Forging reimbursement pathways for digital health apps

Megan Jones Bell, PsyD, chief strategy and science officer at Headspace, discusses evolving business models and creating paths to reimbursement for digital health apps.

Graphic of man meditating with dollar sign to right

Mindfulness meditation can transform health and lives when practiced regularly. But how best to learn and nurture this practice? Headspace, a mobile app downloaded by about 67 million people, presents meditation as a way to help sharpen focus, shore up sleep, ease stress, and lift mood — all of which seem vital as the pandemic sweeps on. Headspace has expanded its business model from mindfulness-based wellness offerings, available to consumers as free basics or by subscription, to evidence-based digital health products designed to improve health metrics and outcomes. Currently, Headspace for Work contracts with nearly 1,100 corporate clients to address employee engagement, stress, and burnout. And Headspace is attracting a growing number of health systems and payers in commercial and public realms.

Megan Jones Bell, PsyD, chief strategy and science officer at Headspace, is a leader in digital health who champions effective, accessible mental health care for all. Her responses to the questions below are excerpted from the Executive Education at HMS webinar, “Digital Health Apps: Evidence, Reimbursement, and Outcomes.”

Edited and condensed for clarity

Who uses Headspace, and how has your business model changed in recent years?

A very large number of our members are trying to manage everyday stress and anxiety, sleep better, or find relief from their conditions. There’s also a group coming to us for performance-enhancing benefits, like athletes and leaders, and a large user base of people interested in optimizing health, who are looking for support and focus.

People who are engaged users, typically of our meditation content, use the app three to four times a week for at least 10 minutes per session. That amount of usage over the course of several weeks drives the clinical benefits we see associated with Headspace.

Because we demonstrated such strong evidence about Headspace, we were able to transition in 2019 from a wellness category to more of a medical benefit. Many of our enterprise contracts are two- to three-year contracts, meaning that once you establish a partnership with an employer, it tends to be sticky. There is a lot of value for your business in being first to market or securing these larger deals.

My major learning in this journey from academia into industry has been to put the member, or patient, first. Start with desirability: What do they want? What do they need? How do you design for that? And then think about clinical efficacy and the business model. If you haven’t put the member at the heart of your decisions, you’re going to need to add a lot of other bells and whistles to drive meaningful use of the intervention.

How do users approach the app if they come to it through their employers? And how should digital therapeutics companies like Headspace approach value-based models and outcomes?

When Headspace is implemented within the context of a company, we see much higher rates of adoption and usage than for many of the other benefits that they provide. We're seeing typically about 30%, and even up to 50% of employees within some very large Fortune 500 companies, actually download the app, use it meaningfully, and see a clinical effect in terms of stress reduction, or reduction in anxiety symptoms and improvements in focus.

There's a different level of comfort in disclosing that you're using Headspace versus some of the other mental health offerings provided by employers. It doesn't seem to be as stigmatizing for people. And so it allows people to start a conversation about mental health in a way that feels safer for them.

When Headspace is used in more of a therapeutic context in our health partnerships business, we’re selling into an integrated delivery network or healthcare system with therapists or social workers, or primary care physicians are referring patients via digital formularies or portals designed by the customer to enable access to the Headspace app. Or, alternatively, Headspace is part of a corporate health or medical offering. In those cases, what serves you and the customer partner best for an evidence-based digital therapeutic is to align your pricing model with the value you’re delivering across two areas: usage and clinical outcomes.

For us, that often means a monthly active use metric and an agreed-upon reduction in stress or anxiety or depressive symptoms. Based on our research, we're actually able to prospectively agree on an effect size, or a reduction on validated measures, that we mutually agree is a meaningful clinical outcome. Typically, our pricing includes an enrollment fee and then monthly billing based on that combination of usage and outcomes.

The move into health care has implications across the company for your reimbursement plans and business model. What hurdles did you have to leap to enable Headspace to be reimbursable?

That's the million-dollar question in digital health, and certainly in digital therapeutics. You need to demonstrate significant evidence related to a specific clinical target, then demonstrate health economics outcomes research. Can you drive a reduction in health care resource use associated with your intervention? Ideally, is that cost saving over a 12-month period? That matters particularly for commercial insurers, who really need to see that ROI within a 12-month period. Are you capable of supporting a value-based payment model? We're working on all of that. We have demonstrated significant evidence related to a range of different clinical targets.

Reimbursement has several components: coverage, coding, and using coding language to determine payment for services, supplies, or products. At the moment, it’s fairly complex due to fragmentation. We’ve formed an industry trade group, the Digital Therapeutics Alliance, to try to advocate for clearer pathways, so that we can really support emerging digital therapeutics companies and create an easier path to distribution, access, and reimbursement.

We’re also doing some exploration of Medicaid. We reach a Medicaid population through partnership with counties and county departments of mental health across California. We need more innovators focused on solving problems for the Medicaid population, young people, and older adults. Over 70 million individuals are enrolled in Medicaid and CHIP.

As we go from the a self-pay consumer population to a working adult population to a Medicaid population, it's really important for us to make sure that we understand the needs of new groups of potential Headspace members and adapt our offering, or build adjacent offerings best suited to deliver the kind of benefits that they need.

Click here to see the full webinar, “Digital Health Apps: Evidence, Reimbursement, and Outcomes,” which delves more deeply into this topic.

Continue the conversation on Twitter by connecting with us @ExecEd or with  Megan Jones Bell, PsyD @jmegjones

– Francesca Coltrera