Payor Coverage for Psychedelics: Are We There Yet?

The following article is a recap of topics discussed during our Oct. 16 webinar on expanding access to psychedelic therapy with expert panelists Sherry Rais, CEO of Enthea and Kat Thompson, CEO of Fractal Soul Service Center, and moderated by Solome Tibebu, CEO of Behavioral Health Tech.

Behavioral Health Tech is the largest community dedicated to advancing access to mental health and substance use services through technology, health equity and innovation. Their upcoming BHT Conference is Nov. 5-7 in Phoenix, and brings together leaders of health plans, employers, providers, investors, and digital health companies to learn, collaborate, and innovate.


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State and federal policies around psychedelic-assisted therapy may be rapidly evolving, but the costs remain high for patients. To address this, new insurance and benefits programs are promising to make these breakthrough treatments — specifically with ketamine and psilocybin — more accessible to those who need them most.

Thompson and Rais discussed the current landscape of insurance coverage for these treatments. Because the legal status of psychedelics varies widely across the United States, it’s difficult for traditional health insurance companies to cover psychedelic-assisted therapy. Ketamine remains the only federally legal psychedelic. But in Oregon and Colorado, psilocybin-assisted therapy is now legal as part of their respective state-regulated programs. (Massachusetts may be the third state to do this, as well, if voters pass Question 4 next month.)

Why should employers care about making these treatments more accessible to their employees? Because untreated mental health issues can lead to significant financial burdens through lost productivity and high turnover rates.

Rais said U.S. employers are currently spending approximately $3.7 trillion annually on untreated mental health conditions. This figure includes both direct healthcare costs and indirect costs such as decreased productivity and high employee turnover. By investing in effective mental health treatments, including psychedelics, employers can reduce these financial strains.

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The branded version of ketamine, Spravato, which the FDA approved as a safe and effective treatment for depression, is covered by almost all insurance carriers. But Rais says it’s costs are far too great when compared to generic ketamine.

“The protocol for Spravato is also not something you do for a short amount of time, it’s something you stay on. And it’s expensive: It typically cost $45,000 a year, although again it’s typically covered by insurance,” she said. “Generic ketamine is nowhere near that expensive. But it’s not covered by large insurance carriers, which is why Enthea came into existence to help bridge this gap. We help employers cover this much more effective, much cheaper version of ketamine with protocols that in conjunction with the allow people to only do a few sessions.”

According to Rais, if a company with 3,500 employees switched from Spravato to generic ketamine for mental health treatment, it could save an average of $400,000 over five years.

When it comes to psilocybin-assisted therapy, Thompson said Oregon’s state-regulated program is evolving in positive ways to reduce costs. In fact, some patients are able to get reimbursements through their Health Savings Acounts (HSAs) or Flexible Spending Accounts (FSAs).

“Many of our clients, maybe 50% to 60%, have been able to actually pay for their psilocybin services — not the psilocybin product itself, but the services — through their HSA or FSA. But it’s been a little hit or miss so far,” Thompson said. “If an FSA or an HSA program in general covers ‘alternative wellness’ or ‘health coaching’ or those types of services generally, they would potentially also cover psilocybin as well. We’re still looking to get additional coverage through employer sponsorship or insurance coverage, but this has been an exciting intermediary step.”

While the potential benefits of psychedelics are vast, it’s also essential to acknowledge the associated risks. Both Thompson and Rais emphasized that psychedelics are not a universal solution. Thorough screening is critical to determine if an individual is a suitable candidate for treatments like psilocybin or ketamine. Factors such as past psychiatric history, current health conditions, and specific medications can influence eligibility.

To learn more, watch the complete webinar here.

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