Valera Health CEO: There Need to Be Incentives to Care for SMI Population

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

Treating pediatric and adult patients with mild conditions as well as serious mental illnesses (SMI) simplifies things for Valera Health’s health plan partners and health care provider partners. And so far the approach has worked, Valera Health Co-Founder and CEO Dr. Thomas Tsang told BHB.

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

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

In November 2021, Valera Health announced it closed an oversubscribed Series A extension fundraising round led by Windham Venture Partners that garnered $15 million. It has so far 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 on top of the patients that partners refer to the company.

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

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

Valera Health’s holistic approach to care

The comprehensive approach requires Valera Health to do more than just provide behavioral health, especially for SMI patients. In large part, it requires the company to take a wider view of a patient’s health and to embrace strict third-party quality standards.

Generally, patients with SMI have much worse health and care outcomes than those that do not.

Patients with co-occurring behavioral health and chronic physical conditions have two to three times higher health care costs, according to an American Hospital Association report. Several studies have found that people with SMIs have truncated life spans. One study finds that SMI patients die 10 to 20 years earlier than most people.

Valera Health adopted the highest levels of quality measures as dictated by the National Council on Quality Assurance and tracks them as well, 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 diabetes risk for patients who have been on antipsychotics for a few months.

The Medicaid challenge

The comprehensive approach runs into regulatory and reimbursement issues.

Across payers, there is wide variability in the payment amounts and structures for caring for people’s behavioral health, Tsang said

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

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

From the patient perspective, many Medicaid health plans operate phantom networks that act as an administrative hurdle 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 the [Medicaid] The reimbursement model has to be improved. … There needs to be a greater acceleration of value-based models and a moving away from fee-for-service models.”

And as a telehealth provider, the company is navigating patchwork regulations and credentialing requirements of multiple states. This gets even more complicated when credentialing with health plans too.

Telehealth itself is facing an uncertain regulatory environment. The industry is tracking several unresolved federal regulation questions ranging from parity to whether or not Ryan Haight Act in-person consultation requirements will come back.

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

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

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