Virtual-first primary care company Firefly Health is becoming a health plan! Backed by a $40M Series B, CEO Fay Rotenberg and Executive Chairman Jonathan Bush stop by to explain how they’re providing “half-price healthcare that’s twice as good.” (Or, as only Jonathan can put it: “we’re a bloat-less Kaiser.”) All kidding aside, some big-name health innovation investors are not only behind this raise (Andreessen Horowitz led, F-Prime Capital and Oak HC/FT dipped back in), but also this idea to wrap a benefit around Firefly’s digitally-driven comprehensive care model. Already in-market, the new benefit-plus-care product is aimed squarely at mid-sized/small, fully-insured employers – shops with 50-500 employees which, right now, have limited options for dramatically changing their healthcare spend or being able to build out their own benefits the same way large self-insured employers can.
Fay and Jonathan get into the details about how they’re extending their “Marie Kondo-ing” of healthcare delivery – which has thus far netted some pretty impressive health outcomes, cost savings, and a 92 Net Promoter Score – into healthcare financing.
BONUS: Tune in around 25:30 and stick around for a few minutes as Jonathan weighs in on the health tech funding boom, how it compares to the EMR arms race days of ole, and whether or not he thinks he can beat Glen Tullman’s $14.5B valuation if/when Firefly goes public. HA!
Kelsey Mellard is CEO of Sitka, one of the emerging companies that’s providing specialty consults online to primary care docs. They’ve been building a specialty care network that can be accessed by asynchronous video, slightly different to some of their competition. Most of their customers are capitated medical groups, like ChenMed, trying to reduce their spend on specialty physician care (as Kelsey calls it the “unmanaged Part B spend bucket”). I asked her how it works, where the company is going (think virtual care integration), and whether it will be needed in the future. (You can guess her answer to the latter!)
Humana has 4m Medicare advantage members with ~2/3rds of those in value-based care arrangements. The report has lots of data about how Humana makes everything better for those Medicare Advantage members and how VBC shows slightly better outcomes at a lower cost. But that wasn’t really what caught my eye. What did was their chart about how they pay their physicians/medical group
What it says on the surface is that of their Medicare Advantage members, 67% are in VBC arrangements. But that covers a wide range of different payment schemes. The 67% VBC schemes include:
Global capitation for everything 19%
Global cap for everything but not drugs 5%
FFS + care coordination payment + some shared savings 7%
FFS + some share savings 36%
FFS + some bonus 19%
FFS only 14%
What Humana doesn’t say is how much risk the middle group is at. Those are the 7% of PCP groups being paid “FFS + care coordination payment + some shared savings” and the 36% getting “FFS + some share savings.” My guess is not much. So they could have been put in the non-VBC group. But the interesting thing is the results.
(This is the seventh in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)
Even in a healthcare system dedicated to value-based care, there would be a few major barriers to the kinds of waste reduction described in this book. First, there’s the ethical challenge: Physicians might be tempted to skimp on care when they have financial incentives to cut costs. Second, there’s a practical obstacle: Clinical guidelines are not infallible, and large parts of medicine have never been subjected to rigorous trials. Third, because of the many gaps in clinical knowledge, it can be difficult for physicians to distinguish between beneficial and non-beneficial care before they provide it.
Regarding the ethical dimension, insurance companies often are criticized when they deny coverage for what doctors and patients view as financial reasons. Physicians encounter this every day when they request prior authorization for a test, a drug, or a procedure that they believe could benefit their patient. But in groups that take financial risk, physicians themselves have incentives to limit the amount and types of care to what they think is necessary. In other words, they must balance their duty to the patient against their role as stewards of scarce healthcare resources.
On the other hand, fee-for-service payment motivates physicians to do more for patients, regardless of whether it’s necessary or not. In some cases, doctors may order tests or do procedures of questionable value to protect themselves against malpractice suits; but studies of defensive medicine have shown that it actually raises health costs by a fairly small percentage. More often, physicians overtreat patients because of individual practice patterns or because they practice in areas where that’s the standard of care. As long as doctors believe there’s a chance that the patient will benefit from low-value care, they can justify their decision to provide that care.
The Primary Cares Initiative provides new value-based payment models aiming to enhance the delivery of primary care to promote efficiency and quality while decreasing healthcare costs. In the second part of this two-part series, we explore how eConsults directly support this new initiative across several key metrics.
The Primary Cares Initiative aims to enhance the delivery of primary care through value-based payment models. In Part One of this two-part series, we broke down the five payment models offered through this initiative, including two performance-based models (Primary Care First) and three risk-sharing plans (Direct Contracting). Alongside previous programs such as Patient-Centered Medical Home (PCMH), the Comprehensive Primary Care (CPC+) program, and the Medicare Advantage Value-based Insurance Design (VBID), the Primary Cares Initiative represents the most recent push for enhancing primary care within health care systems.
as programs such as these continue to emphasize primary care providers as a
locus of optimal care, the question becomes: how can primary care providers (PCPs)
best work within initiatives such as these to enhance care delivery efficiency
and effectiveness, and what kinds of services and technologies can support this?
It’s great news to read headlines that the average health-insurance premium will drop by 4% next year in the 38 states using federal Obamacare exchanges. As millions of Americans entered open enrollment this year to choose their health insurance plans, it is important to remember that premiums are only one of the ways that we pay for our medical coverage.
many plans lower premiums (paid by everyone) often mean a higher deductible —
or paying more out-of-pocket before insurance coverage kicks in. This burden is
paid only by those who use medical care services.
