Head of Happify Health’s Pharma Specialty Solutions and Corporate Strategy, will help you understand the role of CPT code reimbursement within Digital Therapeutics (DTx).
Even as the healthcare industry shifts toward a value-based care model, CPT coding and payment continue to be critical to the adoption of any new medical technology. Despite advancements in telehealth reimbursement resulting from the pandemic, digital therapeutics (DTx) continue to face the same barriers to widespread adoption.
This presentation at DTx East 2021 by Chris Wasden, Head of Happify Health’s Pharma Specialty Solutions and Corporate Strategy, will help you understand the role of CPT code reimbursement within DTx. Chris answers these questions:
- Which CPT code strategies can DTx companies use to advance their businesses?
- How can clinicians use CPT codes to get reimbursed for services aligned with DTx products?
- Which CPT codes should DTx companies use and promote use by clinicians?
Moderator: "All right. So next up we have Chris from Happify. He's going to be talking to us about the role of CPT code reimbursement within digital therapeutics over to you, Chris. Thanks so much."
Chris Wasden: "The best thing about speaking of this event is I don't have. So, so last time I was at this event was probably when most of you were, which was a year and a half ago at DTX west. So it's good to see a lot of people here. What I want to share today. I've heard lots of people talk about, oh, we got to get CPT codes to pay for our products.
And if you look at how CPT codes are paid in healthcare, generally in medical devices specifically, they're not the pay for products. So I want to orient us today with regards to what CPT codes are really for and what they're going to do to make a difference in our industry. Oftentimes I get people asking me what are the greatest barriers to adoption of digital therapeutics?
And if you think about it on a thermometer scale, It's really not the patients. The patients have been trained now for over 20 years to expect digital and everything they do. And the only place they're not experiencing digital at scale is healthcare. They are in banking. They are in insurance. They are in retail.
They are in media. It's just healthcare. That's really fallen behind. Then I talk about regulators. If you look at the United States, specifically, the regulators have come a long way in the last decade, so that they provide pretty good guidelines with regards to what we need to do. So I really don't see them as a barrier.
Payers people are kind of shocked when I put them this high on the list that they've actually improved a lot. And they have, we've been having discussions with payers now for many years. And what we find is that they are starting to really understand this space well, and beginning to look at how they're going to pay for different types of products, using different approaches.
We still have a long way to go, but they're not the biggest problem. The biggest problem in adoption of digital therapeutics. The physician. Okay. It's the clinicians. And the reason is that it takes 17 years to change the practice of medicine. When we say 17 years, that's 17 years after the data and studies have definitively proved the practice of medicine needs to change.
So after all the evidence is out there, it then takes 17 years to change the. Of this big ship we call healthcare. Since that clinicians now on a massive scale are adopting these best practices to practice medicine in a novel way. So when it comes to digital therapeutics, our greatest barrier to adoption are the clinicians.
And that's why CPT codes are so important. So I want to talk about how we need to think about these codes, uh, and how they will help advance our business and then how they should be applied. I was on a, uh, webinar the other day. And these are three questions that were asked on the webinar is being reimbursed a must.
So that physicians want to prescribe or recommend a DTX product. Most people said yes. CPT code reimbursement is a requirement to get physicians, to prescribe our product. Once the DTX is recommended or prescribed by a physician whose job is it to ensure the patient is on board? Those 16.7% of people are wrong.
Okay. It's not the doctor's job. Okay. It's our job. And that's what most people believe. We've got to be the ones that make it simple and easy. No doctor wants to be tech support for you. What, uh, when it comes to raising ACP awareness of DTX solutions, should we use the same model as for drugs? I think the same 16.7% that we're wrong on physicians are also wrong on this as well.
I don't think the traditional model for selling drugs, the way that we're going to need to go here. So we think about what is the impact of CPT codes in the adoption of new technology? And I'm taking this from the perspective of someone who's been in the medical device industry for a couple of decades now.
And how are new medical device technologies adopted? There's a simple formula that we apply in medical devices generally. And the formula is the following. You take the amount of workflow change that is required for your new technology. And that's a negative doctors do not ever want to change their work.
Okay. So if you require any workflow chains that becomes a barrier to the adoption, they then compare that workflow change as a negative to the new technology CPT payment. So if you're going to make me change my workflow, you better pay me for it. They then multiply that by the number of patients they have with that condition.
