Value-Based Care News Digest - May 2020

As COVID-19 transforms health care, it's also reshaping the pursuit of value. After a brief hiatus, the digest is back with two-plus months of news about deals, policies, regulations and innovations.

Top Trending Themes

1. Investors are eager to jump into telemedicine as COVID-19 has accelerated its growth, and widespread adoption indicates that it may continue to reshape care delivery post-pandemic.*

• According to a study conducted at NYU Langone Health, virtual urgent care visits increased by 638% while non-urgent virtual visits grew by 4,345% between March 2 and April 14. The study also found an increase in postoperative and post-procedural follow-ups via telemedicine. Although the study focused solely on patients seeking care in New York, the results remain consistent with the widespread adoption of telemedicine during the pandemic.
• Medici, an Austin-based virtual health care company, saw a 1,409% increase in patient registrations from February to April. The company also raised $24 million in Series B funding. Medici offers a HIPAA-compliant virtual health care platform for more than 25,000 health care providers and their patients to securely communicate via text, voice and video chat. Unlike some other platforms, Medici also allows patients to connect with their regular doctor rather than matching them with a random provider.

• Vida, a virtual health care platform that focuses on behavioral health, saw 500,000 new users since the beginning of COVID-19, bringing its total lives covered to 1.4 million. Vida recently raised an additional $25 million. Founded in 2014, Vida pairs users with a health coach knowledgeable in the area of need, addressing nutrition, fitness, weight loss, stress management, diabetes or other conditions.

• Telemedicine company Doctor on Demand announced in mid-May that it was the first to expand services to Medicare Part B beneficiaries on a nationwide basis. Until the COVID-19 crisis, Part B reimbursement was limited to certain geographic and care delivery locations. The federal government's regulatory changes in response to the crisis lifted those restrictions and began reimbursing telehealth at the same rate as in-person visits, at least for the duration of the pandemic.
• Blue Cross Blue Shield of Michigan has launched a telehealth program to support members with substance use disorders. The program will include multiple check-ins with doctors, nursing and social workers throughout the day, virtual group therapy, psychotherapy sessions and medication-assisted or facilitated treatment. Patients are also connected to online meetings provided by Alcoholics Anonymous and Narcotics Anonymous.

2. Payers have been largely spared from the financial losses that health systems and providers are experiencing due to COVID-19. Some are attempting to ease the burden on providers and employers.

• United Health announced in early April that it was accelerating payments of more than $2 billion to providers to help offset the influx of COVID-19 patients and sharp decreases in elective procedures. This effort applies to UnitedHealth commercial, Medicare Advantage and Medicaid beneficiaries.

• BCBS of Arizona has developed a partial prepayment plan for primary care providers enrolled in their Patient Centered Medical Home program. Receiving a partial prepayment of their estimated annual quality incentive payment will allow providers to potentially cover monetary shortfalls due to COVID-19.

• Premera Blue Cross announced in early April that it would provide up to $100 million in advance payments of claims to medical, dental and behavioral health providers in Washington State and Alaska in response to their financial challenges from the pandemic. These funds will be recouped by Premera as a percentage of claims over the course of nine months beginning January 1, 2021.

• Priority Health of Michigan will provide premium rate relief for individual plan members and small group employers for June and July, and it will waive cost-sharing for Medicare Advantage members for in-person and telehealth primary care services until the end of the year.

3. Medicare Advantage (MA) insurers and dialysis providers are raising funds and launching initiatives to manage beneficiaries with end-stage renal disease (ESRD), who will be able to enroll in MA plans for the first time later this year.

• Currently, ESRD patients are the only patient group barred from enrolling in Medicare Advantage, except in limited circumstances. The 21st Century Cures Act, signed into law by former President Barack Obama in 2016, lifted that restriction beginning in 2021. The Centers for Medicare and Medicaid Services (CMS) said it expects 83,000 ESRD patients to switch to MA due to the Cures Act provision, with half of those enrolling in 2021 alone.

