Amidst 3 critical challenges—coverage, payer acceptance, and provider adoption—prescription digital therapeutics (PDT) acceptance is increasing. Recent regulations, industry advocacy, and compelling evidence are shifting attention toward the value that the FDA-approved subsegment of digital therapeutics (DTx) brings to healthcare provider and payer organizations. Highlighting these 3 issues, we'll spotlight positive movements, including the Access to Prescription Digital Therapeutics Act of 2022.
What is the difference between digital therapeutics and prescription digital therapeutics?
DTx is defined as providing evidence-based therapeutic interventions to prevent, manage, or treat a medical disorder or disease. Like DTX, PDT are backed by real-world evidence (RWE) and authorized by the FDA. A physician must prescribe a PDT to be used by a patient on their digital device. The FDA reviews PDTs against clinical data, quality, and safety measures consistent with the process for prescription medicines.
The current state of PDT and DTx
While business deals have dampened due to economic pressures in 2021 and 2022, the DTx global market is expected to exceed $28 billion by 2030. The FDA has cleared more than 35 PDT solutions over the past 5 years. The PDT space continues to chip away at 3 challenges to full market adoption.
Challenge #1: Reimbursement coverage
Reimbursement coverage for PDTs is the gateway to market expansion, but it raises the age-old question: “Which came first, the chicken or the egg?" In the case of PDTs, the question is: will reimbursement coverage depend on investment/provider adoption, or will provider adoption and patient use drive reimbursement?
Government and health plan payment for PDTs is a keystone event, signaling to the healthcare market that particular categories of PDTs, clinical uses, or prescription digital therapeutics developers have met certain criteria. Yet, those requirements can be opaque, which we'll explore further in the second and third challenges.
Initial PDT reimbursement scenarios set the stage
While FDA-approved PDTs address various symptoms and diseases like substance use disorder, ADHD, insomnia, or diabetes, payment strategies have focused on individual state Medicaid agreements or ad-hoc contracts with health plans and employers. Currently, there is no Medicare benefit category or physician fee schedule for PDTs. Pear Therapeutics partnered with MassHealth to create the first Medicaid program to reimburse for PDT.
Federal movement regarding PDT coverage
Two recent actions by CMS and the Senate could open up opportunities for wider PDT adoption.
CMS introduced a new Level II Healthcare Common Procedure Coding System (HCPCS) billing code for prescription digital behavioral therapy. Effective April 2022, Current Procedure Terminology (CPT) code A9291 covers FDA-cleared PDT and should be used for each course of treatment. While numerous PDT manufacturers have lobbied CMS to create new HCPCS codes for each FDA-cleared product, CMS has determined that a single code is sufficient at this time.
Under HCPCS Level I, CPT codes cover a licensed provider's time setting up and monitoring data created via patient use of PDTs and do not cover the cost of the PDT product.
In December 2022, senators presented a bill called the Access to Prescription Digital Therapeutics Act of 2022. It would make PDTs eligible for coverage under Medicare and Medicaid. The bill has been referred to the House Subcommittee on Health, and no additional actions have been published since the referral.
Should PDT benefits be paid under pharmacy or medical?
Having a cohesive and standardized way to handle coding that ensures proper billing and reimbursement is key to adoption by payers and providers. The primary industry decision under debate is whether PDTs should be covered under pharmacy or medical benefits. Pharmacies like CVS and ExpressScripts have already included certain PDTs in their formularies. Other commercial or Medicaid contracts have classified particular use cases under pharmacy or medical benefits.
A December 2022 PsychU webinar on the value of DTx shared results from a payer survey, indicating that DTx was considered a medical benefit by 41% of payers, a pharmacy benefit by 5% of respondents, and a product-dependent category by 43% of payers. We'll see later how coding standards for DTx and PDT are essential to provider adoption.
Challenge #2: Payer acceptance
Reimbursement for new types of medical devices, services, and medications is complicated. This is particularly true for DTx technologies and PDT. Health plans have a host of factors to consider when deciding if coverage is appropriate, how to implement coverage, how much coverage to offer, and for what types of PDTs.
Even if a payer knows the value that PDTs deliver through random controlled trials (RCT) and RWE, many are unsure how to create the proper framework for PDTs. Currently, most coverage decisions are product- or contract-specific. And most payers do not have a standardized review pathway or product policies. It takes significant initiative for a payer to identify the leader who will take up the PDT category, assess the need and impact of PDT on various business units, create coverage policies, and train staff to carry out appropriate and thorough claims processing.
