Slaying Silicon Valley’s White Whale: Realizing the Benefits of Connected Health Innovation

“Disruption” is Silicon Valley’s favorite buzzword, and every tech innovators’ goal. After conquering travel, shopping, and transportation, healthcare was always tech’s next greatest opportunity. With more than $22 billion in venture capital and untold billions worth of investment from giants like Amazon, Apple, Google, Fitbit, Microsoft, and Samsung, entrepreneurs and venture capitalists have set their sights on disrupting the $3.2 trillion healthcare ecosystem — with little success.

Unfortunately, healthcare will remain Silicon Valley’s white whale until entrepreneurs and venture capitalists break down the real barrier to success. Like most difficulties, it’s all about the money — more specifically, the payment and reimbursement model that underpins the finances of our entire healthcare system.

America’s annual healthcare spend of $3.2 trillion is 20 percent of U.S. GDP, and equal to Germany’s entire GDP. Despite our massive healthcare budget, American communities continue to struggle with severe shortages of medical professionals, the systemic costs of chronic disease management, and the inability to use technology to solve for either problem.

This year, ACT | The App Association’s Connected Health Initiative (CHI) led an unprecedented breakthrough in the healthcare industry’s payment and reimbursement model. We’re on the verge of tearing down the artificial barriers that prevent doctors from using technology to improve patient outcomes and make their lives easier. In simplest terms, we’ve created the opportunity for physicians to be reimbursed for using patient data.

Understanding the ACTUAL Problem

A common misperception among entrepreneurs and venture capitalists is that the healthcare industry is a regulatory morass where FDA approvals and HIPAA compliance present the largest barriers to wide scale adoption of connected health technologies.

In reality, a central barrier to the uptake of connected health technologies are the economic incentives, or lack thereof. A recent Deloitte analysis explained the core problem is that “the marketplace lacks strong incentives … to fully embrace cHealth technologies.”

Credit: U.S. Department of Health & Human Services

Nowhere is this problem more acute than at the Centers for Medicare & Medicaid Services (CMS), the biggest, most influential player in the American healthcare ecosystem. Every year, nearly 40 percent of the national healthcare expenditure is run through CMS. Yet last year, an infinitesimal amount of CMS’s budget — $28,748,210 of $1.02 trillion — was spent on reimbursements for telehealth claims.

Here’s why. Not only does CMS limit the definition of reimbursable “telehealth” services to live voice or video calls, but Alaska and Hawaii are the only two states that enjoy Medicare reimbursement for the use of “store and forward” technologies — devices like connected glucometers that periodically collect and send a patient’s vital biometric data to his or her doctor. Medicare physicians across the continental U.S. are essentially precluded from reimbursement opportunities when using remote monitoring technologies that can benefit America’s most vulnerable patients.

Until recently, these archaic rules codified within CMS’s rulemaking presented a key structural barrier that made it nearly impossible for connected health technologies to gain traction in the American healthcare system. After years of working with CMS on regulatory changes to chip away at these structural barriers, we are finally seeing significant results.

How We’re Fixing the Problem

Following more than a decade of stagnation, CMS finally joined the healthcare trend to transition away from the traditional fee-for-service reimbursement model that pays doctors for every test or procedure to a value-based model that encourages cost-savings and improved patient outcomes. This change marks a crucial step to disrupt the system’s reimbursement and payment rules, which will ultimately improve opportunities and increase demand for connected health innovations.

Changing the Rules for Tomorrow

Earlier this month, CMS released its 1,700 page-long Quality Payment Program (QPP) rules, which provide the guidelines for Medicare’s new value-based payment system. Beginning January 2019, the program’s Merit-based Incentive Payment System (MIPS) will assess doctors based on how many MIPS points they accumulate from a list of approved “Improvement Activities.”

We were incredibly proud when CMS adopted an improvement activity developed by CHI entitled “Engage Patients and Families to Guide Improvement in the System of Care.” This new activity would enable pioneering doctors who use remote monitoring or telehealth technologies — medical devices, wellness devices, or a combination of the two — to receive an Advancing Care Information (ACI) bonus for activities like sending medication reminders, prescribing patient education, or collecting, monitoring, and reviewing patient’s physiological data.

These new rules will provide doctors with points each time they review patient generated health data from a connected, wearable, remote monitoring device, and will culminate in a financial bonus at the end of each year. This change helps unlock the vault to reimbursement opportunities for doctors and their care, and is integral in helping connected health innovators overcome a huge hurdle to secure their technologies within the healthcare ecosystem.

But What About Today?

To date, Medicare-funded hospitals, doctors, and practitioners bill insurers using the annually-issued Physician Fee Schedule (PFS), a comprehensive list of activities and treatments for which doctors can be reimbursed. Under the PFS, Medicare caregivers submit claims using Current Procedural Terminology (CPT) codes that are linked to a specific reimbursable medical service. Just think of the paper filled with rows of numbers and procedures your doctor hands you at the end of each visit — those numbers are the CPT codes used by every doctor you’ve ever visited.