And they raise that to the power of the clinical benefit. Your product delivers. This is the formula that we have to maximize and optimize for the adoption of our technologies. The reason the CPT codes are so important for physicians is that they create interest in a new medical procedure or a new medical application.
They compensate doctors for adopting a new activity or new practice. And eventually they become a tool for changing the practice of medicine. So if you look at what CMS oftentimes does, if they have a new practice of medicine, they want to be happy, instituted within healthcare, they will create very attractive CPT code payments.
So the doctors will be more highly incentive to try this new activity, to change the practice of medicine. We have this two minute rule that we talk about, which is that the. Prescription of a digital therapeutic can't take any longer than two minutes, which is about how long it takes to prescribe a drug so that the doctor's gotta be able to explain within two minutes or less why the patient's getting this as a compliment or an alternative to a drug.
What the mechanism of action is that is why is it working and then how it works. So how do they prescribe it? How does the patient get it? How has it downloaded? How is it directed? How has it. That's got to take less than two minutes. Then the prescribing has, has to be automatic and through this chain channels they prescribed today.
So you have ERs systems for drugs. The same thing's gotta be used here. Physicians are not going to go to a different workflow to get the doc the product in the patient's hands. It's also got to be covered. I did a survey among physicians that actually prescribed visual therapeutics, and I asked them, how do you triage a patient to know whether or not a patient should get a digital therapy?
They said, well, first it's gotta be paid for by the insurance company. Next, the patient has to have a smartphone, otherwise they can't use it next. The patient's gotta be someone that I think is going to be compliant to the therapy that is they're going to use it. And then they've got to have the technology aptitude.
To, to understand how to use it. Now, when I did this survey, I found that many of these physicians actually didn't know the answers to these questions. So, so we can't presume that the physician can actually do the triage, uh, currently with all these. So we've got to help them to do that as well. And then dispensing and claims.
It's gotta be simple to dispense, simple, to adjudicate, simple with regards to tech support. Again, the doctor doesn't want to be your tech support and simple for activation activation is downloading an app beginning to use. So we look at the adoption of new technologies and our CPG payments. What we're really looking at is a, a leverage model and the leverage model is how we're enabling patients to do things on their own that they used to do in person with a clinician.
Now, oftentimes when I talk about this, people will say, why are you saying that doctors need to be paid with CPT codes for prescribing digital therapeutic? They don't get paid for prescribing drugs. That's true. They don't get paid for prescribing drugs. They get an office visit reimbursement. That's about it.
The difference is several fold, but one is that this is a medical device. So they do get paid when they are using medical devices in the practice of medicine and what's going on here and why you can justify them getting paid. And there are now payment mechanisms that I'll describe in just a minute, is that the bottom of this line, that 30 hours is the time the patient.
Is spending on your digital therapy. The top of the line, those small little lines are the frequency with which a clinician is checking in on the patient to make sure that they are getting the therapeutic benefit of the therapy. What you see here is a 10 to one ratio for every one hour of clinician time, we have 10 hours of patients.
So why the physician or clinician of any variety should be paid for prescribing. This is because this is the least costly way for patients to get therapy. And that if patients are adherent to the therapy, they will receive. If it's a good therapy, they received clinical benefit from that. So the clinician is actually providing a therapy that will deliver better patient outcomes.
Now there are four principles that really drive innovation and services and payment. And what really is driving this whole CPT focus. The one is measurement based care. So measurement based care is using a systematic approach to measure how patients are doing on a therapy. The next is technology for managing and monitoring improvement and patient care coordination.
This is kind of the medical behavioral integration. Yeah. Value-based payments. Increasingly we see a lot of healthcare moving towards value-based payments. Some parts of the country like Massachusetts are ahead of other parts of the country. And then we have precision care. What we see with digital therapeutics is we have a way to deliver precision care in ways that we never have in the past.
And what I mean by that is if you look at healthcare generally, The whole focus on genomics proteomics, biome microbiome is all around precision care. We all have different genes. We all have different microbiomes. Therefore we should have different sort of therapies because our physiology, our biology can be, be different.
Digital is another form of precision care. Digital enables us to deliver precise, personalized care in ways we never could with analog care. So if you look at how this is applied in all focus on an area that, that I know well with regards to mental health. In today's analog, mental health world, less than 18% psychiatrists actually measure if a patient's.
We don't do that. We do that in other parts of medicine, but we don't do it in mental health with a DTX. You can enable that to be a hundred percent. All the patients that are on your digital therapy can be measured from a measurement based perspective technology. So it can support clinical decision making.