• Medicare Advantage plans are bracing for a flood of patients with ESRD. According to Modern Healthcare, Emblem Health and Humana, for example, are working with dialysis providers to develop value-based care arrangements, and Priority Health in Michigan is training care managers about the disease and investing in analytics to identify opportunities to improve care. For plans seeking to offer more services in patients' homes, CVS has a home hemodialysis device now in clinical trials, which could be on the market by the second half of 2021.
• DaVita launched DaVita Venture Group (DVG) to facilitate efforts to develop solutions for patients with kidney disease and related chronic conditions. "DaVita Venture Group aims to find new solutions for our patients that go beyond dialysis," said Steve Phillips, vice president of innovation for DVG.
• Monogram Health, which provides kidney disease patients with at-home care management,  secured $7 million in funding through the closing of a Series A-1 financing round. The new round brings the total funds raised to $12 million in the past 15 months. Monogram currently operates its programs for thousands of patients across the U.S., including Humana Medicare Advantage and commercial plan members in Louisiana and Mississippi.

COVID-19 News

Visit Evolent's COVID-19 Resource Center for additional information about regulatory changes, policies and other actions taken in response to the pandemic. Click here to jump to our roundup of non-COVID-19 news related to value-based case.

General News

• The United States saw a 4.8% drop in GDP in the first quarter of 2020, primarily driven by a reduction in health care spending. The health care sector was the cause for nearly half of the GDP drop, largely due to hospitals and health systems needing to cancel elective procedures during the pandemic. In March 2020, the component of GDP related to hospitals fell 12.1%.

Payers

• To prevent overcrowding in emergency rooms and other health care facilities during the pandemic, Blue Cross Blue Shield of Oklahoma (BCBSOK) partnered with DispatchHealth, a home health company, to provide home care to BCBSOK members. BCBSOK estimates that more than 256,000 beneficiaries in the Oklahoma City region have access to DispatchHealth's services, helping its members receive medical care while avoiding unnecessary exposure.
• Blue Cross Blue Shield of Michigan (BCBSMI) in April offered to pay the salaries and benefits of employees with nursing or medical backgrounds who volunteer to work in the coronavirus field hospital in downtown Detroit. The temporary field hospital was designed to house COVID-19 patients who are ill but do not require a ventilator to monitor breathing. Within 24 hours of the announcement, 29 BCBSMI employees agreed to volunteer.

Health Systems

• Nearly 55% fewer Americans sought hospital care in the first two months of the pandemic, resulting in a $60.1 billion monthly revenue loss, according to a Strata Decision Technology analysis. Those losses represent about a fifth of the health care industry's monthly output. A decrease in procedures for life-threatening illnesses was particularly alarming, researchers said, noting a 57% decrease in services related to cardiology, 55% decline to breast health and 37% decrease to oncology.
• Kaiser Foundation Hospitals said in mid-April that it would draw on its full $2.4 billion line of credit for the COVID-19 response. Kaiser, along with other large health organizations such as Mayo Clinic, have seen dramatic declines in elective procedures. In the filing, Kaiser stated that it has not significantly changed its capital plan but is following national and international recommendations in dealing with COVID-19.
• Thomas Jefferson University called off plans to acquire Fox Chase Cancer Center from Temple University. "This transaction is the latest casualty of COVID-19," Dr. Stephen Klasko, president of Thomas Jefferson University and CEO of Jefferson Health, said in prepared remarks. "Because of the tremendous impact that the virus has had on our operations, Jefferson must focus entirely on providing patient care and safety, student education and safety, and for the well-being of our dedicated employees." In the first quarter of 2020, hospital merger and acquisition activity were down compared to the first quarter of 2019, with not-for-profit buyers pulling back by about 30%.
• Many health system executives are taking pay cuts in response to the financial impact of COVID-19. Some, including Pennsylvania-based WellSpan Health and Illinois-based Advocate Aurora, will put the savings generated from executive pay cuts into assistance programs for employees who are financially impacted by the virus.
• Hospitals partnered with online match-making platforms to help them swap masks, gowns, ventilators and even doctors with those that have surplus. The collaborations were created to fill gaps until supplies from regular distributors arrive. Many turned to the Exchange at Resilinc, a new online trading platform from Stanford Health Care, hospital consulting group Premier Inc. and logistics software company Resilinc. In its first two weeks, The Exchange at Resilinc had more than 900 hospitals participating, plus thousands of surgery centers, nursing homes and other facilities.

