Featured3/10/15

The shifting center of care

Sarah Jacobson

Former Strategy Fellow

By Sarah Jacobson and Teresa Wang

The center of care is shifting. Digital health has an enormous opportunity to reduce hospital readmissions and keep costs down by extending care beyond the clinical setting and into a patient’s home. At-home patient management companies, like Wellframe and HealthLoop, allow healthcare professionals to keep a closer eye on patients by continuously monitoring and managing patient biometric data (e.g., EKG readouts and blood glucose level) in order to prevent emergencies. Last year, companies in this space raised $418M and grew 206% from 2013 to 2014. In this segment, we’ll tell you how health care legislation has, and continues to, shift the center of care into the home for digital health patient management solutions. (Note: While telemedicine also helps to extend care into the home, we have distinguished it from solutions that are used for patient management. Check out our post dedicated entirely to all things telemedicine.)

Policies driving the change
The Affordable Care Act, both through ACOs and incentivizing lower readmission rates, has driven most of the activity in at-home patient management tools. For example, the Readmissions Reduction Program places a penalty on hospitals that have excess readmission rates within 30 days as an indicator of poor quality care. To determine a hospital’s penalty, CMS looked at the readmission rates within 30 days for patients that were admitted with one of the following conditions: heart failure, heart attack, pneumonia, chronic lung problems, such as emphysema and bronchitis, and elective hip and knee replacements. Penalties range from 1 to 3 percent of all Medicare DRG-related revenue, and these penalties apply to all DRG payments, not just the five conditions measured. In 2014, over 2,600 hospitals racked up $428M in penalties. Under the 2015 guidelines, 75% of hospitals will face some amount of readmission penalties. But these penalties seem to be accomplishing their goal—hospital readmissions declined by 150,000 between January 2012 and December 2013. CMS estimates that the penalties could ultimately save the health system $8.2B over 7 years from the program’s beginning in 2012.

In the face of readmission penalties, ACOs feel the pressure to reduce unnecessary readmissions through better care coordination and leveraging technology that allows provider to catch patients before they fall through the cracks. To do so, over half of ACOs have deployed remote patient monitoring solutions to manage high-risk patients with chronic conditions, according to Spyglass Consulting. However, the same report found that 71% of ACOs are concerned with the integration of this new technology with existing clinical processes. Nonetheless, ACOs are champions of extending care into the home and coordinating care across different providers in order to lower costs and reduce readmissions.

Money talks
Providers are now turning to digital health for alternate, cost-effective solutions to manage patients at home as traditional home health care reimbursement continues to decrease. In 2014, CMS cut the home health budget, which includes home health care services, by 1.05% in 2014, and the 2015 budget was slashed by $60M, or 0.3%. These cuts fall under a part of the ACA that calls for lower payment rates, but many providers worry that these cuts will leave patients at home without sufficient care. Thus, health systems should investigate technology-based solutions as a way to better monitor patients and achieve better health outcomes in the most cost-effective manner possible.

With Medicare’s expanded fee schedule to include a $40.39 per month per qualifying patient for care coordination management, we’ve seen leading health systems, such as Stanford and Mayo Clinic, rolling out apps that integrate Epic with Apple’s HealthKit in order to push body metric data directly to the EHR. This incentivizes care providers to adopt technologies that allow them to continuously interact and monitor their patients. In particular, there are now three CPT codes that allow physicians to bill for HealthKit: 99490 (analysis of clinical data), 99090 (collection and interpretation of physiological data), and 99091 (remote chronic care management). There’s the potential to combine these codes for a monthly fee of $99.52, but it’s unclear how this will work in practice since we have not seen data on physicians billing for these combinations yet. However, these new reimbursement codes signal that the health system is very close to being able to routinely bill for patient-generated data collected via systems such as Apple HealthKit.

Similarly, there are incentives for individual doctors under the Medicare Physician Feedback/Value-Based Payment Modifier Program, which rewards or penalizes physicians based on quality and cost metrics. The program is specific to Medicare Fee-for-Service (FFS) and will affect practices with 100 or more providers starting in 2015. Based on established benchmarks, adjustments will be made to a physician’s fee schedule in the form of a value-based payment modifier (VBPM). There is a lot of incentive for participation—physicians can receive as much as 100% payment increase for high quality scores in low-cost services and be penalized up to 1% for a low-quality, high cost item or service. As a result, hospitals and physicians are searching for ways to keep patients happy and healthy at home.

