This month's digest recaps the major themes of another busy year in value-based care. We also round up recent news from the field, spanning policy, research, innovations, payers and providers.
2019 Year-End Review
- Incumbent payers were very keen on expanding into care delivery for their members this year, either by building it on their own or with partners.
- Taking the build-it-yourself route, CVS and Aetna are piloting HealthHUB primary care clinics that will expand to 1,500 locations over the next two years.
- Among those employing the partnership approach, Blue Cross Blue Shield of Texas teamed with Sanitas Medical Center to launch 10 new primary care medical centers in the Dallas and Houston markets. In addition, UnitedHealthcare and Walgreens are opening 14 UnitedHealthcare Medicare service centers within Walgreens stores in Las Vegas, Cleveland, Denver, Phoenix, and Memphis. And Blue Cross Blue Shield of North Carolina launched an initiative to deliver highly coordinated, patient-centered primary care to its members, partnering with Iora, Cityblock, and CareMore to open new practices across the state.
- The current administration appears bullish on value-based care, with new payment models multiplying.
- As health care entrepreneur Brad Smith takes over as the new director of the CMS Innovation Center (CMMI), CMS Administrator Seema Verma said she was excited to have him "build on the important work the Trump administration has undertaken to transform our health care system to deliver better value to patients." CMS's ambitious value goals include having 100% of traditional Medicare and Medicare Advantage payments flowing through two-sided risk alternative payment models by 2025. HHS also released a pair of proposed regulations aimed at breaking down barriers to value-based arrangements and care coordination due to Stark, Antikickback and Civil Monetary Penalties laws.
- Meanwhile, these value-based payment models continue to proliferate. CMMI announced 10 new payment models in 2019, including several mandatory models and the much-awaited Direct Contracting model. Other models run the gamut from primary care and emergency triage to specialty areas (e.g. kidney and cancer care) and drug pricing. Most ramp up to implementation in 2021.
- The growth of value-based primary care shows the promise that both payers and providers see in this model.
- ChenMed and Oak Street expanded into several new markets in 2019 and launched new partnerships with payers and providers.
- Through these new relationships, payers can lower their medical costs and reach at-risk members in "primary care deserts," providing their members high-touch, personalized care. Health systems that historically haven't taken on value-based care on their own have partnered with these companies because they are effective at managing costs and improving outcomes. Even Walgreens has seen the value in outsourcing clinic operations, partnering with VillageMD to open clinics.
- Specialty care-focused companies continued to proliferate, with payers and providers eager to partner with them.
- For example, several organizations have emerged with innovative methods of treating kidney disease. This includes InterWell, a kidney disease-focused population health management company started by nephrologists; RenalytixAI, an artificial intelligence-based clinical diagnostics company; and PRINE Health, a medical group that plans to take on risk-based contracts to manage chronic kidney disease patients. Somatus and BlueCross BlueShield of Tennessee also entered into an outcomes-based agreement for Somatus to provide kidney care to the plan's Medicare Advantage members with end-stage renal disease.
- Livongo, a digital health company that provides a diabetes management program to its users, had its initial public offering in July and expanded its partnership with Blue Cross Blue Shield of Kansas City.
- In October, Progyny, a company that manages fertility benefits for employees at large firms, became the first fertility benefits management company to go public. Progyny offers treatment bundles that cover diagnostic testing and connect members with a patient care advocate. The company also offers members access to a network of fertility specialists and a pharmacy benefits solution, Progyny Rx.
- As proposed mergers fell through and employed physicians pursued independent strategies, health system consolidation began to stagnate.
- Mergers that were blocked or called off include Partners HealthCare's proposed acquisition of Exeter Health Resources, which the New Hampshire attorney general rejected, stating it would inhibit local competition. In addition, Sanford Health and UnityPoint called off a previously proposed merger, as UnityPoint was reluctant to embrace the idea of the combined health system. And Gundersen Health System and Marshfield Clinic Health System scrapped plans to merge seven months after the two Wisconsin-based systems announced they were exploring a potential merger, citing the "complexity" of combining two entities of their size and scope.
- Meanwhile, more health system-employed physicians are exploring their independence. North Carolina, for example, has seen shakeups with health system-employed primary care physicians since 2018. First, a group of 90 physicians broke away from Atrium to form the primary care-focused Tryon Medical Partners. Tryon continues to grow, with physicians from CaroMont Health leaving the system to join. Second, 40 physicians employed with Novant broke off to join Holston Medical Group.
- Tech giants and retailers announced initiatives aimed at growing their role in the health care industry in 2019.
- After several acquisitions and key hires, Google provided some clarity around its health care strategy, building on its key functionality to provide clinicians with medical records that are easy to search and analyze (albeit not without some controversy). Apple Health Records became available for three of Allscripts' flagship products, enabling providers to share data and results with patients more easily and enabling patients to view available medical data from multiple providers like doctors, testing labs, pharmacies, and therapists.