Federal Government

• Over the past two months, the federal government has committed more than $6 trillion, through legislation and the Federal Reserve, to address the coronavirus pandemic and economic recovery. Approximately $250 billion is going out through the U.S. Department of Health and Human Services (HHS). These include a $175 billion Provider Relief Fund to reimburse providers for COVID-19-related expenses and lost revenue; more than $55 billion for vaccines, medical supplies and testing; roughly $14 billion for HHS agencies including the CDC and NIH; and $6 billion for community health centers. Medicare will see a 2% reimbursement bump in May through December and a 20% add-on payment for inpatient COVID-19 DRGs. States will see a 6.2% boost in their federal Medicaid match if they meet certain conditions around maintenance of coverage and premiums.
• Some health care providers who fit the small business criteria are taking advantage of the SBA's Paycheck Protection Program (funded at $659 billion) to cover up to eight weeks/$10 million toward expenses such as payroll, utilities, mortgage/rent—a forgivable loan if certain conditions are met. For others, the Fed has stepped in to cut interest rates and support up to $2.3 trillion in lending, some of which backed by $454 billion in new funds from the CARES Act.
• CMS expanded its Accelerated and Advanced Payments Program to provide upfront cash flow for Medicare providers in response to COVID-19. By late April it had already paid out $100 billion to about 45,000 applicants and had suspended the program. CMS has also postponed certain reporting deadlines and produced interim rules to mitigate risk and provide alternate participation options for Medicare Shared Savings Program ACOs.

State Government

• As of early May, 84,000 Californians had enrolled in California's public insurance exchange created in response to the COVID-19 pandemic. While California joins ten other states and the District of Columbia in opening their exchanges to allow uninsured residents to enroll in coverage, the Trump administration has not opened the HealthCare.gov federal exchange. Some health insurers, including HCSC, have also launched special sign-up periods for certain groups to remove any barriers to seeking COVID-19 testing or treatment.
• Every state in the country has taken advantage of at least one new federal waiver or State Plan Amendment to address the pandemic under Medicaid emergency authorities.

People on the Move

• Optum CEO Andrew Witty took a leave of absence from the company to co-lead efforts at the World Health Organization to develop a COVID-19 vaccine. Witty began his position at the WHO on April 20 and will return to Optum at the end of the year. Previously, Witty served as the CEO of GlaxoSmithKline in the UK, where he facilitated the company's shift from pharmaceuticals towards consumer health care and vaccines.

Non-COVID-19 News

Payers and Providers

• Vera Whole Health, a Seattle-based advanced primary care company, raised $10 million from existing investors. Vera operates 26 clinics across ten states and works with health systems, employers and payers to provide health coaching in addition to traditional primary care. Last year, Vera announced a partnership with Universal Health Services, which also invested in the company. Vera has raised $70 million since it was co-founded in 2008 by President and CEO Ryan Schmid.
• VillageMD opened Village Medical, a full-service primary care clinic, in Pasadena, Texas. The new clinic will offer traditional primary care services along with preventative care, treatment for illness or injury, and management for chronic conditions. Village Medical patients will also have access to same-day appointments, virtual health visits and in-home primary care when needed. Village MD also recently announced a partnership with Aetna in Atlanta to accept full financial risk on Aetna's Medicare Advantage patients.
• Clever Care Health Plan, a California-based Medicare Advantage plan, raised $20 million in Series A financing. Clever Care aims to be a culturally sensitive MA plan, connecting Eastern and Western medicine, with a robust provider network that understands patients' culture and lifestyle.
• Molina Healthcare will acquire the Magellan Complete Care (MCC) line of business of Magellan Health. MCC is a managed care organization serving about 155,000 members in members in six states. With the addition of MCC, Molina will serve more than 3.6 million members in government-sponsored health care programs in 18 states and will have 2020 pro-forma projected revenue of over $20 billion. The purchase price for the MCC transaction is about $820 million.
• Truli for Health, an affiliate of Florida Blue, has expanded as a new health maintenance organization designed to provide small- and medium-sized businesses in Florida with affordable health insurance for their employees. It will initially launch in Central and South Florida on July 1, 2020.