Highmark makes a significant move related to PDT coverage
In Fall 2022, Highmark announced its plans to expand coverage for certain PDTs. They are the first large commercial payer to declare their intent to pay claims for PDTs in treating psychiatric disorders and other complex conditions and establish a medical payment policy. Highmark is 1 of 17 Blue Cross Blue Shield plans that include at least 1 PDT in their standard pharmacy or medical benefits.
Integrated provider-payer organizations and integrated delivery and finance systems (IDFS) like Highmark may have a more straightforward path to adopting PDTs since they can test reimbursement models alongside clinical use. Once a payer creates a global medical payment policy, it demonstrates their commitment to paying for FDA-approved products prescribed by a physician for a medically-necessary treatment.
More payers see PDT adoption on the horizon
Various surveys with health plan participants show a proclivity toward adoption. One survey found that 40% of payers already cover at least 1 PDT and half anticipate coverage by 2024. Ten percent of payers were either unsure or did not anticipate coverage in the near term. That same research found that the majority of payers surveyed were more likely to cover a PDT compared to non-prescription DTx.
It's important to highlight that this survey was distributed to 180 payers and large employer self-insured groups, revealing that 78% had little or no familiarity with PDTs. The remaining 22% had a fundamental understanding and were included in the survey. Their opinions explain which factors make PDT adoption attractive.
Reimbursement is most promising for those PDTs that have proven value through:
- Randomized controlled trials (RCTs)
- FDA clearance or approval processes: De Novo and 510(k) pathways
- Published RWE in addition to RCT findings
- Cost offsets
That same survey highlighted the most important features that payers value in PDTs:
- 24/7 access to care
- More cost-effective treatments
- Giving clinicians patient-reported outcomes
Payers express what they need from PDT manufacturers to improve adoption and coverage
The survey mentioned previously found that payers believe manufacturers can encourage PDT adoption by lessening the cost impact and uncertainties by taking 3 steps:
- Demonstrating cost offsets
- Leveraging value-based contracting to mitigate risk
- Identifying the most appropriate patient population for PDT use
Through these actions and by providing adequate education and evidentiary materials to share with provider networks, PDT developers can alleviate payer concerns and support them in their adoption journey.
Challenge #3: Provider adoption
Providers and prescribing physicians have differing needs regarding PDT adoption. Clinicians want to see the RCT and RWE and have confidence in a product's safety and efficacy. It's their duty to prescribe treatments that will meet their patients' current and growing needs. They also want a clear, straightforward claims process and reimbursement pathway for payment. And they have to be careful that their adoption of PDT doesn't create more chaos and complications that reduce time spent with current patients and impact priorities without commensurate benefits.
A physician serving on a webinar panel explained, “If 1 payer has it (PDT) as a medical benefit, another as a pharmacy benefit, and another as this new thing that might happen, then I'm not going to be able to manage it. My office isn't going to be able to manage it."
PDT alignment with strategic objectives is crucial
Depending on the physician's specialty or a health system's priorities to expand patient access or establish a center of excellence around a particular disease or population, PDTs must align well with strategic objectives. That is evident in the types of PDT witnessing faster, greater uptake than others. Highmark's PDT policy names 8 products that specifically address behavioral health access needs that are top-of-mind for providers and payers.
Because PDT is an entirely new care modality, adoption will follow critical needs. Highmark convened multi-disciplinary stakeholders to create a policy aligned with their strategic objectives. They included leaders from contracting, benefits, pharmacy, and behavioral health.
PDT RWE provides a toehold
PDT manufacturers, like Pear Therapeutics with over 50,000 prescriptions issued, and Akili with 1,000 prescribers in all states, illustrate that PDT adoption and clinical research are correlated. A study published in the American Journal of Managed Care highlighted the efficacy of using a digital therapeutic to treat Type 2 diabetes across patient populations: “Engagement with the software led to improvement in blood glucose levels across demographic groups."
Alternative payment models offer providers proof-of-concept opportunities
Value-based care (VBC) and alternative payment agreements enable provider organizations to utilize PDTs with less possible financial risk, mainly when the payment model includes bundled payments and service flexibility within a per-member per-month (PMPM) fee. This is particularly useful if a provider seeks performance-based reimbursement through a CMMI innovation grant.
Step-by-step toward wider PDT adoption
Prescription DTx are in the beginning stages of adoption and legislation isn't keeping up with innovation. Manufacturers, providers, and payers, alongside their professional industry organizations, are taking critical steps toward testing and incorporating PDT as a viable solution to continuous, asynchronous, and more accessible patient treatment options.