A changing landscape
At-home patient management technology isn’t new, but today’s applications and reimbursement landscape are driving innovations and funding in the space. Remote patient monitoring devices alone, both external and implantable devices, are predicted to grow at a CAGR of 15% until 2018 according to a study by Research and Markets.  In 2012, two-thirds of patients being remotely monitored had been discharged from a hospital, and the remaining one-third were ambulatory patients who had not undergone hospitalization that year. At that time, the top use case for remote patient monitoring was Congestive Heart Failure (CHF), but by 2017 InMedica, a branch of IMS, predicts that diabetes will become the number one condition under remote patient monitoring. This is a much needed solution as diabetes is incredibly expensive to treat and manage, costing the health system $245B in the US alone. The cost of diabetes has doubled over the last 20 years due to more hospitalizations and prescription drugs, but better patient monitoring and preventative care might be able to slow down and reverse this concerning trend.

There’s a growing number of ways companies can provide care for patients. With digital health apps and devices, care providers and case managers can now easily monitor their chronic patients and intervene before an adverse event. Likewise, patients can take advantage of these touch points to become more involved in taking care of their own health.

Consumers answer that they like remote patient monitoring and want to see more of it.  A survey by Ruder Finn found that 33% of patients want access to remote monitoring technology, and 40% of seniors want a form of technology that alerts their physician in a health emergency. And, we know that consumers are not strangers to health-related apps on their phone. Twenty-eight percent of consumers had a health, wellness, or medical app on their phone in 2014, compared to only 16% in 2013 according to a survey by PwC. Physicians are carrying the momentum forward too as they become more comfortable with remote data. Nearly 42% of doctors report being comfortable prescribing medications based on at-home tests.

Still a bumpy road ahead

Doctors say they like the idea of using remote data, but there are still formidable barriers to adoption.

  • Mixed efficacy data: A meta-analysis of 25 studies on telemonitoring of CHF patients found that telemonitoring was statistically significant in reducing mortality; however, most of these studies did not not meet rigorous methodological quality standards and were conducted at a single site. In addition, not all monitoring devices are FDA cleared, and not all clinical studies can necessarily prove clinical efficacy or cost savings.
  • Information overload: Many physicians report being bogged down with data, and 87% of primary care physicians surveyed in the VA reported that they receive an “excessive” amount of alerts each day. Successful remote monitoring solutions will be able to parse the data to deliver meaningful and actionable insights to the care provider, eliminating the need for manual analysis and more alerts. Lastly, these solutions are not yet interoperable with most EHR systems. Siloed data streams create “information islands” that docs simply don’t have the time to navigate between.
  • Reimbursement: In addition to physician adoption barriers, there are still challenges with security and reimbursement. A HIPAA ruling in 2013 placed the burden of securing personal health information (PHI) on the physicians and healthcare organizations. Devices and at-home patient management companies need to create secure platforms that share patients’ data with the right people. Remote solutions also often lack reimbursement. Medicare currently does not reimburse any remote monitoring services, and states are slow to write reimbursement policies. Some states are ahead of the game, though. New York has pending legislation SB 1110 for a hospital-home care-physician collaboration program, which would support collaboration between hospital and home-based care providers to improve patient outcomes. Colorado’s Medical Assistance Program reimburses remote patient monitoring at a flat fee when certain criteria are met for patients with congestive heart failure, chronic obstructive pulmonary disease, asthma, or diabetes.

 

States are beginning to recognize the value of home-based care, and the ACA is creating incentives for providers to adopt these new technologies. Policies and medical solutions will seek to reduce costs by keeping patients out of the hospital. With such favorable tailwinds, there is a great opportunity for digital health companies to gain adoption by providers.There’s still more work to be done not only around reimbursement, adoption barriers, and security, but also in evidence-generation. Digital health companies need to be able to show clinical results that prove their solutions improve health outcomes. Illustrating that patient outcomes improve with more patient-provider monitoring away from the hospital will take time. In the interim, providers want to see that there is an immediate financial ROI, whether that comes from optimizing a healthcare professional’s time and resources or from higher patient satisfaction. Regardless of the incentive for hospital’s adopting these at-home patient management technologies, there’s no doubt that the home is the new center of care.

This is the third installment of a 4-part Healthcare Reform Series.

Part 1: How healthcare reform impacts digital health
Part 2: How laws and policies are shaping telemedicine
Part 3: The shifting center of care
Part 4: Healthcare reform puts consumers in charge

 

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