General Industry News

• CareCentrix, a post-acute and home care services provider, acquired Turn-Key Health, a community-based palliative care company. Turn-Key's proprietary analytics and precision medicine program will be integrated into CareCentrix's platform, allowing it to provide personalized palliative care programs for patients. Through the acquisition, CareCentrix will be able to identify patients in need of palliative care and at-risk for overutilization while enhancing care coordination between the patient, provider and health plan.
• AristaMD, a digital health company that connects primary care with timely specialist insights, raised $18 million in Series B funding. Cigna Ventures and MemorialCare Innovation Fund led the fundraising, with participation from Avalon Ventures, CU Healthcare Innovation Fund and Stanford Health Care. AristaMD and its eConsult solution focuses on increasing access to specialty care by connecting primary care providers with a panel of specialists, reducing unnecessary specialist visits and helping primary care providers retain low-acuity specialty cases.
• Lyra Health, a provider of mental health benefits for employers, secured $75 million in Series C funding. Lyra Health provides personalized therapy, coaching and medication to its users, and leverages its platform technology to support both clients and providers. It has experienced significant growth in recent years, expanding its customer base to include eBay, Uber, NetApp and Genentech. With this additional funding, Lyra plans to expand its platform and network of mental health providers.

Survey Says/Studies Show

• The medical loss ratio rule, designed to lower premiums and protect consumers, has shown mixed results in practice. While many experts agree the rule helped ensure members got more value for their premiums and encouraged insurers to reduce administrative costs and operate more efficiently, they also believe the rule may have increased M&A activity and medical claims costs. "It's evidence that the medical loss ratio was an extremely blunt tool for what it was trying to accomplish," said Steve Cicala, an assistant professor at the Harris School of Public Policy at the University of Chicago. "When you try to regulate profit margins, firms have an incentive to respond by strategically adjusting their costs." Payers were driven to merge in order to reduce overhead, thereby decreasing competition. They also may have increased medical claims costs, rather than reducing administrative spend, in order to meet the minimum threshold.
• Comprehensive care programs reduced inpatient, emergency department, and overall health care spend for children with medical complexity, a study found. After two years, the group in the study saw a 4.6% decrease in overall per member, per year spending, 7.7% in inpatient spending, and 11.6% in emergency department spending. The study leveraged a dynamic care team of providers, development of specific care plans, individualized access and contingency plans, and a patient registry to address the patients' needs.

People on the Move

• Atul Gawande is departing from the CEO role at Haven, the venture formed by Amazon, Berkshire Hathaway and JP Morgan Chase. Haven has not publicized results from the few initiatives it has under way. Its biggest initiative made public to date is a health insurance offering for about 30,000 JP Morgan employees that aims to make coverage more affordable and comprehensible by providing a menu of fixed costs for medical services. It also offers financial incentives for hitting certain health targets, such as lowering blood pressure. Gawande will shift to the role of chairman of the joint venture.
• Sachin Jain, MD, CEO of Anthem's CareMore Health System and Aspire Health, has stepped down. Under his leadership, CareMore expanded services from four states to 32, due in large part to Anthem's purchase of Aspire Health, a palliative care provider, in 2018.  Jain joined CareMore in 2015. He will be replaced by Shaden Marzouk, the former director for Asia health and global health innovation for insurance firm AXA. She is also a neurosurgeon and a U.S. Army veteran, and she was CMO for Cardinal Health.
• Health Care Service Corporation's board of directors has named current president Maurice Smith as chief executive officer and president, effective June 1. At that time, David Lesar, will step down as the company's interim CEO; he will remain a member of the board. Smith joined the company nearly 27 years ago as an intern.
• Dr. Tunde Sotunde was been selected as Blue Cross Blue Shield of North Carolina's new CEO, beginning June 1. Sotunde has been serving as president of Anthem's Medicaid Business Unit.
• Bright Health named current President G. Mike Mahan as its new chief executive officer, while Bob Sheehy will serve as executive chairman of the board. Mikan has worked alongside Sheehy for over a year in the Office of the CEO, driving significant market expansion and attracting over $1 billion in equity financing.

*These descriptions solely represent summaries of recent events in value-based care and do not contain any endorsements for any of the companies named.

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