Currently. No technology is really used to monitor behavioral and physical health on a consistent daily basis with patients with DTX, all this. On a value basis. There's really not a lot of value-based care in mental health here. You can actually, because you're measuring what's going on, you're measuring the engagement, you're measuring the outcomes.
You can have value based contracting due to digital. And then from a precision perspective, we can actually deliver very personalized type of care to the. So we think about strategies for using CPT codes. We can use existing codes that are already out there. This is what Lavango and Amato have done very effectively.
They've actually used existing codes to get paid for delivering digital type of care and services. We can modify existing codes. So you've seen this happen, uh, with different sort of codes that already exist, where they may expand or change. Of the code, so it can be used or we can create new codes. Now creating new codes oftentimes seems like, oh, that's Gravano.
That'll solve all of our problems. The problem with new codes is it takes about five years to get a new code developed and, and take it through the AMA. And then. With a fee schedule. So it will be paid by CMS and others. There's lots of reasons to want to do a new code. Um, but there's also things that we can do with existing codes.
So if you think about that, there are existing CPT codes that support clinical work. That we can use around telemedicine, remote patient monitoring, behavioral health treatment there's care coordination codes. So these are codes around remote patient monitoring, chronic care management, behavioral health integration, uh, transition care management.
And then there's a junk div, uh, clinical services type of codes as well. So there are some of these codes that can be used today by physicians using digital therapy in the practice of Metro. And then there's these new codes that we've heard about these remote therapeutic monitoring codes. Now what's interesting about these codes is that these codes are, uh, paying a physician for prescribing a digital therapy and monitoring the patient on that therapy.
And ironically, or the paradox is the people that do this in the analog world. Can't get paid for prescribing the thing that they actually do in the analog. So if I'm a psychologist, I can get paid for deliver living CPT. But if I'm a psychologist I'm not allowed to prescribe a digital therapeutic that does CBD.
Nor am I allowed to be paid for prescribing and using the digital CPT in the practice of my practice, which is the practice of psychology. So you see this with regards to muscular skeletal, for example, they can't get paid for that as well. So a little bit of a paradox and how we think about. And then there's an issue with regards to these new codes with when they're first promulgated.
Oftentimes they're done almost as experimental codes as cat one codes versus cat three codes. And so when you look at a lot of these codes here, they're category three codes, which are really to measure its use, but not really to pay. Now, there are some codes that have been proposed now to be paid for.
What's interesting is that the language for these codes looks a lot, like almost exactly the same as these chronic care management codes and as these, a behavioral integration type of codes and they pay about the same amount, $45 for about 20 minutes or so of time per month. So I'll give you a case study of how we can think about using some new codes or existing codes for a mental health as a case study.
So the problem with the status quo, as I mentioned earlier, is that there's a shortage of therapist. It takes them about three months to get a, an appointment with a therapist, shortage of physicians or psychiatrists. It takes over a month to get a, an appointment with them. Most therapists actually don't follow our delivered discipline CBT.
So, what we can do with these digital therapies is we can be much more disciplined and consistent in the way that we deliver CBT and behavioral type therapies. I mentioned earlier that only 18% are currently monitoring patients. So we can actually monitor them a much higher levels. SSRI SNRI, both have significant side effects.
And about a third of patients don't respond to their first SSRI or SNRI. So they have to continually go through different ones to find one that. Uh, only about 40% of patients that need help actually even get diagnosed and treated. Uh, and then patients oftentimes have a comorbid condition, which makes their healthcare cost twice as expensive.
So from a digital therapy perspective, we can address all of these problems and more so when you think about it from a CPT billing perspective, Here are three different types of codes that could be charged by a physician or bill by physician for using a digital therapeutic in the practice of medicine.
So there's recurring measurements. As I mentioned with the PHQ nine, the GAD seven, there is the better management of the patient by using this data to better manage them digitally. And then there's the recurring checking in on the patient. Every. Uh, to make sure they're on therapy that they're progressing to answer any questions.
And it doesn't have to be the physician that does this. It could be any one of the physician's office that does this. And so in total you can see here, and this is what the CMS fee schedule that a clinician could earn $263 in reimbursed payment for patients that are using a digital therapeutic in their practice of medicine.
