Weekly Health Tech Reads | 10/23

DOJ suing Cigna for upcoding, Elevance reported earnings, & more!

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Clarifications:

  • Babylon shared some additional details about last weeks announcement regarding the sale of the Meritage IPA and how Babylon drove Meritage revenue from $111 million in 2021 to over $400 million in 2022. Per an email from Babylon, Meritage added 19,000 DCE lives in 2022, on top of 20,000 lives from Meritage and 50,000 lives from First Choice Medical Group. The primary driver of revenue growth was PMPMs associated with the DCE. The expansion of Meritage's Restricted Knox Keene license was the second largest driver, as Babylon extended the Knox Keene license by six counties, allowing it to move MA members to global risk.
  • Unite Us asked us to share an updated link to the Forbes article from last week discussing how they won a Medicaid contract in North Carolina, as the article was updated with quotes from UniteUs adding their perspective on the impact of the program and events that led UNC Health to pick Unite Us.
    Link (updated Forbes article)

News of the Week:

  • The DOJ sued Cigna alleging it violated the False Claims Act by using a home visit program to upcode patients and collect additional payments from Medicare Advantage. Per usual, legal proceedings are a great way to learn about how these programs actually operate, and also per usual these programs are a few years in the past so Cigna likely has already adjusted this operation. But either way, it provides a lot of insight into the rationale for home visits for payors. The DOJs accusation walks through in good detail how Cigna leveraged home visits to increase revenue without any real intent of providing clinical care. And the program certainly seems to have worked, according to Cigna internal documents, in 2014 Cigna spent $18.8 million on home visits, generating profit of $61.8 million for Cigna from additional Medicare payments. Cigna paid one home visit vendor $2.13 million to conduct 6,658 home visits in the first nine months of 2014, for which Cigna received over $14 million in additional Medicare payments. That equates to Cigna paying the vendor $320 and making $2,102 in additional revenue per visit.
    Link / Slack (h/t James Lu)
  • Elevance, the insurer formerly known as Anthem, reported a solid quarter of earnings this week. The earnings call was relatively uneventful, but it did include some interesting commentary about Elevance's digital platform, Sydney, and specifically its virtual primary care platform. Elevance highlighted it is seeing strong member satisfaction, and that 62% of the top diagnoses have been for treating chronic conditions, which seems counter to the narrative that telehealth is generally used in an urgent care-like manner. Interestingly, however, when pressed by an analyst whether Elevance's virtual primary care products had a lower premium than other plans, Elevance was very non-committal in response. Instead, Elevance talked about segmentation and strategy and the like. It will be worth keeping an eye on whether actuaries have already moved on from pricing virtual-first plans at a discount, which seems like it would say much more about the utilization of such services than the data point above.
    Link
  • Allina Health and Flare Capital announced they're partnering to launch a new hospital-at-home business, Inbound Health. Inbound will receive $20 million in funding, and Allina will be contributing IP from its hospital at home program that has enrolled over 4,000 patients since it launched in 2020. It's an interesting case study in how incumbents can innovate in healthcare, and actually move pretty quickly when the right financial incentives are in place.
    Link / Slack

Other News:

  • CVS has apparently backed out of exclusive negotiations to acquire Cano Health, causing a massive 42% drop in Cano's stock price. Cano's cap is still just north of $2 billion, so it would be a large acquisition for any player, and there probably aren't many viable candidates beyond CVS at the moment.
    Link / Slack (h/t Frederik Mueller)
  • Crossover Health is planning to expand beyond its employer base and will begin working with payors. Seems like a logical extension for Crossover to leverage its physical footprint to drive more density in an area.
    Link
  • There's a report out this week suggesting that Apple will partner with a major insurer by 2024 as its first step into the insurance market. I don't get this at all. As discussed in Slack, it seems like a stretch to connect collecting personal health data via the Apple watch to successfully running an insurance plan. But hey, who doesn't have an ambition to "fix" healthcare these days (or perhaps better said, at least tap into the large profit pools that exist in healthcare).
    Link / Slack (h/t Ben Hughes)
  • Calm is moving into B2B healthcare as it launched Calm Health this week, selling to payors, providers, and employers. This move makes a ton of sense for a brand that has demonstrated it can build consumer relationships to go deeper in healthcare. Will be interesting to watch how they execute on this transition.
    Link / Slack (h/t Kevin Wang)
  • Genneve, a digital menopause care delivery company, was acquired by Unified Women's Healthcare.
    Link / Slack (h/t Danika Fry)
  • Hey Jane raised $6.1 million for virtual abortion services, which will help it expand to all 50 states. The article highlights how it was a challenging process, with many VCs turning down the deal because they were worried about how their LPs would view the politics. A reminder that LPs are really the ones who drive VC behavior behind the scenes.
    Link / Slack (h/t Suzy Goldenkranz)
  • Mindful Care, an urgent care clinic model for mental health needs, raised $7 million.
    Link
  • Limber Health raised $11 million to build a MSK platform helping physical therapy practices move to virtual care.
    Link / Slack (h/t Kevin Wang)
  • Noala, a speech therapy platform for kids, raised $4 million to expand into the US.
    Link / Slack (h/t Rik Renard)
  • Upheal, a platform for mental health practictioners, raised $1.05 million
    Link / Slack (h/t Juraj Chrappa)

