Strategy, Not Panic with Jeremy Zug

welcome to Mental Health Evolution, a podcast about what's changing in mental health and why it matters. I'm your host, Rachel Harrison, inviting you into honest conversations with people from all perspectives in the field, clinicians, tech founders, investors, insurance companies, and all the folks in between. Let's explore what's working, what's not, what's, and what's next. All right, well welcome back everyone to the Mental Health Evolution podcast where we are talking about how the landscape is quickly evolving in the mental health industry. And today we're taking a look at what has changed with payers, specifically insurance companies, in the landscape of venture capitalist partnerships, value based care tech companies, all of these things that are changing how payers are paying on their contracts and how this is impacting the market overall. So for some background, our guest today, Jeremy Zug, is someone I met at Meet yout in Kentucky, which is a conference for group practice owners. And he and I started a conversation, we dove right into talking about the trends in our industry and what he's seeing from his lens. And I think he's going to give you some really great things to think about in this evolving market. So I can't wait to dive into that conversation. But before we do, I want to give you a little background here to set the stage, some kind of topics and trends happening so that you can understand where we're talking from as we start digging into the conversation. So in Indiana, for those that may or may not know, January 1, 2025, Anthem Blue Cross sent out a letter notifying providers that they were delegating care management to the company Carillon and but nothing would change for members and providers. And then June 27, behavioral health providers got a notice that they would now be paid based on lawn reimbursement rates and not anthem rates, which was about a 40 to 57% decrease in provider pay. So there's been a lot of hubbub about that, as you can imagine. So that's a piece of data that's important to know as background to this conversation. Also, just some other articles I've been reading from Becker's Behavioral Health. There's a flurry of M and a that continues 22 deals to know. And if you're not familiar with the term M and A, it stands for mergers and acquisitions. And it's an article looking at continuing push of venture capitalist companies to acquire mental health and behavioral health companies. This is increasing their market share in the mental health industry and they're happening all around us all the time. If you're not watching, knowing that there are 22 deals recently happening, that's a lot happening in terms of mergers and acquisitions here. And one more piece of fierce healthcare reporting that Octave nabs 52 million in the expansion of network therapy services to all 50 states. This is back in 2020, so that was already happening. But in this article they are discussing merging Alma and Headway. Most people have heard of Alma and Headway to provide in network services at higher rates to therapists due to their venture capitalist funding. So this is again like merging Alma and Headway that brings up all kinds of questions about who's covered what, what are the rates. And so this is all of the kind of thing that we want to dig in and be talking about today. So let me tell you a little bit about Jeremy. He is the co founder and partner at Practice Solutions LLC which is a medical billing and revenue cycle management company dedicated to serving mental and behavioral health providers. His experience working directly in group practice, billing and operations has shaped his mission to create a service that empowers therapists to understand, manage and improve their billing policies and processes. So thanks for being here, Jeremy. That's amazing.

Yeah, thanks Rachel. That's great context by the way.

Thank you.

Wonderful.

Yeah, I feel like if we're going to dive in, people need to know a little bit about like where is this coming from? And we will attach the articles and references to the show notes too for people if you want to dig into that more. So let's talk about all of this. I'd love to start by just asking you what are the patterns you see in the work that you're doing?

Yeah, so there's a few patterns that we track on a regular basis. So and I think the Carillon example is a really good example. These shifts happen all the time. So if you're in private practice, you probably up until this point you haven't needed to be aware of what's going on. But the big therapy, my good friend Brent likes to call the big MSOs big therapy. You know, oftentimes providers come in to these big MSOs, they try it for a little bit and they, they think that the guarantees that were sold to them are sort of the golden goose of private practice. They come in, they get ehr light, maybe some administrative stuff is done for them, but what they find is that the hands off value proposition of joining a big MSO like that is not quite what they're looking for. So one trend that we're seeing a lot of are providers going into those organizations. They try it out, they realize it's not quite what they're expecting for, and then they decide that doing the uphill work of starting a private practice is really what they want to do. And that's an exciting trend that the independent private practice owner and that idea is having a little bit of a reemergence from the COVID era from four years ago. And so that's. That's an exciting one. We're noticing that the insurance conversations with those, with the big therapy providers are changing those big MSOs.

Can you just. For people that are maybe not familiar what MSO is.

Yeah, yeah. Managed service organization. And so those companies are the. The almas and headways of the world. The other term that people like to assign those companies are aggregators, because they take a bunch of NPIs, they aggregate them together to form one very large organization. It's a great clarification, Rachel. Thanks. Yeah, there's a lot of acronyms floating around the billing world, so we gotta. I gotta be a little slower. You.

Right. It's just everyday conversation for you, but not necessarily necessarily for listeners. Yeah.

