John J. Miller, MD: What are strategies that payers could use to help manage the costs for both the medical as well as psychiatric costs for people with schizophrenia?

Caroline P. Carney, MD, MSc, FAPA, FAPM, CPHQ: Let’s talk about medications first, and the cost of medications typically is created between the PBM [pharmacy benefits manager] and the owner of the insurance, whether that’s a Medicaid agency or a commercial insurer or Medicare. We look at the creation of a formulary, so what is or isn’t available on a formulary? Those may be tiered with, say, generics first with zero or a very low copay, which may increase as we go back to the second tier or third tier depending on the medication and what that PBM has negotiated with pharma to get to a price that is affordable. Unfortunately, we have to take into account the cost, and these medications, especially the newer ones that come to the market, can be very expensive. So looking at programs where we can have the type of assistance to individuals to cover the cost of medications may be beneficial at first. When those programs run out and that medication has to be paid for, those programs sometimes can be harmful in the long run as well. I think really having a highly designed program around copay, generic, step-through therapy, and failed therapy is supported by evidence-based practices. And I will tell you that much of the information that PBMs use is highly evidence-based, quoting studies in fact, in those kinds of criteria. However, they don’t necessarily speak to things like we think about when we’re having that patient in front of us and that patient preference and that individual’s drug level. It’s more adequate dose or duration, and you check that box and move on. I think an intelligent benefit design is really important there. In mental illness, one of the things that I think is not thought of in the right way is the total cost of care. And that’s the effect of treating mental illness, schizophrenia or otherwise, on the total health care expenditure of the individual, including the care that they need for medical conditions. We know conditions like depression and anxiety tend to lead to higher overall health care costs. Individuals with serious mental illnesses like schizophrenia have among the highest total health care costs of all individuals in our system. [It’s important to design] programs that will support those individuals in accessing preventive care earlier on in their trajectory, staying in the type of setting where they don’t have to navigate to find a primary care provider who will even see them. So the community-based behavioral health centers that we are seeing today. Those are really important aspects of care that insurers need to make certain [are] in their provider networks that they have access to, and availability of care. That we have intensive care coordination and that will get individuals into those kinds of programs. That we monitor the outcomes of those programs to ensure that evidence-based practice is being done. And those individuals may or may not need to have a copay for certain kinds of care. One of the barriers to psychotherapy is having a copay for every session. That adds up quickly for individuals. As insurers, we have to think about that differently. We have to look at bundled payments for an episode of care and other more creative ways to be able to finance evidence-based care.

John J. Miller, MD: I like the concept of a bundled payment, and then you can provide the comprehensive package.

Caroline P. Carney, MD, MSc, FAPA, FAPM, CPHQ: Right. In state Medicaid programs, one of the challenges with bundles has been that states still want to be able to have a fee-for-service claim for everything inside the bundle so that they know how to price downstream for their Medicaid budgets. The bundle sometimes hides that information. Several state Medicaid programs won’t allow bundles still for many areas of treatment because of that issue.

Transcript edited for clarity.