What we're thinking about

January, 2016

The Center for Medicare and Medicaid Innovation (CMMI) was formed as part of the Affordable Car Act and has been on the forefront of implementing and experimenting with new models of care delivery and payment. Considering the history of healthcare within a regulated environment a look at the sheer pace of innovative experiments that have been rolled out since the inception of CMMI is nothing short of remarkable. One such experiment was kicked off last summer, in line with other Center for Medicare and Medicaid Services (CMS) efforts within specialty healthcare, under the Oncology Care Model (OCM).

The other initiative with focus on specialty care for end-stage-renal-disease (ESRD) started last year under the ESRD Seamless Care Organization (ESCO) experiment. A close comparison of these two specialty care models brings to light how distinct they are. The ESCOs have a similar requirement as the Accountable Care Organization (ACO), where the nephrologist quarterbacks patient care as opposed to the primary care physician (PCP), along with a gain sharing incentive. In contrast, the OCM looks at a 6-month bundle around chemotherapy treatment along with addition cost-sharing incentives more closely resembling the Bundle Payments for Care Improvement (BPCI) experiments that CMMI has been running. The OCM lacks specification on how success would be measured and that has also caused some of the pioneers of alternate oncology care delivery models to back away from participation.

However, there is ambivalence around what effect the OCM will have on quality and cost breakdown of oncology care, and what kind of organization should be adopting this. If we look at the total cost of oncology care and divide that into medical oncology costs and in-patient costs the OCM is clearly setting its sights on lowering high(er) cost in-patient care and re-admissions, and work towards moving that to out-patient or community oncology care. This is absolutely the right place to focus on given the marginalization of oncology care in the outpatient setting over the last fifteen years.

Let's be clear that this would not address the growing cost of medical oncology that includes use and cost of drugs. This has been a hot button topic lately with the growing concern around branded medications, especially for high cost drugs, as well as heightened interest in oncology by big-pharma. Like a lot of other models proposed by CMS and CMMI, this would require evolution and a look beyond the low hanging fruit.

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MeHi Digital Health Cluster Event

Just over two weeks ago, I had the opportunity to speak at a dignitary-filled event organized by MeHI and the Mass Tech Collaborative which heralded the launch of a new Digital Health Cluster initiative in Massachusetts. The initiative is a public-private partnership intended to spur the development and growth of digital health companies in Massachusetts in much same way the $1B Massachusetts Life Sciences Strategy has contributed to the growth of the local life sciences sector.

No funding commitments have yet been announced in relation to the Digital Health Cluster project, but I do feel that the announcement is a step in the right direction. It’s good to see commitment from the state and industry to assert Massachusetts as the leader driving digital health innovation, especially in the face of competition from the Bay Area and New York City. What remains to be seen are the specifics of how the initiative will actually help startups.

A few reporters asked me for my thoughts immediately following the event (see coverage from WBUR and The Boston Globe), but as I’ve reflected on the announcement and have spoken to other healthcare startup founders, I’ve come up with a few thoughts what is needed to help fledgling companies succeed

1. Help startups do customer development

For those of us following the ‘Lean Startup’ methods, we intend on ‘leaving the building’ to do customer development by speaking with users and potential customers. For healthcare startups, what often happens is that we leave our own buildings but find ourselves locked out of the buildings housing our users! And if we do get in, we still don’t get in often enough to obtain the variety of viewpoints needed to validate (or invalidate) our ideas. The Digital Health Cluster initiative could have a strong impact if it can facilitate access to partner healthcare organizations (hospitals, health plans, health IT vendors) and the people to work in them.

2. Inform healthcare organizations about innovative solutions

Lack of uptake of new technology is not necessarily because healthcare organizations do not want to innovate. Often, they simply do not have the access to information about new solutions - this is a problem of market inefficiency. Faced with a problem to address, healthcare organizations may attempt to build the solution in-house instead. Wouldn’t it be better if the healthcare organization collaborated with a startup that is already working on solving that problem by offering its clinical expertise? By promoting new solutions to healthcare organizations, the Digital Health Cluster can drive further efficiency in the local digital health economy.

3. Support early collaboration

Some of the biggest hurdles for healthcare technology startups are being able to demonstrate their value propositions and operationalize their solutions in a live healthcare setting. For many, this means gaining entry to a hospital system, healthcare insurer, or a larger healthcare IT company - all organizations that can be difficult for early stage companies to access. The Digital Health Cluster initiative could be game-changing if it can help guide, fund and support pilots of new technology to provide infrastructure that encourages early-adopter organizations to experiment with startup solutions.


If the initiative can truly improve the success of local digital health startups, then it will also help spur the growth of more established healthcare technology players through M&A activity. And, with a deeper pool of healthcare innovation talent in the region, Massachusetts will be able to attract more health tech companies to establish operations here. There is a lot of potential but little time to waste if we want to pull ahead of the Bay Area and New York City. Let’s hurry it up!

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About a year ago this time, my colleagues and I at Klio were fielding a lot of inbound interest for the then newly approved chronic care management (CCM) services code. In conversations with primary care physicians, specialists and healthcare administrators alike, there was much excitement around this newly approved code, which went into effect January 1, 2015 and represented an additional source of revenue for providers. I noticed this excitement firsthand as a presenter at the Health Datapalooza in Washington, DC in June 2015 where there were at least three newly launched startups that were taking a bite of this low-hanging fruit.

Under the approved code, clinicians could derive payment of $42.60 per patient per month for remote chronic care management provided to patients. What constituted remote chronic care management was left vaguely defined (part of the problem) and up to the discretion of the physicians. The requirements set forth by Centers for Medicare and Medicaid Services (CMS) were that patients with at last two or more chronic conditions would receive a minimum of 20 minutes of non-face-to-face care per month. It sounded hard to pass up and frankly too good to be true. A year later, very few have been able to take advantage of the new billing code and it has so far turned out that the juice was not worth the squeeze.

Physicians who fell for Chronic Care Management carrot realized that billing for it would require changes to their electronic health record (EHR) and practice management system (PMS) to be able to record the 20 minutes of activity. Use of the CCM code also meant that the same patient could not be billed under some of the other evaluation and management (E&M) codes by any of the other clinicians that they were seeing for the month in which the CCM code was used. Beyond that, clinicians had to get consent from their patients to be able to use this as it represented a 20% uptick in co-payment for the patient who was often confused as to why they were paying for something that they assumed their clinicians were already doing.

Why did CMS lay out such a carrot? Wouldn’t this perpetuate the fee-for-service mindset that they were desperately trying to wean the constituents away from? For a majority of physicians these chronic care management activities were things that they were already doing, so getting recognized and paid for it only seemed fair. But from CMS’s world-view, this was behavior that they wanted to further develop and hence it made sense to provide a carrot for.

However, CMS’s failure was in communicating the clear intent beyond introducing the code and future direction. CMS needed to be upfront in admitting that payment under the code would not result in a positive cash flow; rather, it was meant as a means to raise the standard of chronic care management by recognizing activities that many clinicians were already doing and incentivizing others to catch-up. Lastly, CMS needed to frame the services to make it more palatable to the patient by including clearer language around measurable activities so that patients could compare and see what new value they were getting from their additional co-pay dollars. It remains to be seen whether CMS will make the needed modifications to drive adoption of the new billing code or whether code 99497 will fall by the wayside like so many others before it. Let’s check back in another year.

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