During COVID those organizations had a lot of sway because all of a sudden they had this new. They had tens of thousands of new therapists that they could offer to the insurance company network. The insurance company executives also went to Ivy League schools and got pretty decent grades. And what they realized is that, is that those organizations are not adding net new NPIs or providers to the network. They're actually just borrowing NPIs or providers to the network that were already there. The only organizations that are adding net new providers are the independent private practices. And that's the value proposition that practice owners have now, is that we're actually adding new providers to the network and MSOs are just reshuffling what's already here.

And so the NPI, the new provider piece, when you're talking private practice, are you talking solo practitioners? Are you talking group practices, or are you talking. Both?

Both.

Okay.

Yeah, both. Because groups, independent groups, attract folks from grad schools all the time. And those providers have the choice of going to community mental health. They could start their own practice. They can join an mso. And so oftentimes they join, yeah, the independent group practice for a huge range of reasons. I mean, the value proposition there for a new clinician is giant. Right. Versus like a cmh, for example. So those, those practices are adding more providers to the network. But then you have this, this other M and A pattern, Right. Like Optum and insurance companies at large buy practices all the time. Right. Like they could approach your practice and say, rachel, we want to buy your practice. And they could offer you some kind of deal. Like, I have a friend who has a friend whose practice owner sold to Optum because of this exact kind of swirly deal that they offered. And a year later that that deal was not as attractive as it was said to be. Right. In no judgment. Right. I don't own a practice, and I don't know the pressures that that particular practice owner was facing and the huge range of reasons why you'd want to do that. But practice owners are going to get approached by insurance companies, right? They have a lot of money, they have a lot of options, and you got to look at those deals very carefully. So it's really important here that a practice owner notices these trends. They know the players, they know the game board, and they're able to make the best decision they can, even if it feels a little bit like attrition. Right. You're going to stay in your trench for as long as you can hold out for. Right? Because generally the normal vicissitudes of life will play out in your favor.

It's interesting to hear the leverage of group and solo private practitioners, because I think insurance companies are coming out and saying, hey, your rates are going to be decreasing. It takes longer to get credentialed than say, an ALMA or headway. Like there are all these sort of ways that they are maybe reducing the service to private practitioners. Do you see that across the board, across the country as well?

Yeah, that's a good question, Rachel. Not. It's not a typical trend across the board because our health care system is. Is like with broken pieces of ice floating on the ocean. They don't all jive and work together. They don't move. They're not correlated with each other. And so you have some states that that's not the case. In some states where it is the case. Here's what I'll tell you. The research is pretty clear that. And at least in the mental and behavioral health space, clients are four times more likely to go out of network with their provider than find an in network provider. So Caroline can come along and they can cut the rate by half. And then you, you got to think, right, if you're not going to make a panicked decision, which I don't recommend, don't make a panic decision, go, okay, they're going to offer me half, let's say, just for round numbers sake. That that's 50 bucks a session. I would be willing to wager that a client who has a good therapeutic rapport with their therapist is going to follow them out of network for the same rate or more cash. And because you're not going to find the same therapist. Right. Somewhere else. It's not like, I don't know, another medical. It's not like a pharmacist who can just do it. You know, it's very relational rapport matters. So what I would say is leave the network. Right. Maybe charge five bucks more than what they were going to offer you. That $5 difference per session makes a huge difference. So providers have a lot of opt in terms of what their response can be to this. But you can't panic. That's. That's the first thing for sure.

I love that. I love that. And so if you could kind of predict the future, which we know you can't, I'm just asking you to use that, that part of your brain. Right. But what do you think will change with the tech companies which with venture capital backing, insurance companies, backing the tech companies in our industry, like, what do you see on the horizon?

