09 May Can Mental Health Parity Laws Ensure Access to Psychedelic Assisted Therapy?
This this post was originally posted here
This week, the company formerly known as MAPS PBC—Lykos Therapeutics—announced that the FDA will start the review process for MDMA-Assisted Therapy in June.
From the Lykos Press Release:
on June 4, 2024, the U.S. Food and Drug Administration’s (“FDA”) Psychopharmacologic Drugs Advisory Committee (“PDAC”) will review data supporting the new drug application (“NDA”) for midomafetamine (MDMA) capsules used in combination with psychological intervention (“MDMA-assisted therapy”) for adults with post-traumatic stress disorder (“PTSD”). This will be the first FDA advisory committee meeting to review a potential new PTSD treatment in 25 years.
If approved, it will be a watershed moment for the treatment of PTSD, the stigma against psychedelics, and the advent of Psychedelic-Assisted Therapy.
Over the next several months, we’ll examine some of the more critical issues that will impact the (hopeful) rollout of MDMA-Assisted Therapy.
First up is the underappreciated matter of Mental Health Parity Laws and the all-too-common practice of insurers and payors ignoring them to deny coverage for mental and behavioral health treatments.
Let’s dive in.
In January, Stat News, a leading life science and healthcare media publication, published an article by Boston psychiatrist Andrew Popper about his experience fighting with insurance companies for reimbursement and his decision to stop accepting insurance—a trend that has become increasingly common amongst mental health professionals.
Popper writes (emphasis added):
“Finally, I realized that from the insurer’s perspective, the numbers mattered more than the care: The insurer was getting paid from the premiums of my patient, and from the premiums of prospective patients, all while denying me payment for my work and preventing me from doing additional work. This is the business model — customers pay for the right to be deprived of the product they’re purchasing. I decided I would stop spending portions of my days fighting that model, and instead I’d follow most other solo practitioner psychiatrists who do not take insurance.”
How does this happen?
How is it even legal that insurance companies can not pay physicians for the services provided to patients who pay their health insurance premiums and are expected to be eligible for these services?
How have we arrived at a situation where we have a mental health crisis, a shortage of mental health providers, and still, the denial of care by insurance companies is allowed to persist?
This is the problem that Mental Health Parity Laws were passed to solve.
Mental Health Parity laws are designed to ensure that insurance companies cover treatment for mental health just as they would cover medical and surgical treatments.
Since 1996 federal parity laws have come in waves.
The Mental Health Parity Act (MHPA) of 1996 was the first legislation of its kind that required “annual or lifetime dollar limits on mental health benefits to be no lower than any such dollar limits for medical and surgical benefits offered by a group health plan or health insurance issuer offering coverage in connection with a group health plan.”
The MHPA was superseded by the Mental Health Parity and Addiction Equity Act (MHPAEA) in 2008.
The MHPAEA extended the benefits of the previous act and was actually passed as part of the legendary Troubled Asset Relief Program (TARP) that ironically saved the largest insurance companies during the subprime mortgage crisis.
The 2008 Act was then superseded by Affordable Care Act elements designed to ensure parity.
Federal Parity laws were then again amended under The Consolidated Appropriations Act of 2021 (CAA)
Each iteration of Mental Health Parity Laws is presented as an improvement upon the previous version; however, critics say there are still too many ways for insurers and employers to evade full parity.
For example, an investigation by the Attorney General of New York found the denial of coverage is twice as high for mental health coverage than other claims and four times higher for addiction services.
This investigation also found a company that denied inpatient addiction treatment seven times more than they denied other forms of inpatient treatment.
A recent report from the Research Triangle Institute (RTI) using data from one of the largest commercial insurance claims databases found that patients were 10.6 times more likely to go out of network to find psychological care than to find specialty medical care.
So, how could this impact the rollout of psychedelic-assisted Therapy when it hits the market?
Last week, the nonprofit BrainFutures published a report titled A Path Toward Parity Ensuring Equitable Access to Psychedelic-Assisted Therapy.
The report is required reading for stakeholders as we look ahead to a potential rollout in the Fall and early 2025.
In my opinion, the section dedicated to the hypothetical scenarios by which insurers and payors could dampen the adoption of PAT is among the most important.
The authors cite three hypothetical examples:
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Classifying PAT as an Experimental Treatment
Because each insurance company sets its own criteria for what it deems experimental, this classification is essentially uncoupled from the FDA decision. This means that, despite FDA approval, MDMA Assisted Therapy could still be considered an experimental treatment as far as the insurer is concerned.
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Using a stricter classification of medical necessity criteria
The official indication for an FDA-approved treatment is decided at the time of approval and appears on the Drug Label.
In the case of Lykos’ MDMA Assisted-Therapy, the goal, as I understand it, is to have the Drug Label state “PTSD” and not something more restrictive like “Severe PTSD” or “Treatment-Resistant PTSD” which would provide cover for insurers to set stricter classification of medical necessity.
However, if the eventual Drug Label is “PTSD,” then insurers may, under their own internal guidelines, provide coverage for documented diagnoses of Severe or Treatment-Resistant PTSD but not PTSD.
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Prior Authorizations and Fail-First Policies
Similar to the previous example, insurers commonly require prior authorization or require a patient to have tried and failed other treatment options before they are authorized for PAT.
These procedures are put in place to reduce unnecessary and expensive treatments, which has a place, but when these practices are more common in mental and behavioral health disciplines, they become a violation of Mental Health Parity Laws.
Many of the people I talk to point to the commercial success of Spravato—which is on track to become a blockbuster (>$1 billion in sales) this year—as an indication that insurers are willing to pay for psychedelic therapies.
While it is a hopeful sign that the relatively expensive Spravato seems to be getting traction, the treatment is categorically different in two fundamental ways from Lykos’ MDMA Assisted Therapy:
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The Spravato REMS entails a two-hour post-treatment observational period where clinics must keep patients on site. Comparatively, MDMA sessions alone can last as long as eight hours.
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Spravato treatment does not include concurrent psychotherapy; the Lykos MDMA treatment does.
These factors alone contribute to the majority of the treatment costs.
Will insurers cover them?
We’ll find out soon enough.
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