Following persistent advocacy from CHI, this year CMS took the first key steps towards reimbursing connected health innovations in a value-based system. CMS committed to unbundle, or provide payment for, CPT code 99091. The 99091 code covers doctors’ collection and interpretation of physiologic data — like blood pressure or glucose levels — digitally stored and/or transmitted by a patient or their caregiver for a minimum of 30 minutes. Unbundling this code finally allows doctors and care providers to be reimbursed for time spent reviewing patient data generated from a connected device. This is an important step by CMS to recognize the value of patient generated data, and reimburse for this specific activity.

Moving forward, CMS will need more codes to reflect the range of connected health services available today, and those to be introduced in the future. Recognizing this need, the AMA convened the Digital Medicine Payment Advisory Group (DMPAG), a volunteer group of clinicians and digital medicine experts (of which we are a member), to identify new avenues to integrate connected health tools into clinical use — including through the development of new CPT codes. The group submitted several new codes to be reviewed by the CPT editorial body, which will assess each connected health procedure based on valid evidence, scientific backing, clinical expertise, and other criteria before approving the code. Though the process may take time, it is a vital exercise to ensure the payment system evolves with the efficiencies and cost-saving benefits put forth by connected health innovators.

Why Does It Matter?

Moving Beyond Wellness and Preventative Care

In the past, when faced with the significant incentive and medical reimbursement barriers in the healthcare ecosystem, connected health innovators often resort to the outskirts of the industry — tapping into market opportunities to sell directly to consumers through “wellness” and “preventative care” offerings. Even the recently announced partnership between Aetna and Apple is limited to working on apps that “provide incentives to make healthier choices,” but do not put Apple Watches or the data they create into clinical settings.

Still, manufacturers are predicted to sell more than 26 million consumer smartwatches and health trackers in 2017 alone. With regulatory barriers removed, we unlock a huge opportunity for patients and doctors to begin leveraging these devices for chronic disease management, diagnosis, and treatment.

These changes will help patients, doctors, and healthcare providers become more comfortable using connected health devices in medical settings, and will allow innovators and Silicon Valley “disruptors” identify the best practices for getting there. This process begins a virtuous cycle: the more incentivized the use, the more likely doctors are to use these devices in medical practice, which encourages more innovation, greater effectiveness, and additional cost-savings benefits for connected health devices.

Lowering Costs and Improving Outcomes

We have yet to tap into the full potential of connected health devices’ ability to help patients make healthier decisions, and help doctors provide better, more effective treatments. We’ve uncovered just the tip of the iceberg of good they can do.

For example, connected health devices have been helpful in the treatment of diabetes, a chronic disease that plagues more than 100 million Americans, and is the third leading cause of death in the country. Georgia-based connected health innovator Rimidi provides a diabetes management platform that enables patients to share their glucose levels, dietary habits, and care management data seamlessly with their physicians, enabling them to inform and improve their treatment methods. In Georgia alone, the use of remote diabetes management programs like Rimidi’s could improve patients’ life expectancy gaps in 10 years, and decrease healthcare spending by $1 billion per year. Connected health devices like the Podimetrics SmartMat ™, a hardware-enabled, thermal-imaging mat that that helps diabetes patients predict and prevent diabetic foot ulcers, is already paying dividends to patients across the country. The SmartMat ™ has been successful in detecting 97 percent of developing non-traumatic foot ulcers five weeks before they were visible, preventing debilitating amputations and high cost treatments for diabetic patients.

These are but two examples of the cost-saving, improved healthcare outcomes connected devices present for diabetes treatment. By removing incentive and payment barriers, we create a level playing field for connected health innovations that can address countless chronic diseases in a country facing an aging Baby Boomer population and ever-increasing healthcare costs.

Moving Forward

The door to modern preventative health is open, but much work remains to be done to ensure we achieve its true potential. Here’s how:

• Tech innovators must work with doctors, hospitals, and other healthcare providers to ensure their tools are accurate and functional. We must ensure an open dialogue with doctors and patients as they continue to innovate.
• Healthcare insurance providers must follow the leadership of Medicare to encourage doctors to make the most of modern technology — and consider ways to make these innovations more accessible and affordable for patients.
• The FDA and other regulatory bodies must work together with doctors and innovators to create functional long-term oversight and interoperability standards.
• Clearing the hurdles for reimbursement opportunities for doctors that use connected health technologies is the first step. We must constantly consider new ways to encourage patients to bring these tools and their benefits into personal healthcare management.

The changes put forth by the Centers for Medicare and Medicaid Services have unlocked the door to incentives and reimbursement for game-changing connected health innovations. Now is the time to tackle the white whale and make the most of this new, exciting, uncharted territory.