The Rise of Telehealth for Mental Health Care: What’s Covered?

Health Highlights

Commercials, news articles and targeted social media advertisements abound offering virtual mental health services from providers like Talkspace and Calm. These startups are just a few of the many companies offering telehealth care for individuals dealing with mental illnesses. Given this growth, coupled with the corresponding demand from the public, it seems likely that these technology-driven services are here to stay, if they can successfully navigate through the already complex U.S. health care space.

Dealing With Mental Health in 2021: The Explosion of Telehealth Providers

As the COVID-19 global health crisis lingers on, the number of individuals experiencing high levels of anxiety and depression continues to rise.1 Reports have shown that at least one in five Americans has some mental health condition, with many more reporting feelings of anxiety and depression. Given access to mental health services under the Affordable Care Act, many of these people are now seeking treatment for these issues.2

This new demand has accelerated delivery of mental health treatment from nontraditional sources. Digital health providers offering direct-to-consumer services (more than 20,000 such providers specifically addressing mental health) have flooded the market.3 Venture funds saw opportunity in this exploding space, with investors pouring more than $1.5 billion into this market in 2020, and $795 million in the first quarter of 2021.4 Forbes reports that there are now seven digitally driven mental health “unicorns” (billion-dollar privately held companies) in the United States, up from just two a year before.5 And there appears to be no slowdown of digital health IPOs, SPAC deals and M&A activity, resulting in rising valuations for these companies.6

These companies, however, differ in goals and scope. For example, San Francisco-based Calm offers direct-to-consumer mindfulness practice techniques.7 Others, like Lyra and Modern Health, offer to connect users directly with therapists and medical health care providers.8 Alma likewise connects users with therapists, but also contracts with insurance companies on behalf of its members on a bloc basis to arrange coverage for mental health treatment.9 Still others employ “mental health coaches” who cannot diagnose or treat any mental health clinical conditions, but who instead help users deal with stress and relationships, for example.10

Given the wide range of services being offered, determining who is responsible for paying for these services can be tricky.

What Services Are Covered and Who Pays?

As investment continues to pour in and innovative companies continue to surface, Americans have more options than ever when seeking mental health services. Some of the telehealth companies intending to offer medical care, like Talkspace and LiveHealth Online, already accept insurance. Others generate revenue by contracting with large employers.11 These digital companies, while working within the existing behavioral health delivery system, are finding ways to adapt to the “new normal.”12 Still others offer only individual sessions at a fixed price or through monthly fees, based on the level of care offered and the expertise of the clinicians or “coaches” employed by the digital provider.13

While consumers have a myriad of options at their disposal, there is debate concerning the effectiveness and the long-term role of these “unicorns” in the new telehealth space. And underneath this debate runs the question of how payors should assess and decide which services qualify for coverage.

There is worry among some stakeholders that a focus on technology-driven health care is problematic.14 There is still much that time will tell about this new industry, including what these companies can and cannot accomplish. While the appeal of these technologies is evident, these concerns may lead to disputes over payment and coverage determinations.

Moreover, there is concern that these companies sometimes exaggerate what their platforms can offer.15 For example, with thousands of these companies on the market, are there enough safeguards to guarantee that they are staffed with qualified mental health clinicians?16 There is also concern over the lack of a uniform standard to evaluate and treat these conditions. As is the case in any emerging space, these difficult issues, and others known and unknown, present challenges that must be dealt with for this industry to thrive.

What Does the Future of This Space Look Like, and What Should We Expect?

There is no doubt that, on the whole, the American health care industry strives to provide high-quality, affordable health care. But a major concern with the boom of the digital mental health direct-to-consumer industry is that certain startups may not be providing services consistent with medical standards. As these digital companies continue to grow at rapid speeds and amass large customer bases along the way, these concerns will only grow. While these companies may increase access to mental health care, ensuring that they do so in a safe, effective and affordable way is essential for the continued effectiveness of this sector in the telehealth space and for user health overall.

As long as the health care industry can continue to differentiate between effective and ineffective treatment to combat surging mental health cases, the health care industry will continue to benefit from these digital, new-age, telehealth providers.

1 CNBC, “What you need to know about the cost and accessibility of mental health care in America” (published May 10, 2021), available at

2 National Alliance on Mental Illness, “Mental Health By the Numbers” (updated March 2021), McKinsey & Company (McKinsey Quarterly), “Mental health in the workplace: The coming revolution” (published December 8, 2020), available at; Fierce Healthcare, “Cigna: COVID-driven demand for virtual behavioral healthcare remains high” (published March 26, 2021), available at

3 Fierce Healthcare, “The digital mental health market is booming. Here’s why some experts are concerned” (published April 21, 2021), available at

4 Forbes, “Venture Funding For Mental Health Startups Hits Record High As Anxiety, Depression Skyrocket” (published June 7, 2021), available at

5 Id. As an example, Lyra, Modern Health, BetterUp and Ginger joined Genoa Health and Calm as billion-dollar digitally driven mental health and therapy providers.

6 Id.

7 Id.

8 Id.

9 Forbes, “This Startup Raised $50 Million To Help Therapists Build Virtual Private Practices—And Take Insurance” (published August 31, 2021), available at

10 Forbes, “Venture Funding For Mental Health Startups Hits Record High As Anxiety, Depression Skyrocket” (published June 7, 2021), available at

11 MobiHealthNews, “Contributed: Virtual-first care is here to stay, but can it fix healthcare?” (published January 8, 2021), available at

12 Healthcare IT News, “Here are the major issues facing healthcare in 2021, according to PwC” (published December 16, 2020), available at

13 Everyday Health, “Best Online Therapy Programs of 2021: Reviews and Pricing” (published August 5, 2021), available at

14 Forbes, “Venture Funding For Mental Health Startups Hits Record High As Anxiety, Depression Skyrocket” (published June 7, 2021), available at

15 Fierce Healthcare, “The digital mental health market is booming. Here’s why some experts are concerned” (published April 21, 2021), available at

16 Id.



pursuant to New York DR 2-101(f)

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