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Exclusive: Brave Health gets $40M for Medicaid's mental health gap

Oct 11, 2022
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Illustration: Sarah Grillo/Axios

Brave Health, a virtual care startup dedicated to mental health care for Medicaid members, raised $40 million in Series C funding led by Town Hall Ventures, the parties tell Axios exclusively.

Why it matters: The prevalence of mental illness and substance use disorders is highest in non-elderly adults with Medicaid, yet few startups are tackling this problem for this low-income population most in need.

  • 1 in 4 Americans are covered by Medicaid and CHIP, while only 35% of psychiatrists accept Medicaid —  a massive access problem only exacerbated by COVID.
  • "I don't think that number is going to start going the other direction in the near term, so the question becomes 'what can we do to get different results?'" CEO Anna Lindow says.

Meanwhile, insurers are eager to address the rising medical costs associated with behavioral and mental health conditions — much of which falls on Medicaid plans.

  • "There's an enormous societal need, but there's also a real business need for health plans," Lindow says.

How it works: Partnering with health plans and hospitals, Miami's Brave Health offers telehealth counseling, therapy, psychiatry and medication management — with a central focus on the serious mental illness population.

  • With a national average wait time for behavioral health services of 48 days, Brave Health prioritizes engagement with patients before they leave the hospital.
  • "When someone is thinking about getting mental health support, you may only have a window of time where that trust is there," Lindow says. "The care delivery piece is necessary, but not sufficient."

By the numbers: Brave Health serves more than 65 million covered lives across 18 states, partnering with 200-plus health plan contracts.

  • Year to date, 23,000 individuals have been referred to Brave Health.

State of play: Investors have poured capital into virtual behavioral health over the last two years, but most startups have employer-facing models.

  • That camp includes highfliers like Lyra Health, Spring Health, Modern Health, and Headspace Health.
  • Some exceptions include Eleanor Health and Bicycle Health, which both focus on addiction treatment and do accept some Medicaid.

What they're saying: Navigating through factors like regulation and insurance contracting are less understood on the Medicaid side, whereas startups are about moving fast, Lindow says.

Yes, but: There's a pretty good payoff:

  • "On the other side of that investment of time, energy and capital you really unlock something that can create true value to communities over time."
  • Town Hall Ventures' Anna Fagin says the firm looked at some 50 behavioral health startups the last year. "The commitment to Medicaid really stood out."

Between the lines: Lindow says Brave Health has achieved its first two goals: serve a large need at scale, and prove it can improve outcomes — like reduced hospital readmissions, and therefore, costs.

What's next: Lindow wants to push forward innovative reimbursement methodologies.

  • Brave Health inked its first value-based contract earlier this year with Molina of Texas, and recently signed a second with Centene's Medicaid plan in Florida, Sunshine Health.
  • The funds will also support continued investment into technology and data infrastructure.

Context: The deal is the first of Town Hall Ventures' third vehicle, which just raked in $350 million to invest exclusively behind health care companies focused on under-represented populations.

  • Insiders Union Square Ventures, City Light Capital and others participated in the funding, bringing Brave Health's total funding to date to $60 million.

The bottom line: Investment behind health care innovation has disproportionally focused on affluent and urban populations, but we're finally starting to see a crop of companies hone in on marginalized populations.

  • Outside of behavioral health, that includes the likes of Cityblock, Circulo, Nuna and SameSky.
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