Opinions:

  • The Gist newsletter this week featured a good, sobering perspective on the industry's slow (non-existent?) transition to value-based care, highlighting how the Medicare Shared Savings Program has only saved $3.6 billion on $5.6 trillion of total spending, a savings rate of only 0.06%. The capitated and risk-based percentages in the top right of the chart below highlight just how far away we are - health systems have barely moved toward risk since 2013. Yikes.
    Link / Slack (h/t Frederik Mueller)
  • The NHS is apparently losing staff to employers like Amazon, as people are choosing to work in Amazon warehouses over the NHS because Amazon because it pays more. This is going to be a challenging dynamic to address moving forward in the US as well - you can't exactly blame folks for wanting to work somewhere where they're paid more in a generally less stressful environment.
    Link (paywalled) / Slack (h/t Nikita Singareddy)
  • The Atlantic looks at the potential for AI to help identify and treat sepsis, focusing on some recent promising research out of Johns Hopkins developing an early warning system for sepsis. The article provides good insight into how physicians can adopt AI tools into their workflow to improve patient care.
    Link
  • This was a good read on how Boulder Care, a virtual care platform for substance use disorder, got its first payor contract. It highlights how much of the work was relationship development, and how thoughtful Boulder Care was in terms of setting up its key champion inside of the payor client for success. There's a lot of good food for thought for other early stage startups attempting to sell to payors here.
    Link
  • Zach Miller highlighted various stakeholders in the ESRD market and how various parties are paid. Check out this chart on dialysis payments by payor type.
    Link / Slack (h/t Zach Miller)

Data:

  • Bain and KLAS Research released a report on the technology priorities for provider organizations, noting among other things how there seems to be a general sentiment that provider orgs are overwhelmed by all the vendors and are increasingly looking to their EMR to provide a streamlined offering. Feels like this is a common occurrence among buyers of healthcare tech startup products at the moment, and indicative of the continued consolidation trend we're likely to see. This statement feels like an evergreen one: "In the current environment, it is critical that vendors understand the investment posture of their customers, properly segment them based on their needs and behaviors, and refine go-to-market (GTM) models by articulating their differentiated value proposition in a crowded field." The report is worth checking out as it includes a bunch of interesting data, like the chart below, which provides a good reminder of why rev cycle companies make great investment opportunities.
    Link / Slack (h/t Sam Stearns)
  • This is a good look from the Clarify Health Institute on the state of Z-Codes, which are used to capture Social Determinants of Health data, finding that Z-Codes are quite underreported in Commercial and Medicaid claims. Check out the chart below which highlights how low the reporting of Z-Codes are.
    Link
  • Trilliant featured an analysis of care utilization patterns, providing a good look at supply and demand trends as it relates to care delivery.
    Link / Slack
  • This is a good read from Center for Connected Health Policy looking at telehealth reimbursement and regulatory policies across different states.
    Link / Slack (h/t Jonathan Solomon)

Featured Jobs:

  • BrightInsight, a digital health consultancy, is hiring an Innovation Venture Architect. Link.
  • California Health Care Foundation, a non-profit philanthropy focused on improving healthcare for low income Californians, is hiring a Senior Program Investment Officer for its CHCF Innovation Fund. Link.
  • Carbon Health, a hybrid primary and urgent care startup, is hiring a Clinical Research Coordinator. Link.
  • Hims & Hers, a multi-specialty telehealth platform, is hiring a Head of Talent Management and Employment Experience. Link.

You can post to, or view roles on, the HTN Jobs Board here.

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