Substance use disorder continues to be a pervasive health challenge in the U.S. as 61 million people have reported alcohol use disorder and 9 million have opioid use issues, according to federal data.
There are also significant barriers to treatment including the high cost, lack of access and stigma from exposure. Data from the Substance Abuse and Mental Health Services Administration (SAMHSA) national survey found that 94% of people with substance use do not receive any treatment.
This also poses a major health challenge for employers and there's a critical unmet need for cost-effective prevention and treatment strategies.
Carrum Health, a company that established value-based Centers of Excellence for employers, unveiled today a new value-based treatment model for substance use disorders. The company says its substance use treatment program has been successfully road tested with a Fortune 50 retailer and offers employers and their members access to top quality treatment centers nationwide with significant cost savings over traditional insurance – and zero out-of-pocket costs for employees.
Over the past 10 years, Carrum Health developed a service that enables employers to purchase healthcare services and specialist medical care directly from top providers for a bundled price. Utilizing a Centers of Excellence network, with an all-inclusive pricing model and 30-day warranty on surgery and two years on cancer care, Carrum members receive surgical and cancer treatment guidance and coordination through the entire care journey with upfront pricing, according to the company.
The company applied that same approach to develop a substance use treatment model using transparent, pre negotiated, bundled payments. This approach makes employer costs predictably lower, eliminates predatory or out-of-network pricing, and requires providers to take on risk for patient outcomes which aligns incentives to reduce relapses and readmissions, according to Christoph Dankert, Carrum Health's Chief Network Officer.
Carrum has been working on the "R&D" for this service for three years as employers have been reaching out after observing member populations struggling with opioid use and alcohol use disorders, Dankert noted
There is a high relapse rate among individuals in substance use treatment, estimated to be 40% to 60%, per the National Institute of Drug Abuse. This adds up to lost productivity and ballooning costs for employers.
Treating substance use disorders costs employer-sponsored insurance $35.3 billion a year, with alcohol and opioid misuse topping the list of what many working-age people struggle with, according to a study by researchers with the Centers for Disease Control and Prevention (CDC). These costs most likely balloon when factoring in residual effects such as presenteeism, absenteeism and job retention, according to the JAMA Network Open study.
Based on a Carrum analysis of claims data, it costs employers an average of $31,000 per patient per episode of substance use disorder treatment.
"It's a real challenge, and it's compounded by the fact that there is a real out-of-network problem," Dankert said. "There are a lot of treatment providers out there, you could almost use the term predatory. If you type substance use disorder into Google Search, you'll see the beautiful imagery of these fancy treatment centers, but the quality is questionable, because there's nobody on the hook for actually getting you better. Employers want their employees to go to high-quality, high-value places for treatment and providers who are on the hook to get to better outcomes."
Employees seeking treatment at out-of-network centers can further spikes costs since there are no set prices and some centers charge arbitrary pricing for questionable quality and outcomes.
A value-based program based on a high-quality substance use provider network helps to break through the cycle of high relapse rates, according to Carrum Health.
The company initially launched the service with Fortune 50 employer resulting in 52% cost savings with its value based bundled rates, compared to fee-for-service costs. The program is now available nationally and the majority of Carrum’s current and new clients plan to offer the benefit to their employee populations beginning January 2025.
The company built a network of substance use providers with carefully vetted COE partners across the U.S, such as Hazelden Betty Ford and other evidence-based treatment centers. There are currently 60 locations in the network.
Carrum said it vetted the providers based on quality criteria and evaluated programs and data for readmissions, sustained sobriety rates and continuity of support.
When a member reaches out to Carrum seeking help, a licensed substance use counselor speaks with them in an intake session, and connects them to the appropriate COE provider so they can begin treatment within 24 to 48 hours. Each patient is matched with the appropriate level of care they need – whether that’s inpatient detox followed by a residential program, step-down intensive outpatient program or partial hospitalization program, according to the company.
The company built out its provider network by looking at the demand for services as well as providers' level of quality and outcomes. "That's a big filtering process, and a lot of providers fall by the wayside once you apply that lens. We want the best of the best," Dankert said. "There's also the second filter, which is, 'Can you can you deliver value? 'Meaning, can you do the treatment, not only really well, but can you also do it efficiently? And are you willing to put your money where your mouth is? We use bundled payments under the hood, where the provider takes a very substantial amount of risk for the outcomes."
As a Center of Excellence, Hazelden Betty Ford reports strong patient outcomes. Sixty percent of patients are abstinent after a year, 86% are drug free after 12 months and 64% are alcohol free. Staff-approved discharge decreased the odds of relapse by 50%, the data showed. Carrum Health plans to publish results on its program outcomes once the company has collected enough data, Dankert said.
It took three years to develop the right model as value-based care is a nascent idea in substance use disorder treatment programs, Dankert noted.
"For SUD, the idea of value-based care, the idea of providers taking risk, wasn't present. It's not like other service lines where CMS [Centers for Medicare and Medicaid Services] had done a lot of work and fertilizing the ground," he said. "We were kind of on our own right. It took us a better part of two years to get providers comfortable with the idea, yes, they should take on risk and they should be held accountable for outcomes such as a reduction relapse rates, a reduction binge drinking and getting to sobriety," he said.
He added, "We analyzed the space and understood the challenges. You need to really think about, how do you structure the model where you find the highest quality, and what does quality even mean? And how do you get to value and where does the value come from? It took a couple of years to button that up."
In January 2023, Carrum Health clinched $45 million in an oversubscribed series B financing to build out its oncology benefit offerings and scale its surgical care service lines. The company has raised $96 million to date.
“Employees using opioids, alcohol and other substances struggle not only with addiction, but also with the fear of exposure and stigma surrounding use. When you add to that the lack of reliable, high quality treatment centers, unaffordable care, and the challenge of balancing treatment with family and work responsibilities, the obstacles to treatment are often insurmountable,” said Sach Jain, founder and CEO of Carrum Health, in a statement. “We’ve built the first substance use treatment program that overcomes these barriers, offering employers a solution that provides their members with the comprehensive support they need and deserve.”