- Retailers are also making big bets that they can find a niche in health care. Best Buy, historically known for growing without acquisition, has made three health care acquisitions over the past year to support its plan to grow into selling health monitoring devices for seniors. Sam's Club is piloting a program with big name health care companies (Humana, Quest Diagnostics, etc.) to offer customers bundled health care services ranging in price from $50 to $240 per year. And Walmart launched its "health care supercenters" (offering low-cost primary medical services, dental care and behavioral health services) rather than partnering.
- Recognizing that a nationwide shortage in health care workers means problems for their care delivery businesses, health systems, payers and even new market entrants are creating opportunities for medical education.
- HCA, which employs 94,000 registered nurses, acquired its third nursing school. Geisinger also has its own medical school focused on community health, and it announced this year that it will offer free tuition. Dell Medical School and the McComb School of Business at the University of Austin created the Value Institute for Health and Care, providing a curriculum that educates students on the transition to value.
- Among payers, Kaiser Permanente and Humana are both supporting medical schools with a heavy focus on value-based care, population health, primary care and community engagement.
- Walmart employees will be able to earn bachelor's degrees and career diplomas in health-related fields for $1 per day, helping to organically grow its health care workforce.
December 2019 News Roundup
Payers and Providers
- Blue Cross Blue Shield of Michigan has teamed up with seven physician groups and health systems to launch Blueprint for Affordability, a value-based care program that includes two-sided risk. The model kicked off Jan. 1 and will last for five years. Ascension Michigan, Henry Ford Health System, Michigan Medicine, Oakland Southfield Physicians, the Physician Alliance, Trinity Health-Michigan and United Physicians signed onto the model, requiring them to work towards annual targets for the cost of care they offer Blue Cross members. Blue Cross executives estimate 30% of its membership in commercial PPO and Medicare Advantage PPO plans will be in risk-based contracts, representing approximately $4 billion in health care spending.
- Humana has signed an agreement to acquire Enclara Health, a hospice pharmacy and benefit management provider. This acquisition will allow Humana to expand its care continuum to simplify mail-order pharmacy benefits and enhance technology associated with in-home pharmacy, including mobile medication management. Currently, Enclara serves 450 hospice providers and 97,000 hospice patients.
Accountable Care Organizations
- ValueH Association LLC, the parent company of Florida Association of ACOs (FLAACOs), launched the ValueH High Performing Network, a value-based network to support small- and medium-sized self-insured employers. Through collaborating with ACOs and other value-oriented networks, ValueH aims to bend the cost curve and deliver value and patient engagement to employers. "One of the primary barriers to bending the cost curve for small- to medium-sized employers is the lack of a statewide high performing network aligned around the same principles as the ACOs," stated Balford Francis, one of the officers of FLAACOs, who believes that ValueH will be able to deliver low cost, high quality care.
- One Medical, a San Francisco-based primary care company, filed a proposed initial public offering with the SEC. Currently, One Medical operates 77 offices across nine markets, including Boston, Chicago, Los Angeles, New York, San Diego, San Francisco and Washington, DC. Hoping to attract a working-age, commercially insured demographic, One Medical charges $199 for an annual membership and bills patients' health insurance for services provided. However, One Medical's performance has faltered in recent years, as it reported a $44.4 million net loss in 2018 and a $30.8 million net loss the year prior.
- Advantia Health, an Arlington, Va. value-based women's health group, secured $45 million in funding from BlueMountain Capital Management, LLC. Advantia hopes to use the investment to build a new women's health practice, add more providers to its network, and further develop its technology. This is Advantia's largest investment to date and closes out a successful year including two acquisitions. Currently, Advantia has 200 providers across 60 locations and serves 430,000 patients.
- Bright Health signed an agreement to acquire Brand New Day Health Plan, a California-based Medicare and special needs plan, indicating plans to expand into the California market. The acquisition will combine Brand New Day's specialized clinical programs and local market presence with Bright's technology and intelligence platform to provide specialized care to complex patients. "This transaction gives Bright Health Plan a strong presence in California with an established and philosophically aligned partner," said Mike Mikan, president of Bright Health. "But beyond that, it positions us to leverage this partnership to bring key elements of Brand New Day's patient-first, integrated clinical model of care to all our members across product lines and geographies."
- Fresenius Medical Care North America (FMCNA), a provider of kidney care products and services, is collaborating with more than 650 nephrologists to launch InterWell Health, a population health management company focused on patients with renal disease. "InterWell Health is uniquely positioned to expand its high-performing network of renal providers to collaborate with both public and private payers under value-based arrangements," said Bill Valle, InterWell Health board member and chief executive officer for FMCNA. "It combines the expertise of a diverse and preeminent group of nephrology practices with the experience of FMCNA and aims to advance value based contracting models that are attractive to payors and patients by driving better clinical outcomes at lower costs."
