Humans in Healthcare #33 | Value-based care is here to stay

Hi friend, Amy here, your authentically honest full-stop human, community builder, and creator of Humans in Healthcare, sharing the stories and experiences of healthcare professionals, patients, and caregivers. Today’s chapter is sponsored by Timeless Autonomy and Dana Strauss, DPT, PT as part of my clinician creator database where I highlight clinicians building newsletters, podcasts, products, services, and beyond. Are you a clinician creator and want to list your services or sponsor this newsletter for more eyes on your product or services? Complete your creator database application below.

Dana Strauss is the author of the Timeless Autonomy, a newsletter focused on value-based care (subscribe through the link!). She is a PT turned expert in health care payment and alternative payment models, acute and post-acute care, home-based care, and care transitions. She works as a health policy analyst for a Fortune 10 company, where she is responsible for VBC and Medicare public policy.

And today, she’s unpacking what any founder building a health tech company centered around value-based care in 2024 should know. This will be a two-part series with an invitation for more learning opportunities in part two.

📖 Value-based care 1.0 is behind us; value-based care 2.0 has arrived.

What Health tech startups need to know about VBC 2.0 to create and sell their solutions.

Value-based care is not about limiting necessary utilization

There are many misunderstandings about VBC. This is a big one ☝️ 

Health tech startups should understand it.

• Necessary utilization improves outcomes and reduces high-cost, interventional, higher-risk care

• Necessary utilization engages patients in their care, detects diseases and chronic conditions early, assists in differential diagnoses, assists in coordination of care, provides the right intervention at the right time in the least restrictive site

• Necessary utilization is evidence-based or evidence-informed and specific to each individual

• Necessary utilization is the treatment or care that’s most appropriate based on evidence and patient-specific needs, not what leads to the highest billing

• Necessary utilization uses data-driven insights when available, not provider “experience” alone

Value-based care is about avoiding and preventing unnecessary care, care driven by “wants,” instead of “needs,” and making referrals and creating orders that will not improve patient outcomes

Unnecessary care includes many things. Here are a few examples:

• Based on patient or provider “wants” after an acute stay: As an example, a patient has a short hospital stay for a UTI. She is a bit weak and will need some support for a few days as she gets back to moving. Her daughter is home with her. The discharge planner says she could go “for rehab to a skilled nursing facility.” However, she can be managed well in home health. But that referral takes longer for the d/c planner, and the daughter said she could “use a break.”

  • Cost of SNF for 3 weeks in FFS Medicare: around $15,000

  • The cost if she had gone home with home health: around $2,000

  • And we won’t even touch on the risks of adding another transition of care or another inpatient stay

• Referring for services because no solution fits in a fee-for-service payment paradigm: A classic example PTs can relate to:

  • Chronic low back pain patient who has had negative impacts on her mental health in multiple failures of treatment. Siloed care, unsuccessful procedures, obesity, sedentary lifestyle, etc. The physician has sent the patient for a PT evaluation 4 times in 6 months. Treatment approaches require behavior change, support for depression, coaching, and more. PT has exhausted options in terms of treatment modalities, but the referrals continue

• Patients dictating what they think they need, and providers complying. Example, again based on musculoskeletal care: Low-risk low back pain patient with no red flags, acute mechanical pain. No fall or trauma

  • Patient is afraid of “something serious” and requests an MRI and Percocet

  • Provider prescribes both

  • Neither are necessary in this simple patient scenario

Health Tech startups should understand the fee-for-service incentives of every site of care. Some examples:

• Inpatient acute care hospital: short lengths of stay, procedures/attracting and retaining surgeons

• Outpatient medical practices: visit volumes, procedures, simplifying and optimizing operations

• Inpatient Rehab Facilities: short lengths of stay, relationships with hospitals

• Skilled Nursing Facilities: long lengths of stay, relationships with hospitals and IRFs

• Home Health Agencies: beyond the LUPA, low number of visits per 30-day episode, relationships with all community referral sources: hospitals, SNFs, IRFs, physician practices, etc

Also, understand the lingo, how payers and their possible payment arrangements with providers are alike and different. Talk the talk:

Medicare FFS vs MA, Medicaid FFS vs. MCOs, MA SNPS, MSSP, EOCs, ACA plans, CMS vs HHS risk adjustment, EOM, KCC…

There’s nothing worse for a healthcare executive than being pitched on a product by a team that doesn’t understand at least as much as they do about these things. They expect you to be an expert!

Identify motivators for a provider or site of care to engage in VBC arrangements:

For primary care physician practices, it depends on what kind. Primary care levers are pretty well-established.

What about for specialists? Simple answer—depends.

Depends on things like:

• the local market

• the specialist type

• the payers more or less common to that specialty

• where they see patients

Stay abreast of healthcare delivery and payment policy and the political climate

What will cost the payer vs. what will save the payer?

Who will be advocating for and against something that you do or don’t want to see happen?

What upcoming changes are expected to programs in which your ideal client participants or may want to participate?

What political pressures and timing could impact the actual movement by Congress to change policy?

An example: Telehealth Policy and Implications. What do you need to know?

Maybe you provide telehealth solutions for a group physician practice focused on the Medicare population that hasn’t yet entered into risk-based arrangements.

Telehealth use has expanded in the Medicare population with the PHE waivers allowing beneficiaries to receive telehealth in their own homes. That was extended for two years in the Consolidated Appropriations Act of 2023. It wasn’t legislated into policy or paid for beyond 2024.

Why does this matter?

Telehealth has to be added to the Physician Fee Schedule payment regulations and funded in a budget-neutral way. Physician payments have been through several years of conversion factor cuts and a long-term solution is badly needed.

So how will telehealth be paid for? What’s going to happen? We don’t know.

But what we do know is that there are ACO models with a telehealth waiver available, and by joining the model, providers can continue to offer telehealth services regardless of fee-for-service regulations and policy and payment updates.

If I’m the telehealth solutions provider, I might think about:

• presenting an update on telehealth policy relevant to their setting and patient population

• sharing what the risks mean for them

• offering to help them enter a model that would ensure they continue to have access to telehealth for their patients

We’re going to leave it here for today. Come back for part two when Dana will share insights on how to successfully demonstrate what value your solution brings to patients, providers, and payers (a must to be a successful company in the VBC space) as well as offer resources for learning more about VBC in 2024! Thanks for reading and don’t forget to subscribe to Timeless Autonomy.

In humanity,

Amy

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