. Neither digital health formulary includes tools that require prescriptions. Cigna and Aetna did not respond to interview requests.
Along with a lack of evidence, insurers may be concerned about an uncertain legal environment for prescription therapeutics, said Aaron Miri, co-chair of the federal Health Information Technology Advisory Committee, an expert panel that advises the federal government on health IT policy.
“If I prescribe to you medication X and something happens to you, we have a clear understanding of that,” said Miri, who is also senior vice president and chief digital officer at Jacksonville, Florida-based Baptist Health. “If I prescribe app Y, and it is supposed to have the same result and it doesn't, where’s the liability? Is the doctor at fault? Is the maker of the app at fault? Is the hospital system at fault? That’s a big question mark.”
Michael Pace, CEO and founder of PalmHealthco, expressed surprise that risk-adverse insurers refuse to cover FDA-approved prescription digital therapeutics but will cover unapproved digital therapies. These unreviewed tools actually could expose insurers to greater liability, he said. “I would hate to be an executive at a payer organization that has been funding their members’ use of something that is not authorized by the FDA and not covering something that has been approved by the agency, if something bad were to happen related to that unauthorized therapy,” he said.
Not everyone agrees that FDA approval is the gold standard for patient care, or necessary for success in the marketplace.
“The rules of engagement are pretty straightforward,” McCann said. “If you want to treat a disease, then you need to go through an FDA approval process. If you want to deal with something that is more health and wellness-oriented, like for example weight loss, that's not something where the FDA has any sort of purview.”
Big Health had its digital therapeutic for insomnia and anxiety placed on Evernorth's digital health formulary. Arun Gupta, CEO and executive chairman of Big Health said that the fact it’s not considered prescription therapeutic does not matter.
Big Health is engaging in conversations with the FDA and keeping potential regulatory pathways open, Gupta said. “We have an evidence-based therapeutic that’s backed by science,” he said. “What’s most important is that these programs need to be evidence-based and effective, and they need to be distributable to the majority of the population.”