- Humana, in partnership with kidney care management companies Monogram Health and Somatus, is launching two programs aimed at improving kidney care coordination for its Medicare Advantage and commercial patients. Members in Louisiana, Mississippi, Georgia and Virginia will have access to a multidisciplinary care team who work with physicians to provide education and in-home assessments. Through internal research, Humana found that they had a significant number of beneficiaries on dialysis and hope to preventatively address the needs of patients with chronic kidney disease.
- SSM Health and Strive Health announced a new joint venture to introduce a value-based care model that improves outcomes and quality of life for individuals suffering from chronic kidney disease and end-stage renal disease. SSM Health Kidney Care, in partnership with Strive Health, will provide patients with access to high-quality care that is also affordable and sustainable. The new SSM Health Kidney Care centers, with Strive Health as the operating partner, will introduce a value-based, high-touch care model that surrounds patients with a team of specialists including nephrologists, nurse practitioners, dietitians, pharmacists and social workers to develop integrated care plans and provide education to patients who often suffer from other conditions like diabetes and hypertension.
- Care Advantage, a population-driven home health company, acquired Team Nurse Inc., a home health and staffing agency. With the new acquisition, Care Advantage now has more than 40 locations in its network and is the largest privately-owned home health company in the Mid-Atlantic. Care Advantage had an aggressive acquisition strategy in 2019, acquiring three other companies, and it hopes to accelerate growth in 2020.
- Sutter Health | Aetna, a joint provider and payer venture, has partnered with Heal, a home health provider, and 98point6, a virtual primary care app, to provide home and virtual services to its beneficiaries. Heal's physicians are available for at-home visits seven days a week, including holidays, and can often arrive within two hours. 98point6 offers a text-based app where patients can text, video chat or speak with physicians who can write prescriptions, order labs and suggest referrals for specialists and other services. This partnership is part of an effort by Aetna to provide more accessible care to members while lowering costs and improving outcomes.
Social Determinants of Health
- Independence Blue Cross is expanding its program with MANNA, a Philadelphia-based meal delivery company, to provide free meals to its Medicare Advantage beneficiaries. Independence and MANNA rolled out a pilot in 2019, providing meal delivery after a hospital stay to members with end-stage renal disease. Starting in 2020 they will be reducing the eligibility requirements for the program to include patients with a combined diagnosis of congestive heart failure and diabetes. In addition, MANNA offers free nutritional counseling to eligible members.
- Emory Healthcare is partnering with Verily, a health care and life science analytics company, to deploy value-based solutions for the health system. The two organizations will kick off the partnership with an analysis of medication and lab ordering patterns at Emory to identify value-based opportunities and drive organizational change. Along with Emory, Atrius Health and the Veterans Administration Palo Alto also teamed up with Verily in 2019.
- Sutter Health is required to pay $575 million to employers, unions and the government after a years-long antitrust case. Sutter has agreed to cap out-of-network costs, stop all-or-nothing contract deals, and halt existing measures to prevent access to lower-cost plans. This settlement could mark a significant shift in the northern California market, where prices are 30% higher than the rest of the state due to increased consolidation.
Government & Regulatory
- The big December health policy news is what ended up in Congress's end-of-year spending bill (most notably the repeal of several ACA taxes) and what did not (major bills on drug pricing and hospital surprise billing). As part of the deal, Congress delayed Medicaid cuts to disproportionate-share hospitals and other health care "extender" priorities through May 22. This could provide a spring legislative vehicle for drug pricing and hospital surprise billing. However, impeachment and 2020 election politics could keep Congress from getting much done, if anything.
- The Affordable Care Act's 2020 Open Enrollment Period ended with 8.3 million sign-ups through federal insurance exchanges, a slight decline from 8.4 million last year. ACA premiums are down 4% for the 2020 plan year.
Survey Says/Studies Show
- A study in the New England Journal of Medicine found that increased care coordination efforts for high utilization patients were insufficient to drive significant improvements in outcomes. The study followed the Camden Coalition of Healthcare Providers, a team of physicians, nurses and social workers who coordinated the care of "super-utilizers" in an aim to reduce hospital readmissions. However, many of the patients were struggling with homelessness and drug addiction—issues that could not be addressed or rectified with increased visits to primary care physicians. "Care coordination is necessary but insufficient to fix the health care of these patients," said Dr. Jeffrey Brenner, founder of the Camden Coalition.
- A study published in Annals of Internal Medicine found that acute care costs were 38% lower for patients who received services at home. Secondary outcomes found that home patients also had fewer lab orders and imaging studies, spent less time sedentary or lying down, and had lower 30-day readmission rates.
- A Health Affairs study reported that bundled payments for lower extremity joint replacement is the only type of clinical episode to produce savings in Medicare bundled payment programs thus far, with no evidence of reduced spending or improved quality for other clinical episodes. However, the study's authors believe the modest progress is promising, and recommended that CMS allow for more robust risk stratification methods to provide higher payments for complex patients.