This is an exclusive BHB+ article
After a few years of growing pains, the burgeoning autism treatment industry is beginning to mature.
But maturation comes with a price: rising expectations from payers and investors alike. Earlier this week at Behavioral Health Business’ Autism Investor Summit East, over 250 attendees gathered to hear industry leaders weigh in on where the field is headed.
With rates for applied behavior analysis (ABA) fluctuating across state Medicaid programs and more pressure to curb spending from commercial plans, there is a greater emphasis on providing quality outcomes. Still, providers need to standardize the most important outcomes to demonstrate; otherwise, payers will do it for them.
And relationships with payers are a key driver in M&A activity. Investors want to fund organizations that have a healthy reimbursement strategy.
Reimbursement is only one factor driving industry evolution. The diagnostic process in autism services has created a massive bottleneck. Now, some providers are looking to change the traditional diagnostic process through a combination of technology and biomarkers.
In this week’s exclusive, members-only BHB+ Update, I will explore:
– Why standardizing autism outcomes metrics can help enable more innovative payer contracting
– What investors are looking for when it comes to reimbursement trends
– The future of autism diagnostics
If autism providers don’t standardize outcomes, payers will
Value-based care conversations are heating up across behavioral health, though they remain few and far between in the autism space.
Yet with commercial payers and state Medicaid programs seeing increasing spending on autism services, value-based contracts could become a way for payers to ensure they’re getting what they pay for and for providers to demonstrate quality.
These value-based care conversations raise an age-old question in ABA services: What quality metrics should be included in the standard?
“I think it is necessary to have standardized data sets moving forward to be a value-based provider beyond just some of the process measures,” Jim Spink, CEO of Autism Care Partners, told me at AIS East. “And until we get there, I think we will see few and far between real value-based contracts.”
Autism Care Partners is a multi-specialty autism therapy provider operating in Massachusetts, Vermont, New Hampshire, Rhode Island and New York.
Jim Spink, CEO of Autism Care Partners, speaks at AIS East. Photo credit: BHB
If providers don’t lead the conversation about standardizing measures, payers very well may, for better or worse, several industry leaders said at AIS East.
“There’s a danger of payers coming forward saying this is what we value, if it’s not consistent and reflective of what’s going on in the clinical setting,” Spink said.
He noted that some payers have already begun creating their own quality metrics; for example, Carelon tracks nine quality metrics.
Having a set of standardized metrics agreed upon across the industry could also enable a more equitable system in the future, where both large and small payers can participate in value-based care contracting.
“Somehow we have to bridge the gap within the industry between the individual, standalone ABA provider who wants you to serve the same mission as the larger ABA providers, who may have 100+ centers,” Barbara Gromacki, president of Lighthouse Autism Center, said. “All of us have the same mission with the payer and the outcomes, but how we get there is going to be different. And so getting the systems and processes that we have, nine metrics everybody can measure against those nine metrics, otherwise, we have the risk of creating winners and losers in the industry.”
Lighthouse Autism Center offers ABA services across Illinois, Indiana, Iowa, Michigan, Nebraska and North Carolina.
Payer trends drive or derail M&A activity
While tracking quality could help enable innovative reimbursement structures, it could also be essential for closing a private equity deal. Investors are closely watching payer trends and increasingly incorporating payer relationships into their due diligence.
“We’re in the second phase of autism investment, and there’s still a tremendous amount of unmet need out there, a lot of consolidation that can happen in the industry,” Jason Slocum, managing director of sustainable investing at Goldman Sachs Alternatives, said.
“But I think as an investor, one of the things we’re thinking very hard about is making sure we’re on the right side of health care and the right side of where payers are trying to go within ABA,” he continued. “As we think about M&A deals, I think focus on quality and outcomes and making sure you know how not only a company is tracking that, but how payers are tracking that. Making sure that you’re providing good efficacy and good value for the time that a child’s in therapy [is critical].”
The other major payer question driving M&A activity is the reimbursement landscape across different geographic regions.
“If you’re looking at an investment in the autism sector, the question is not as much as the ‘what,’ but the ‘where,’ and where providers are determines what the rates are going to be,” Dan Beuerlein, managing director of Brentwood Capital Advisors, said at AIS East. “The individual pockets of reimbursement and what payers – typically, as of late, from the Medicaid departments – have been doing has really been driving M&A focus, both from an interest level standpoint as well, certainly, from a due diligence perspective.”
Brentwood Capital Advisors is an M&A advisory firm focused on middle-market health care transactions.
We’ve already seen major shakeups in how state Medicaid programs reimburse ABA services.
For example, Nebraska and Indiana both have substantial rate cuts on the table.
With Medicaid volatility top of mind, having a healthy mix of revenue streams is paramount. Other factors affect a company’s margins, too.
“It’s becoming more and more important to PE firms looking at the valuation of your organization, … because ultimately reimbursement really does drive margins,” Scott Semmel, senior vice president of payer relations at Acorn Health, said. “So they’re really focused on that, making sure the health of their organization is in existence. But also understand the cost of real estate, the cost of providing services, hiring commissions are rising just as much as costs are rising for payers, so make sure there’s a healthy balance to be able to support that.”
Acorn Health is an autism service provider that operates in Florida, Illinois, Maryland, Michigan, Pennsylvania, Tennessee and Virginia. It is backed by the Ontario Teachers’ Pension Plan (OTPP).
The diagnostic process could look very different
It can take families over a year to get an autism evaluation and diagnosis. This can cause children to miss out on critical early interventions.
Moreover, such evaluations are vulnerable to subjective bias. But new methods of diagnosis, such as biomarkers and behavioral markers, could help to improve diagnosis in the future.
“I’m a clinical psychologist, and I do lengthy evaluations for every child,” Cheryl Klaiman, director of clinical research operations at Marcus Autism Center, said. “I have a certain level of expertise, but these are happening all over the country, and all over the country, people are doing things differently. So that’s leading to inequities in care a lot of the time. If we can think about using biomarkers where every kid can be seen the same way, … we’re going to reduce some of those disparities in care.”
Marcus Autism Center is a nonprofit autism services provider based in Atlanta. It offers ABA therapy, multidisciplinary care coordination, diagnostic services and other autism-related services.
Cheryl Klaiman, director of clinical research operations at Marcus Autism Center, speaks at AIS East. Photo credit: BHB
And a few companies at the conference were working on biomarkers, such as LinusBio, which analyzes hair strands to gain insights into a person’s response to environmental exposures.
There are also behavioral diagnostics that use eye tracking technology to evaluate children for autism.
“Evolutionarily, we are born to immediately attend to caregivers, looking at us, listening to us,” Jamie Pagliaro, president and CEO of EarliPoint, said. “For some reason, in kids with autism, that programming is different. [Researchers] noticed this difference in the looking behavior. They sought to quantify that, and the end result is an eye-tracking technology that captures 120 data points per second of where the child is looking. It’s comparing that to how typical children look at video, and specifically social interactions and language interactions during those video. … So eye tracking really has become the first identified biomarker for diagnosing and identifying someone with autism, and in our case, being able to do that as early as 16 months old.”
EarliPoint is a company that offers an FDA-cleared autism diagnostic device that uses eye-tracking technology in assessment.
Having more objective measures could also help to monitor children over time.
“We have height and weight growth charts, things like that. And so can we have what we call social visual engagement growth charts?” Klaiman said. “Like how a child is looking and attending to their world, and if a baby starts to fall off their curve, just like we would for height or weight, we’d probably provide some intervention. Can we do something similar if they’re following this social visual engagement growth target growth chart?”