What we're thinking about


At a recent event organized by Harvard Medical School (HMS) affiliated Incite Health to show-case their class of healthcare fellows and their ventures I heard their keynote speaker talk about one the major problems faced by our industry and the innovators trying to disrupt it. His advice came with a lot of gravitas having been part of the healthcare ecosystem at HMS and Merck and various other organizations working on introducing tech-fueled innovation. In his words the plight of the industry and innovators had been with its fateful love affair with pilots, an affliction sometimes referred to as pilotitis.

The word pilotitis cannot be credited to the digital health world. In fact, the mobile health (mhealth) space, which refers to the use of mobile technology in bringing clinical interventions to resource-constrained environments, had already experienced this menace. In low and middle-income countries, where most of the mhealth work has been focused on, novel mobile-enabled health services were often launched but were never rolled out as sustained services supported by policy. The innovators and companies that aimed to bring new products and services to the market usually spend time on the ground to understand the needs for a particular problem. The resulting pilots end up iterating to arrive upon a solution that is right for the given context. However, when it comes to scaling beyond the pilot, the target market for these mhealth solutions are typically public organizations with multiple layers and often at two levels of government which made the decision making process complex and lengthy. Other problems such as spending restrictions, risk-averse culture and outdated procurement processes thwarted innovative solutions from being made available to health practitioners in these constrained environments.

Given the lessons learned from mhealth, it is surprising that the digital health world, which aims to bring complex set of services to patients across various care settings, has fallen for the same ill-fated trap. In some ways the pilot culture is influenced by the public sector. Center for Medicare and Medicaid Innovation (CMMI), which was established under Obamacare, has been force behind launching new delivery and payment system pilots from the government's side. However, these pilots are significant in size and typically last for multiple years. In addition, these pilots are typically only open to organizations or a group that has some direct responsibility for healthcare delivery. These pilots (sometimes referred to as demonstration projects) go through multiple stages of review before opening up an RFP.

In contrast the delivery organizations, which come in various flavors, are the target market for innovators and startups, and hold the keys to the castle. The metric for success for a lot of early-stage companies is the number of pilots that they have been able to launch with these organizations. So much so that the digital health startup ecosystem plays to these metrics as well in attracting participation from provider organizations that want to be perceived as "cutting-edge" and "innovative". That sounds like a great recipe. Almost. It’s not how the delivery organizations solicit pilots, its what that entails for the early-stage digital health companies that wish to participate in it. These pilots are often ill-conceived, run into opposing interests at different levels of the delivery organization, have a very long gestation process which often times comes across as a black box, and is often doomed to failure and hence never scale. It would be one thing if this was a US-centric problem, but there is evidence that this disease is not specific to the US.

While their intentions to bring about innovative digital health solutions are not misplaced, their execution is found wanting. Even if they were to take a page out of the CMMI playbook, it would help to clearly define an RFP process. This RFP process would be derived from organizational or business objectives, against which they can define clear criteria for selecting which pilots get to run. Launching an initiative that doesn’t entirely map to existing clinical practices requires a certain amount of foresight and reserved bandwidth from these organizations.

What is needed is a gate-based approach, which is common to product development organizations that empower inclusion of new or evolutionary ideas, needs to be adopted and made transparent to the early stage companies. A clearly defined and documented process of introducing these innovations needs to be developed and made public as part of the organization’s RFPs. This should involve affording responsibility and structure needed at each level of the organization, from IT to nursing. The spray-and-pray, many-irons-in-the-fire, helter skelter approach part of pilotitis has been detrimental to a lot of young companies and the body bags are only going to pile high if a clear construct to introduce and scale pilots is not provided.

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The need for matching pre-dates the world of OkCupid and Tinder. But according to Nobel prize winning economist Alan Roth there are lots of endeavors where what we seek isn't available as a commodity and there are certain criteria that determine an optimal match. He has been behind using matching across disparate set of problems from kidney exchange to school choice within most of the large metro areas in the United States. At a larger scale we can see a matching market at work in Federal Trade Commission (FTC) auctions for radio spectrum. Bids represent complex bundles across multiple players, and the matches are determined based on selection of bundles that provide the highest utility. Is there a way we can apply some of these principles to healthcare payment and delivery?

