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- Weekly Health Tech Reads | 3/24/24
Weekly Health Tech Reads | 3/24/24
CMS's new primary care model, a review of digital diabetes programs, and more!
Kevin O'Leary & Amanda DiTrolio
March 24, 2024
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News
Sharing our perspective on the news, opinions, and data that made us think the most this week
News
TL;DR:
The model will offer ~130 low revenue ACOs (i.e. small, rural primary care practices) prospective payments to help strengthen primary care in the US
Going Deeper:
CMS launched a new model this week, specifically targeting low revenue ACOs in MSSP. As CMS notes, these low revenue ACOs have demonstrated better outcomes in MSSP and also tend to be small hospitals or physicians in rural areas. In 2021, low revenue ACOs generated $237 in net savings per capita, high revenue ACOs which generated only $124. So essentially CMS appears to be focusing support here on small primary care practices that have demonstrated the ability to successfully manage costs, but given their small size lack the financial means to build necessary infrastructure that larger orgs have (i.e. health systems). High revenue ACOs don’t appear to be too pleased by this move, as indicated by the NAACOs statement (linked below) asking CMS to reconsider the decision to only allow low-revenue ACOs in this program.
CMS intends to select ~130 ACOs to participate in the voluntary five year model that begins on Jan 1st, 2025. The model will pay participating ACOs a one-time $250,000 payment to cover costs associated with setting up the ACO, and practices will receive prospective payments for attributed members. These prospective payments are key to this model, intending to support primary care practices’ ability to invest in their care models.
Travis Broome (Aledade’s SVP of Policy and Economics) did an excellent job analyzing the Flex Model on Twitter (X, whatever), with some helpful real world context of what it all means for practices - suggesting that the upfront payment will be used 130 different ways by the 130 ACOs, that the enhanced payment needs to be meaningful (>$10 PMPM), that CMS is essentially asking ACOs if they can be better than average, and perhaps most interestingly, the comment that the highest ROI in all this sort of work is ensuring patients have a consistent relationship with a PCP over time. It’s well worth perusing the posts over there:
1/ @CMSinnovates left a lot of details on payment structure graciously giving me the opportunity to opine on what I think it should be. CAUTION not a report on what CMS did but rather how we could implement the three elements of the Flex Model.
— Travis Broome (@Travis_Broome)
Mar 19, 2024
Other Relevant Reads:
NAACOs statement. Apparently high revenue ACOs in MSSP also want to participate in this, as NAACOs asked CMS to reconsider
Implementing High-Quality Primary Care: Rebuilding the Foundation of Health Care. CMS noted in the announcement that the Flex Model was based on recommendations from this 2020 report
ACO Flex Model FAQs. A helpful resource diving into some of the many questions about the model.
CMMI Infographic on Primary Care Models. This infographic articulates the various CMMI models supporting primary care. It’ll be interesting to see how these continue to evolve as CMS approaches 2030 and its goal of every member in an accountable care relationship by then.
HTN Slack Convo (h/t Maxim Petrovsky)
Charts
Visuals from the week that help convey data, trends, or topics
Rock Health’s annual consumer preference survey
This Rock Health survey on consumer preferences towards virtual care includes a ton of interesting data about how consumers perceive virtual care offerings. Of the many interesting charts included, this one stood out highlighting the massive differences in how willing different races / ethnicities are to share data with their providers.
A paper suggests nursing homes “tunnel” 63% of their profit to related entities
This is a fascinating NBER working paper looking at how nursing homes potentially “tunnel” profits - meaning they move them to related parties in order to hide profits. The chart above highlights the rise in related party payments over the last twenty years, which are heavily concentrated in management fees and rent.
Report questions the efficacy of digital diabetes management solutions
The Peterson Health Technology Institute released a report analyzing the clinical effectiveness and economic impact of digital diabetes management solutions (DarioHealth, Glooko, Omada, Perry Health, Teladoc, Verily, Vida, and Virta Health). The chart above highlights the key findings: for remote patient monitoring and behavior / lifestyle modification, evidence does not support adoption of those tools because there is little clinical impact and they increase costs. The report finds that RPM increases annual spending by $2,002 per user with commercial insurance, behavioral and lifestyle modification increases spending by $484 with commercial insurance. Nutritional ketosis is the one space that makes out ok, with more evidence needed both on clinical effectiveness and the potential for long-term savings.