Deductibles are rising, and so is the number of
Americans enrolled in so-called high-deductible health plans
(HDHPs). Thus, more people with health insurance are being asked to pay
full price for all their care, regardless of its clinical value. Although
it may be better for many people with significant medical needs (and less
disposable income) to avoid plans with high deductibles, more and more people
who receive health insurance through their employer no longer have a choice
except to choose a plan with hefty costs in addition to premiums.
Imagine if your bank handled all your online transactions for free but charged you only when you visited your local branch – and then kept pestering you to come in, pay money and chat with them every three months or at least once a year if you wanted to keep your accounts active.
Of course that’s not how banks operate. There are small ongoing charges (or margins off the interest they pay you) for keeping your money and for making it possible to do almost everything from your iPhone these days. Yes, there may be additional charges for things that can’t be done without the bank’s personalized assistance, but those things happen at your request, not by the bank’s insistence.
Compare that with primary care. The bulk of our income is “patient revenue”, what patients and their insurance companies pay us for services we provide “face to face”. We may also have grants if we are Federally Qualified Health Centers, mostly meant to cover sliding fee discounts and what we call “enabling services” – care coordination, loosely speaking.
Only a small fraction of our income comes from meeting quality or compliance “targets”, and those monies only come to us after we have reached those goals – they don’t help us create the needed infrastructure to get there.
Then look at how medical providers are scheduled and paid. We all have productivity targets, RVUs (Relative Value Units – number and complexity of visits combined) if our employer is paid that way and usually just straight visit counts in FQHCs (because all visits are reimbursed at the same rate there). Sometimes we have quality bonuses or incentives, which truthfully may be the combined result of both our own AND other staff members’ efforts.
Todd Park is known for being excited, but THIS TIME the co-Founder and Executive Chairman of Devoted Health is excited that it’s the 10th Anniversary of Health Datapalooza, a gathering and initiative he had a hand in creating when he served Barack Obama as the Chief Technology Officer of the United States. What else is energizing Todd? How about value-based payment finally taking hold and the opportunities that’s opening up for payment model innovation and that will allow the disruption of healthcare to achieve ‘escape velocity.’
Filmed at Health Datapalooza in Washington DC, March 2019.
Jessica DaMassa is the host of the WTF Health show & stars in Health in 2 Point 00 with Matthew Holt.
Get a glimpse of the future of healthcare by meeting the people who are going to change it. Find more WTF Health interviews here or check out www.wtf.health.
Back in 2015, 20 major health systems and payers pledged to
convert 75% of their business to value-based arrangements by 2020. Today, more than
two-thirds of payments from U.S. commercial health insurers are tied to some
kind of value-based model. By 2021, the health plans expect three-quarters of their
payments will be value-based.
However, a recent analysis of Change Healthcare data by Modern
Healthcare found that the percentage of value-based revenue tied up in
upside/downside risk contracts was in the single digits. Among the types of two-sided
risk contracts that provider organizations had were capitation or global
payment (7.3%), pay for performance (6.5%), prospective bundled payment (5%),
population-based payment (5.8%), and retrospective bundled payment (4.1%).
An AMGA survey picked up signs of a recession in risk contracting
in 2016. A year earlier, survey respondents—mostly large groups–had predicted
their organizations would get 9 percent of revenue from capitated products. In
2016, the actual figure was 5 percent, according to a Health Affairs
post by the AMGA’s Chet Speed and the late Donald Fisher.
cited a number of obstacles to the spread of risk contracting, including
“limited commercial value-based or risk-based products in their local markets; the
inability to access administrative claims data from all payers; the massive
administrative burden of submitting data in different formats to different
payers; lack of access to investment capital; and inadequate infrastructure.”
How will the drive to health care value affect health care’s structure? We tend to assume that the health care structure we’re become accustomed to is the one we’ll always have, but that’s probably far from the truth. If we pull levers that incentivize the right care at the right time, it’s likely that many of the problems we think we’re stuck with, like overtreatment and a lack of accountability, will disappear.
A large part of getting the right results is making sure that health care vendors have the right incentives. All forms of reimbursement carry incentives, so it’s important to align them, to choose payment structures that work for patients and purchasers as well as providers. Fee-for-service sends exactly the wrong message, because it encourages unnecessary utilization, paying for each component service independent of whether its necessary and independent of the outcomes. Compare US treatment patterns to those in other industrialized nations and you’ll find ours are generally bloated with procedures that have become part of practice not because they’re clinically necessary but simply because they’re billable.
By contrast, value-based arrangements are really about purchasers demanding that health care vendors deliver better health outcomes and/or lower cost than what they’ve experienced under fee-for-service reimbursement, and the payment structure often asks the vendor to put his money where his mouth is, at least where performance claims are concerned. In a market that’s still overwhelmingly dominated by fee-for-service arrangements, one way for a vendor to get noticed is to financially guarantee performance. Integrated Musculoskeletal Care, a musculoskeletal management firm based in Florida, guarantees a 25% reduction in musculoskeletal spend on the patients they touch. This typically translates to a 4%-5% reduction in total health plan spend, just by contracting with this vendor, a compelling offer in an environment that makes it hard for upstarts to get market traction.