Reimbursement for New Care Models

Reimbursement for New Care Models

We often hear of healthcare initiatives seeking to provide the right care at the right place at the right time. There are many passionate healthcare leaders in both the public and private sectors investing in new care models, technology, consumer engagement, and coordinating care to help achieve these objectives. Public and private reimbursement models lag these healthcare models for a few reasons including:

  1. The challenges of calculating returns on investment
  2. Multiple innovations touching members in different ways
  3. Point solution fatigue
  4. Complexities around incorporating innovation into value-based models and taking risk
  5. Misaligned incentives between those taking risk and those still fee for service

There have been recent positive additions to care reimbursement which increases access to these care models. Examples include CMS mandating that all Medicare Advantage and Medicare Supplement plans offer a DPP program (certified Diabetes Prevention Program) in their benefits. According to the AMA, the largest study to date shows DPP models reduce the chances of developing type 2 diabetes by 58% over three years. Reimbursement is only for a face to face DPP program and not provided for mobile solutions. According to the AMA, many of the 84 million people with pre-diabetes are unable to attend in-person sessions.  Mobile solutions could benefit these people through greater access to the DPP solutions.  Commercial carriers are now considering payment for DPP programs for their populations.

Commercial carriers are now considering payment for DPP programs for their populations.

Other examples include reimbursement for non-skilled home care benefit in Medicare Advantage plans effective 2019 opening up the potential for even more in-home care reimbursements. CMS has also included three new CPT codes for reimbursement of Remote Patient Monitoring (RPM) and telehealth services for Medicare Advantage beneficiaries in 2019. These include remote monitoring for vitals measurements such as weight, blood pressure, pulse, oximetry, and respiratory flow rate along with set up costs and patient education on use of the equipment. Given clinical shortages and appropriate triage of clinical skill sets, CMS will also allow remote patient monitoring services to be performed by other clinical staff such as RNs and medical assistants.

According to a study from University of Pennsylvania and published in JAMA Internal Medicine, Medicare patients discharge from a hospital to home health had a 5.6% higher 30 day readmission rate versus those that were discharged to a skilled nursing facility. However, home health actually saved Medicare $4514 per beneficiary in those first 60 days after discharge based on lower home health service costs than the SNF.  CMS also recognizes the significant lack of access for substance abuse disorder treatment and opioid recovery. Reimbursement has opened up for treatment eliminating geographic restrictions for telehealth services of a substance use disorder or a mental health disorder for services performed after July 1, 2019. Medication Assisted Therapy (MAT) is considered the gold standard in treating those addicted to opioids through a combination of prescribed medications (Methadone, Buprenorphine, Naloxone, Suboxone) along with the need for behavioral health therapies. MAT is often reimbursed in Medicare and Medicaid with private commercial plans lagging behind. This keeps the lines very long for those waiting for this gold standard treatment.

CMS also recognizes the significant lack of access for substance abuse disorder treatment and opioid recovery.

CMS has built The Innovation Center which is developing new payment and service delivery models. The Innovation Center plays a critical role in the implementation of quality payment programs which includes formulas to pay providers who earn incentive payments by participating in advanced Alternative Payment Models (APM). Clinicians accept more risk in these programs and are under pressure by both the public and private sector to participate in more downside risk. There are 7 categories of Innovation Models that run pilots to help incorporate innovation into appropriate reimbursement models.

The 7 models include:

  1. Accountable care organizations
  2. Episode-based payment initiatives
  3. Primary care transformation
  4. Initiatives focused on the Medicaid and CHIP population
  5. Initiatives focused on Medicare/Medicaid enrollees (dual eligibles)
  6. Initiatives to accelerate the development and testing of new payment and service delivery models
  7. Initiatives to speed the adoption of best practices

An example of an innovative payment model through The Innovation Center is Emergency Triage, Treat, and Transport (ET3) payment model addressing Medicare beneficiaries’ healthcare needs following a 911 call. The model for emergency ambulance services will allow Medicare fee-for-service beneficiaries a triage of options when an emergency transport is required. Currently payment is made for transportation only when the person is delivered to an emergency room where a less acute episode might have better options upon the arrival of the ambulance. The ET3 model allows ambulance suppliers and providers to partner with healthcare practitioners to deliver, either on the scene or through telehealth, alternative destination site decisions such as to a primary care doctors office or urgent care clinic.

The ET3 model allows ambulance suppliers and providers to partner with healthcare practitioners to deliver, either on the scene or through telehealth, alternative destination site decisions…

Other reimbursement models continue to evolve especially as health plans and providers take capitated risk and are accountable for the overall health outcomes and cost of each member/patient. Reimbursement continues to evolve for community services to address social determinants including reimbursement for transportation barriers, food and nutrition, housing, education, employment services, and deeper integration of behavioral and clinical care coordination models.

New payment models will continue to be a challenge as technology and innovation accelerate well into the future. Examples of major challenges include things such as regenerative medicines that can provide transformative and long-lasting effects and possible cures with a single treatment.  According to MIT’s New Drug Development Paradigms (NEWDIGS) as of mid-year, 2018 there were more than 950 regenerative medicine therapies that were in clinical trials with more than 90 in phase 3. Approximately 39 gene therapies’ will be approved by the end of 2022 and include every major organ system. These regenerative medicine’s get at underlying root cause of disease which can have a material impact for a long period of time after one treatment or administration. These therapies will save lives, with significant savings to the healthcare system in the long run. Many of these therapies will have very significant upfront costs. Enzyme replacement therapies can cost between $300,000 and $500,000 per year with many millions of dollars over a lifetime. These are spread out over the lifetime of the patient with cost that can be paid over this lifetime by different public and/or private payers. Reimbursement models need to be worked out in terms of these significant one-time treatment costs.

Approximately 39 gene therapies’ will be approved by the end of 2022 and include every major organ system.

It’s an exciting time in healthcare as innovation continues to drive better health, lower-cost, and more importantly, improved lives. New reimbursement challenges will continue to evolve over the next coming years and require collaboration between innovators, health plans, providers, regulators, pharmaceutical companies, and community services.

About the Author
Jimmy Lee

Jimmy Lee

Strategic Advisor