Yeah, So I have a couple. I really appreciate this question. We think about this stuff all the time because this industry changes so much. So for tech companies specifically, one of the brighter pieces of news or trends that I'm seeing is a commit a renewed commitment from insurance companies to change the prior authorization process. That was something that you'll see on LinkedIn a lot or you'll see in news releases that prior authorization has really become a sticking point for a lot of folks for good reason. But there's also, and this is kind of the interesting conversation that you and I can have about this process. But prior authorization is not all bad, right? Sometimes prior authorization does prevent fraud. So if you want to look at a case study from 2014, North Carolina removed prior prior authorization wholesale. They said no more prior authorization allowed. And nine months later they reversed course. Why is that? Well, they flood. What happened was a flood of bad actors came into the market and fraudulently billed like crazy. And I think the attorney general, from what I've read and understand, is still dealing with those cases today. So they had to roll that back at a $500 million state budget deficit because of all these bad actors. And so you have to, you have to balance this system wide chain. And this is what, this is my prediction that tech companies are going to figure out what the prior authorization process, a renewed one, looks like because with, with it as it exists today, you prevent care from people that actually need the care. Right. Without it, you allow bad actors to come in and run up a giant bill. So you got to figure out somewhere, some other system we got to get off like either or and find a new thing. So that's one prediction. The second is that insurance companies are not, and this isn't really a prediction, this is currently happening, but insurance companies are not giving the same rates to Big Therapy because they're not adding net new NPIs. So big therapy is either going to have to increase the session count of therapists or they're going to have to decrease the amount of pay. Rachel, you and I both know either one of those is going to be like a net negative for those companies. So my prediction there is that if those companies, the MSOS aggregators start to decline, I think the insurance companies will just buy them out. I think they'll just adopt them as another service within their platform of companies. And then my last one is that like Medicaid is getting cut. We all know that that's kind of the new thing. And so what does that mean? Right? That means for some of you listening, that's a loss of patience, that's a loss of reimbursement. And we don't really know what the impact of that is going to look like. Right. We think the higher limit says 36 million people lose Medicaid. The Congressional Budget Office says 10.4, 10.6. I think that's a little low. So I think somewh between 10 and 30 million folks are going to lose coverage. So that's a lot of folks. So you got to start planning for what that looks like.

Well, yeah, and then in the industry you have, you know, clinics, practices that are all Medicaid are primarily Medicaid clinics. Right. You have others that don't take it at all. It'll be interesting to see how that affects other private insurance, I would think as well, and maybe even self pay for sure.

So like Centene is a really large publicly traded company that all of what they do generally is Medicaid and Medicare management. And so that company is going to take a huge hit. Humana also is another big one that manages Medicare and Medicaid. And then UnitedHealthcare also has quite a few Medicaid members. And so, you know, they, those, the folks running those companies again are pretty smart and they're not panicking. They're, they're thinking about their next step. And I would encourage practice owners to have the same attitude. Right if these, if these things are true, what's my response? Right. So I would, like, flip the question back on you, Rachel, which is like, let's say all this stuff plays out and you were a practice owner, like, just starting. What would be your move?

Well, I have definitely recommended to some people who are starting out in, like, solo practice not to go with any of these MSOs, because I think it's a gamble, right? I think having your own credentialing, having control of your own billing, I think all of those pieces are going to be something you want control over for the long haul. So it's. It's sometimes a hard sell, though, because they look at me and they go, yeah, but these people are going to do my credentialing and do my billing for me and all that. And I'm like, okay. I mean, do. Do you. But if you're asking me my opinion, I would say steer clear of those organizations because of some of the volatility that you're talking about. There's going to have to be change there. I look it from the perspective of if venture capitalists are investing in these companies, right? They're. They're at the market grab part of this. They're trying to get as much market share as possible. So all the money is flooding in. It's amazing. You do all these things with all this money, we can get all these providers, right? But at some point, the payback has to happen. And that's right where I think all of these changes are going to come is like, okay, we can ride this wave of you're getting more than you would if you were paneled individually. And what's going to happen when they reduce that and maybe there's something in there. Reach your contract really well, too, right? Make sure you can actually get credentialed independently. And then how long is that going to take? And then do you lose patience in the meantime? Right there. There are all these risky things when you're not the one that sort of owns those processes. So that's part of what I see as well, for sure.

And I would highlight a bright spot in the M and A world. Like, it's not all. There's only, like, from what I've been able to meet in this community, there's only one good one, like Fireside Strategic. I don't know if you've heard of them. I haven't, but they're looking at, like, how do we do this M and A thing so that the clinicians benefit, right? That's like their their mission, but they won't buy a practice that's within those big MSO companies. Right. And it's not yours. I like exactly what you're saying. Yeah. And so you look at that too, and you look at a fireside strategic, who I think is actually going to be a very good actor in this, like a good influence in this space. But it's not your practice if you're part of those big MSOs. So. And I'm a. Probably like you, Rachel. I'm very independent. And so I, I like the idea that you can, you can steer the ship. Right. If you're not in helm, that ship gets steered for you.

Sure does.

For sure. Yeah.

Oh yeah. So I'd love to sort of talk about another piece on the side here, but it has to do with payers. I'm hearing all of this talk about value based care and insurance companies requiring that of behavioral health and mental health providers. And I think it's been a much slower rollout. I know they've already ruled this out in a lot of medical practices and for medical providers. So I'm curious some of what you're seeing there because you work with practices all over the country. So how much value based care are you seeing being implemented? How much is not. What are. What are you noticing?

