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Moody's: Healthcare Payers Need to Tackle Behavioral Health

Analysis  |  By Christopher Cheney  
   May 06, 2022

The incidence of behavioral health conditions is increasing and patients with behavioral health conditions have relatively high medical costs.

Healthcare payers that can improve treatment of behavioral health conditions will generate a competitive advantage and reduce the risk associated with political solutions, according to a new Moody's Investors Service report.

Patients with behavioral health conditions have higher medical costs than patients without behavioral health conditions. In the United States, the number of people with behavioral health conditions has been increasing in recent years, with the incidence of behavioral health conditions rising sharply during the coronavirus pandemic.

"The steady rise in behavioral health diagnoses, and the corresponding increase in medical costs, underscores U.S. health insurers' need to augment and improve the integration of behavioral health services within the full range of their offerings. Those companies that are successfully able to manage behavioral health, and contain medical costs, can also reduce the likelihood that the industry will face political solutions to address this problem[, which come with associated risk]," the Moody's report says.

Behavioral health conditions increase medical costs and healthcare payers have been responding to the challenge, the Moody's report says. "Average annual medical costs for those with behavioral health conditions are 3.5x higher than for those without such conditions, according to one study. In response, the health insurance industry has been devoting more resources to identifying and treating behavioral health conditions in a more coordinated manner than in the past, while also better using digital capabilities such as telehealth for treatment and diagnosis."

Earlier research found that behavioral health conditions have been increasing in the U.S. population in recent years. For example, from 2010 to 2018, the number of adults with major depressive disorder jumped 12.9% to 17.5 million. During this period, the overall cost of major depressive disorder skyrocketed 37.9%, rising from $236.6 billion to $326.2 billion.

Behavioral health conditions have surged during the pandemic, the Moody's report says.

"According to the National Health Interview Survey, covering January – June of 2019, 11% of adults reported symptoms of anxiety disorder and/or depressive disorder. That number increased to 41.1% by January 2021. This reflects many factors including isolation, job loss, and deaths of close friends and relatives. For children, the pandemic has been especially tough. In October 2021, The American Academy of Pediatrics, the American Academy of Child and Adolescent Psychiatry, and the Children's Hospital Association, citing the pandemic, declared a national emergency in children's mental health," the report says.

One strategy healthcare payers have pursued to respond to the increased incidence of behavioral health conditions and associated hikes in medical costs is the acquisition of specialist companies, the Moody's report says.

"In 2020, Anthem Inc. (Baa2 stable) acquired Beacon Health Options Holdco Inc., the largest behavioral health organization in the U.S., thereby improving its ability to manage behavioral problems of its members. Also in 2020, UnitedHealth Group acquired AbleTo, which uses advanced analytics to identify individuals with unmet behavioral health needs and provide cognitive based therapy. And in 2021 Centene Corporation (Ba1 stable) acquired Magellan, a leading behavioral health company. In each of these cases, the companies will generate third-party revenue and earnings, but a key consideration in each acquisition is the ability to better identify and treat behavioral health issues and generate better outcomes and, thereby, reduce medical costs," the report says.

Related: Tackling the Top 3 Challenges in Behavioral Health

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.


KEY TAKEAWAYS

People with behavioral health conditions have average annual medical costs that are 3.5 times higher than people without behavioral health conditions, a Milliman research report found.

From 2010 to 2018, the number of adults with major depressive disorder jumped 12.9% to 17.5 million.

One strategy healthcare payers have pursued to respond to the increased incidence of behavioral health conditions and associated hikes in medical costs is the acquisition of specialist companies.

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