So I fundamentally believe that the mission that we're on as this community is transforming the practice of medicine. There's nothing short of that, that we're trying to achieve. Right? So we think about transforming the practice of medicine. There's really a number of drivers of that. The first is that there's not enough physicians and clinicians to currently deliver the care to patients that need the.
We have increasing demand because the expanding populations with chronic disease populations expanding as well. And then the mental health pandemic that is already a pandemic before then the COVID pandemic. We then have innovative new digital therapeutics that can personalize care, deliver care. 24, 7, 365 they're clinically effective treatments.
And then they can do continual monitoring. And the combination of these three things then enable precision. It enables us to deliver therapies to patients that are more tied and more precisely personalized to their needs and can deliver this precision care at scale, it increases access, it improves outcomes and it decreases costs.
So that's what, the way that I think we, as an industry need to think about CPT codes. It's really an enabler. It's an amplifier and it's an accelerator. To the adoption of our technologies. It's not a way for us to be paid. We still have to figure out how to get the payers to pay it for us or the health systems to pay for.
Uh, or the employers to pay for us because in the patient's mind, they don't pay for health care. Somebody else does. So you've got to figure out how to get these somebody else's to pay and having physicians get rewarded for using your products. And the practice of medicine is going to be key to our success.
So with that, I will open it up to any questions people might.
No questions. Come on, you got it all figured out."
First Question: "I'm curious, given your experience in the medical device industry, whether you see a future for TTX in which there are product specific CPT codes, as in actual training and procedures that actually, uh, analyze individual metrics for individual PDTs?"
Chris Wasden: "So. Just to amplify kind of what you pointed out. So some CPT codes can be very product specific. So when you look at things like bone densitometry, right? So there's some codes that are so specific. You've got to have a specific unit with specific characteristics to get paid for that there's other codes, which are more general that as long as you follow.
But in fact, you can even follow any procedure you want, as long as you had certain end points, as far as a measure or something that you can get paid for that, uh, you will have seen if you went through the AMA documents that, um, a company like pear is trying to get very specific CPT codes, just for substance use disorder therapies.
Okay. And we may see some of that where it's very, this, that specific. When you look at these other codes that I showed earlier, which is these, uh, there we go. It's these RTM codes. They're fairly general. Now there's some that are more focused on, um, respiratory conditions. There's others might be more focused on some others, but in general, you see here, muscular skeletal, skeletal.
Uh, some specific language there, others, but I think generally we're talking about, if you look at how these codes are structured, it's saying that if you spend at least 20 minutes a month with a patient in a virtual. Encounter texting email, phone, call, video, call, something like that, that, that qualifies you for $50 of payment for a patient.
And so you're expecting this digital to kind of do the base load of work. And then you're just checking in with the patient for 20 minutes a month and you're being paid 50 bucks. And so it's fairly general that way. So, so we'll see both things are going on right now."
Question 2: "Terrific. Terrific. Terrific overview.
Um, so what do you recommend a sponsor to do as they're going through product development and looking for approval from the point of view of access and CPT codes?"
Chris Wasden: "So I think that this brings up actually an interesting part to the business model. Okay. So there are some companies out there I'll use free spirits and exact.
So free spirit has a physical device. They have software, so that's the software as a medical device. But in addition to that, they have clinicians providing services, physicians, coaches, other sort of clinicians. And so they're also billing CPT codes as a provider.
So I think a lot of us in this room have to decide, are we a software only company?
Are we a software and a services company? And are we going to provide the clinical services associated with our software or not? If you look at Lavango, if you look at Omada, they are a software and services company. They are a provider. They bill as a provider, they boot bills, hick picks and CPT. So we have to decide if, is that going to be part of our business model to deliver the services, be it provider and bill, and get paid for our software and for our services or, or one or the other.
And I know in this room, there's many companies that are talking about that, that are looking at that. Some of them do that. Uh, that's a hard question to answer because making software is a very different business than being a healthcare deliver."
Question 3: "I think we all know that physicians times are increasingly busy, especially in mental health. Have you found that given the time requirement and the level of reimbursement, that this is attractive to physicians, as opposed to spending their time, uh, performing other services with patients?"
Chris Wasden: "So here's an interesting case study to answer your question.
About four years ago, these codes that I showed here, these, uh, chronic care management codes, uh, came out. So these are the 9, 9 4 9 0 9 9 4 9 1. Those codes, okay. CMS budgeted a couple of billion dollars and they send to the providers. I have a couple of billion dollars. I want to pay you. All you have to do is have somebody in your office connect with your patient 20 minutes a month.
