Valera Health CEO: There should be incentives to care for the SMI population

Providing comprehensive mental health services has been both a winning point and a challenge for Valera Health, based in Brooklyn, New York.

Treating pediatric and adult patients with mild conditions as well as serious mental illness (SMI) makes things simple for Valera Health’s health plan partners and healthcare provider partners. And so far, the approach is working, Valera Health co-founder and CEO Dr. Thomas Tsang told BHB.

“I think health insurance companies and provider organizations want a hands-on partner that can actually provide a full range, not just a point solution of one thing here and one thing there,” Tsang said.

Founded in 2015, Valera Health has until recently been exclusively a telehealth-based provider. It opened its first office location in Manhattan and is in the “very early days” of considering other office locations.

In November 2021, Valera Health announced that it had closed a Series A expansion fundraising round led by Windham Venture Partners, which raised $15 million. To date, it has raised $26 million since its founding.

Valera Health, which operates under a “private practice model,” will also treat patients who self-refer to the company, in addition to patients referred by partners to the company.

The company’s specific offerings include therapy, medication management and case management.

Valera employs approximately 400 providers and is available to 37 million lives through its Medicaid, Medicare and commercial health plan partnerships.

Valera Health’s holistic approach to care

The holistic approach requires Valera Health to do more than just provide behavioral health, especially for patients with SMI. To a large extent, this requires the company to take a broader view of the patient’s health and adopt strict third-party quality standards.

Overall, patients with SMI have much worse health and care outcomes than those without.

According to a report by the American Hospital Association, patients with co-occurring behavioral health and chronic physical illnesses have two to three times higher health care costs. Several studies have found that people with SMI have a shortened life expectancy. One study found that patients with SMI die 10 to 20 years earlier than most people.

Valera Health has adopted the highest levels of quality measures as dictated by the National Council for Quality Assurance and is also tracking them, Tsang said.

These standards require Valera Health to measure the cholesterol and lipid levels of patients treated with antipsychotics, which can have the side effect of elevated cholesterol levels. It also tracks the risk of diabetes in patients who have been on antipsychotics for several months.

The Medicaid Challenge

The holistic approach faces regulatory and recovery issues.

Among payers, there is wide variation in payment amounts and structures for people’s behavioral health care, Tsang said

“The payment structure for patients with SMI is sometimes the same as for a very mild patient,” Tsang said. “There needs to be incentives to take care of a high-acuity population because that’s a much bigger challenge.”

These challenges are particularly acute for Medicaid plans. Only 35.7% of psychiatrists accepted new patients with Medicaid coverage, the lowest rate of all specialties. Physicians overall had an acceptance rate of 70.8%, according to a 2019 MACPAC report.

From the patient’s perspective, many Medicaid health plans operate phantom networks that act as an administrative barrier to mental health care.

“We’re one of the few companies that actually accepts Medicaid patients and managed Medicaid patients,” Tsang said. “I would say that [Medicaid] the recovery model needs to be improved. … There needs to be a greater acceleration of value-based models and a move away from fee-for-service models.”

And as a telehealth provider, the company navigates the regulations and certification requirements of multiple states. It gets even more complicated when you’re also authenticating with health plans.

Telehealth itself faces an uncertain regulatory environment. The industry is tracking several unresolved issues with the federal regulations, ranging from parity to whether or not the in-person consultation requirements of the Ryan Haight Act will be reinstated.

Still, the COVID-driven focus of health plans, employers and provider groups on incorporating behavioral health into care has made this a ripe market for Valera.

“Every single healthcare partner has welcomed us with open arms and said, ‘We need you, we want you, our patients need you,'” Tsang said. “We’re excited to see that type of reception.”

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