Under the Affordable Care Act (ACA) Center for Medicare and Medicaid Service (CMS) launched an array of experiments under Bundled Payments for Care Improvement (BPCI), which selected 48 different clinical episodes that provider organizations could choose from. The sub-parts of the BPCI experiment allowed the participants to engage in increasing levels of sophistication across two axes a) time horizon - retrospective vs. prospective and b) bundling across care settings (acute, post-acute). With the newly announced Comprehensive Care for Joint Replacement (CCJR) experiment, CMS has focused its attention on an area that has shown a lot of variations in cost and outcomes. Other experiments such as the Oncology Care Model (OCM) utilize the bundle payment model for non-surgical care around chemotherapy episodes.

With questions around the ROI for various ACO experiments, a lot of the organizations have pulled out of their contracts and are unsure about further participation. The skittishness around this is due to the fact that the savings have been negligible to non-existent. Secondly, most of the ACO contracts both for CMS and commercials had no real risk and hence no strong incentive to push participating provider organizations to assess whether they were really prepared to take on risk. Fact is, most provider organizations have proven to be ill-equipped to bear risk on behalf of the patients. Lack of top-down leadership, organizational nous, data mobility, capability to engage the patient, changing and challenging health IT regulations are just a few of the several reasons for these failures.

The bundle payment experiments have shown more promise with a narrower focus on care episodes. However, this is in no way a slam-dunk. While provider organizations have an easier task at bookending care delivery, organizations still have to keep track of overall medical resource utilization that might affect the episode outcomes. The questions on when to move the patient across care delivery boundaries and how to disburse payment will continue to plague the organizations that come together to provide these bundles. Overall, both the ACO and bundle payment experiments represent the need for skills that delivery organizations do not naturally possess as part of their DNA. The regulatory framework should not only govern reporting requirements but also provide guidelines used to vet partners who will result in achieving the desired result.

Let's take market design perspective and assume that these experiments by CMS represent an attempt at arriving upon a blueprint for matching disparate organizations that have not worked with each other, to provide care under the pay-for-performance paradigm. There are multiple types of matches possible based upon the intended outcome but the construct provided by CMS and other commercials is still evolving. As per Alan Roth this would be a dysfunctional matching market where the rules of this marketplace is still evolving and make it unsafe to participate, and by that consequence the market is not thick. From the payers perspective this requires putting a clearer guidelines that allow for providers to find each other to maximize their chance of extracting the best outcome for their patients as well as their organizations.

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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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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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Detour Sign

A few months ago, I wrote about the frustration of the HealthcareIT community with the lack of interoperability in the industry thwarting the promise of seamless care for patients. As if on cue, the Office of National Coordinator (ONC) came out with a draft interoperability plan on Jan 15th. Yet again, the ONC’s tactic was to emphasize better standards being key to achieving interoperability. However, I was glad to see that they did go beyond that, highlighting the need for governance as a key ingredient in achieving interoperability.

As part of this mandate, ONC chief Dr. Karen DeSalvo’s opening letter calls for continued work on standards, along with motivating these standards through appropriate incentives. Desalvo’s inclusion of motivating through incentives is an admittance that even if we had best-in-class infrastructure and standards to support interoperability, there are still extrinsic forces and motivators holding us from achieving true interoperability. This is an important point to highlight. It explains why the promise of interoperability is yet to be delivered, despite spending billions of tax dollars.

While this is progress, DeSalvo's prescription still falls short in my opinion. I am not convinced of the ONC’s hands-off approach. Simply calling for a public-private partnership and relying on “non-governmental governance” (also known as market-based approaches in the policy circles) would not be enough. The incentives that woke this industry up from its slumber came from Meaningful Use and while it has not given us exactly what we wanted (yet), MU does show that the government has taken an active role. It is essential to realize the natural progression here before trying to reach for bigger goals such as risk management and population health management. Only after incentives and payment models pave the path will utilization and committed adoption of healthcare IT solutions follow.

The 21st Century Cures initiative, a sweeping bipartisan effort to address an accelerating world that requires faster adoption of technological advances, could prove to be a harbinger. It assumes the existence of the flow of data, quality reporting, and value-based payments as a pre-condition. While that is certainly admirable as the “long game”, a firm foundation needs to be laid by the government first.

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