Yeah, value based care is here. It has been much slower to roll out in the mental health space. But when you look at the, the MACRA and MIPS program within Medicare and, and even for behavioral health providers within facilities have to report certain data influence the reimbursement rate. There's already a template for this. The debate in the insurance companies is whether it's value based care or whether it's value informed care. And there's a big difference here. Value based care is these are your outcomes and your reimbursement follows how much value you provide. Right. So on paper that makes sense. Value informed care says that the outcome measures for the treatment you provide are a factor of the reimbursement. Now that that matters in real life. So like I live in Detroit. There are some pretty wealthy suburbs around Detroit and then there is. There are some pretty poor areas in Detroit. Let's say Rachel, you are practicing in a fancy suburb and I'm practicing in downtown southwest Detroit, for example. There are some like much bigger factors than just the care that are provided that influence the outcome of that care. Right. Value based care says the better grade you get, the more reimbursement you receive. But you never had an essay leave your office and then go Live its life somewhere and then have that impact your, your reimbursement. And that's the trouble in mental and behavioral health care is you can be a very talented clinician, but you're dealing with people that make decisions. Right. Like contrast that to like a medical provider with, let's say a population of folks that have diabetes. Right. You can throw those folks on a medication, almost very little lifestyle change and you're going to get better outcomes. You can't do that in the mental and behavioral health world. So the question has always become for like Kaiser and Optum, what are, to what extent are we measuring the outcomes and how much are we weighting those outcomes? Medicare rolled out MACRA and mips, they're going to continue with that program and you're going to continue to see payers push, play around and experiment with this idea. But it's eminently complicated. In mental health care given like geography, socioeconomic status, diet, there's like a million variables, right, that impact the outcome of treatment. And so insurance companies are aware of that and they're trying to solve for that.

That's kind of in my hunch about why it hasn't rolled out yet is like what are we actually using to measure? What are we measuring? How do we know that that's a fair measure? All the things that you're saying.

Yeah, that's right. And it, you know, if, if you are in a poorer geography versus a wealthier geography, your outcomes will be different. And so do you want to penalize the clinicians that are in a poorer demographic? No, you don't, because you want providers there. And if you, if you punish them for where they are, they won't be there. So you have to figure that out. And the network has federal responsibility, according to the quality associations, to provide access to care. So that's not in their interest to do that either. So they're going to figure out a better system there.

That makes sense. That's a good. Yeah, I think I appreciate that, that perspective. So I'm curious about your business in particular. How is all of this impacting you? What do you see as changes for you or maybe changes in services that you're offering? What's the outlook?

Yeah, we're, we're pretty optimistic in the independent private practice world. I think therapists are pretty smart. I think they are independent. They represent a group of people that I greatly enjoy because of the qualities that they carry for practice solutions. We only exist to empower providers to focus on their patient care by relieving the burden of billing. And part of how we do that is we educate a lot. And so we do this kind of thing. We're launching our learning hub in 15 days where if you're a new clinician and you have no clue what we're talking about, you can get our playbook right. All of our downloadable tools and resources there. Within the Learning Hub, we, we published a book, Insurance Billing Basics. Our podcast is coming out this fall as well. So all of those resources, we want to educate providers on how to make the best decisions for their practice. We also offer like done for you billing. I don't think it would be shocking to me, Rachel, if private insurance in our country went away overnight. That would be like, that would be a wild shift. That would be wild. They would definitely simplify our work. So there's always going to be an element of outsourced. Like we're a US based company. All of our billers are, are here in the US and we serve independent practices that way. But if you're a big group, we also help build out billing departments all, you know, in nationally. So we, between all three of those, we really enjoy the work that we're doing and we're kind of used to these changes. Right? I mean, I feel like last year it was change healthcare getting hacked. So that was, that was real exciting. This year it was tricare west not paying a cent carillon. So these are like normal changes that our leadership team sits down and we plan for as well. So we're right there with practice owners and thinking through, okay, well like, what's the next thing? Like, how do we help empower more practices to enter the marketplace? Because that's where I think the best care happens ultimately.

I love that. I love that we are about out of time and needing to wrap up. But I have one more question for you. If you could highlight just one critical piece of information for people to know, maybe practice owners, maybe people that are seeking care just in general, what would that piece of information be? Now?

That's a good question. There's so many. The one I would say is ask for more. Like negotiate higher rates, demand better from the insurance companies, for sure, build good relationships there. I think there's more available than providers in private practice think there is. And so the care you provide is worth it. I know sometimes that's a struggle for especially new therapists in the market, but the care you provide is eminently valuable. And so if you're not getting that value out of a partner, they're the wrong partner. So find a new one. But yeah, ask for more.

I love that. That's great. Well, I want to thank you so much for your thoughts. Definitely gave us a lot to consider and think about, Jeremy. So thanks for being here and thanks for the work that you do. Definitely.

Oh, thank you. Yeah, it was a pleasure. Thanks so much, Rachel.