Bill these codes for $50 a month and I will pay you that money. That was too much work for most providers to even care. Okay. So what happened? Well, companies like concert, health and MD revolution said, I'll tell you what doctors, because that's too much work for you. If you will give me a list of all of your patients that have chronic diseases, at least two, I will reach out to all those patients.
I will have my staff check on all those patients, 20 minutes. I will provide you all the data and then you can bill these codes and get paid, and then you'll split the fee with me.
Okay. Now that seems like that's almost free money, right? The doctors are almost nothing. Somebody else does it all and they get to split the bill.
In fact, they even got more than 50% of the bill even making it that simple. Didn't mean that people were beating down the doors to, to get this money. And part of the issue is that that is a new practice of medicine, right? This is not the way they practice medicine today. So they think, well, how am I really going to do this?
Who in my office is going to check in on this patient? This is going to follow up. How often do they do. What level of training do they need to have? If they get information, what do I do with the, does it go to the EMR or not? Do we have a separate system to manage this? Because it's probably not managed through EMR.
Like we do the other stuff. So, so what happens is something as simple as that, where the CMS says, I'm going to pay you. Billions, doesn't get doctors who adopted because it changes workflow in ways they're not comfortable with, even though it might provide great patient benefit. So that's that's the problem is that these very minor workflow changes have big implications with regards to physician practice.
Question 4: "I was just going to comment that we're waiting on approaching physicians 20 years into their practice is a bit late. Had somebody earlier talked about if we could get accreditation residents, can we just start treating folks much earlier in the power of DCX practice? Because 20, 30 years later, it's hard to change."
Chris Wasden: "So let me double click on that. So 50% of physicians in the United States are 55 years and older. If you're 10 years from retirement and practicing medicine, you are not going to change the way you practice medicine for the last 10 years to incorporate these new techniques. There might be a few, but most are not.
So basically what we're saying is that half of all the doctors in the United States, and it's just not the U S if you go to Europe, same phenomenon, half of all the doctors in the world, okay. Are not going to change the practice of medicine to incorporate digital therapeutics, unless you pay them a lot of money.
Okay. So we ended up having to shift and say, okay, who are the early adopters? Well, you've got residents, you've got newly minted physicians and whatnot, but you've also got new channels. You've got the telemedicine, right? So all the physicians practicing telemedicine, this is a natural way for them to practice telemedicine.
And so we need to focus on those sort of physicians that practice in novel ways that are going to be earlier adopters because the bread and butter. Physicians that are 55 years or older that are practicing in a clinic today are very unlikely to adopt this. Uh, even when CMS is going to say here's billions of dollars, uh, to adopt this new sort of practice."
Question 5: (Inaudible)
Chris Wasden: "So this is also another phenomenon there's, there's, there's kind of two phenomenons going on. Most new doctors are women. Okay. And because of that, they actually are more focused on quality. And they're also more focused on salaries. Most new doctors that are minted, almost all want to be salaried.
So what we have is a whole generation of doctors that are not the fee for service I'll work, a gazillion hours make a ton of money, sort of people, both the men and the women are more focused on salary and lifestyle. And so fee for service sort of models. CPT code oriented are actually not the models of the future value based care and things that are going to improve.
The quality of life for the clinician are going to be more important than what we've had in the past. And also these newer clinicians are more used to digital experiences themselves and. Yeah, no physician wants more data. Right. But, but if you can use data to make their life simpler than they'd value data, although they'll never use it.
Right. But if it improves the quality of care for the patient and simplifies their lives, that will be valuable as well."
About the Author
Chris Wasden As Chief Strategy Officer, Chris is leading the effort to bring our Intelligent Healing platform to the pharmaceutical and healthcare industry. Recently he was a professor at the University of Utah and served as Executive Director of the Sorenson Center for Discovery & Innovation, a digital therapeutic game incubator. Chris is the co-author of two books on innovation, creativity, and leadership: Tension - The Energy of Innovation; and Solving for Why - Change Your Identity, Change Your Future. He is the named inventor on 12 issued patents, has been a founding leader in 10 startups, and has held leadership positions at JP Morgan and PwC. Chris is also currently a Board Member of the Digital Therapeutic Alliance (DTA), and holds a doctorate from George Washington University in Human and Organizational Learning, and an M.B.A. from UCLA Anderson School.