Other Headlines
A round-up of other newsworthy items we noticed during the week
Epic is leaning heavily into building AI tools for its hospital customers, as this Katie Jennings article in Forbes does a nice job highlighting. Among the applications that are furthest along is medical coding, which Epic plans to release to hospitals in May. The article does a nice job highlighting some of the nuance of applying AI to medical coding. It tells the perspective of Houston Methodist’s coding manager, one of the early testers of Epic’s AI prototype, who thinks that that AI will be good for replacing standard, every day coding. But also that it likely won’t be able to fully replace her team of 50 people, particularly for the more complex coding scenarios. Beyond coding, Epic is working on 60 AI applications, and the article does a good job highlighting the approach to building / partnering, the general strategy for supporting clinicians with AI, and how Epic is managing hallucinations and other drawbacks of AI. Link
Elevance Health’s CarelonRx announced it will purchase Krogers’s specialty pharmacy division following a reduction in pharmacy sales. Financial terms were not disclosed, and Kroger will keep its retail pharmacies and walk-in clinics in stores. Link
Humana partnered with DUOS, a member activation and care navigation platform, to launch a new program for Louisania Veteran members with chronic conditions. The program aims to offer Veteran members access to the DUOS platform, which will allow them to take an assessment and match them with appropriate benefits through their MA/Veteran’s health plan. Link
VillageMD sold 11 primary care clinics in Rhode Island to Arches Medical Partners. Link
R1 RCM filed an 8-K stating it has ended buyout talks with private equity investor New Mountain Capital. Link
Quartet Health partnered with Clover Health’s Home Care division to develop a new program serving patients with serious mental illnesses (SMIs). Link
Grow Therapy, a virtual mental health platform, partnered with digital therapeutics (DTx) company, Big Health, to provider Big Health’s DTx products to Grow’s providers and patients. Link
Scene Health, a medication adherence platform, has expanded its partnership with CareFirst BlueCross BlueShield supporting Medicaid members in Maryland. Link
Funding
Notable startup financing rounds across the industry
Hippocratic AI, a generative AI health company, raised $53 million in Series A funding at a $500 million valuation. This brings its total capital raised to $120 million. The company also announced its first product as well as a partnership with NVIDIA — a healthcare staffing marketplace where payors, health systems, and other stakeholders can “hire” generative AI agents to perform low-risk, non-diagnostic work. The news prompted an interesting dialogue in Slack about how Hippocractic AI is positioning itself by claiming that health systems can “hire” these agents for only $9/hr versus real humans that might cost $90/hr. The whole concept of an hourly rate for AI agents seems like an effective marketing gimmick and probably a good business model for Hippocratic AI, but counter to the whole notion that technological advances will decrease marginal costs at scale. Link
Ultrahuman, an AI-powered smart wearable ecosystem, raised $35 million in Series B funding. Current products include a smart ring, continuous glucose monitor, and preventive blood testing device. Link
PocketHealth, an AI medical imaging startup, raised $33 million in Series B funding to enhance the patient journey with AI, grow its geographic footprint, and improve medical image sharing. Link
CareVoice, a member experience platform for insurers, raised $10 million in Series B funding. CareVoice has been focused on Asia as its first market and is using the funding to expand internationally. Link
Writers Guild
Thought-provoking content from the broader healthcare community
The Rise and Risks of Medicare Advantage “Affinity Plans” by Adam Beckman, Andrew Ryan, and Jose Figueroa
An interesting viewpoint in JAMA looking at the pros and cons of how Medicare Advantage plans are increasingly segmenting the market with more tailored offerings for specific populations.
Breaking Down Medicare Stars Ratings by Josh Heurung
If you’re looking for an overview of Medicare Star ratings and why they matter so much, this is a great piece explaining the ins and outs of the process.
Understanding the Structure of the Physician Market by Michael Stratton
A helpful analysis looking at the sizes of practices that physicians practice in, with some interesting takeaways for go-to-market strategies for folks selling to practices.
Riding the Ozempic wave, w/RO’s CEO Zach Reitano on Masters of Scale
This is a fascinating podcast discussing how Ro reinvented itself as a weight loss platform over the past two years. It’s an interesting listen about how Ro was “refounded” as a business in 2022 after laying off 20% of the business, shutting down a number of product lines, and switching from a house of brands to a single brand. Ro’s obesity product is seen as the future of the business. It’ll be interesting to watch if Ro can sustain success here when it seemingly has struggled to do so with its previous consumer product offerings.
Featured Jobs
Chief of Staff at Conduce Health, a VBC specialty care marketplace. Link
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