Meals on Wheels, Deals on Deals on Deals
A Glimpse Into the (very near) Future of SDOH Financing
“Aim for the moon — if you miss, you’ll land among the stars” — proverb
Anew report by Quantified Ventures provides valuable insights into the first-ever Pay for Success (P4S) project in Medicare Advantage (MA).
Well, sort of.
It was *supposed* to be the first P4S project in MA, but the plan didn’t ultimately sign a P4S contract. Instead, they decided to build a contract directly with Meals on Wheels, without help from an outside investor. So why would a firm publish a case study on a project that didn’t go their way?
A closer look reveals why this might represent a milestone moment for SDOH innovation.
The project, illustrated above, aimed to introduce a way for the MA plan to pay for deployment of a home-based meal + service intervention to address the SDOH of their vulnerable, home-bound senior citizens. The payer’s goal: reduce avoidable ED admissions and boost performance on key quality measures.
So, why did the health plan ultimately decide to opt out of the P4S arrangement? In a nutshell: regulatory burden + timing.
It comes down to some wonky details on bids & benefits, described in page 12 of the report:
Uniformity of Benefits: MA plans must provide all beneficiaries with equal access. While this stipulation was intended to promote equity (and even though it may be changing soon), it currently serves to stymy payment innovation around SDOH.
“In short, this means that when offering a benefit to enrollees based upon health status or disease, the benefit must be readily available to all individuals who meet those characteristics in the plan’s contract. The problem with this is that some MA contracts span several states and serve hundreds of thousands of enrollees. Very few service providers have the scale needed to fulfill this requirement.”
Annual Bid Cycle: MA plans are required by CMS to be sticklers about the details of what they provide as part of their covered services from year to year, which makes experimenting with new payments a bit of a pain.
“[a]pproximately 18% of an MA plan’s enrollees are estimated to be at risk of switching plans and not remaining enrolled in any given year.12 In addition, MA plans are required to submit bids, which cover geography and benefit offerings, among other things, to CMS every June. A number of changes can occur between plan years, including: changes in CMS guidance; plan decisions to re-bid (or not) or make significant changes to their bid; award status for a specific population and geography (i.e., plans are not guaranteed awards beyond a year term); and enrollee disenrollment. Any one of these changes could disrupt the project and introduce significant investor risk.”
Where Do We Go From Here?
Keep in mind: MA plans will be given much more flexibility to invest in SDOH starting in 2020. But, back to those wonky details: Plans have gotten almost zero guidance or oversight from CMS on how much these new supplemental benefits should cost, where the money fits into their annual bidding process, how this changes from year to year, how to figure out if the investment is generating a positive ROI, and so on.
This is where the rubber hits the road — where the business case for SDOH will take off, or flame out. The fact that this project was able to lead an insurer to build an outcomes-focused, measurement-driven program around food — as opposed to yet another grant-funded pilot — represents a significant, if early signal of market maturation.
The real story here is that the magic of pay for success isn’t really magic: its equal parts Art (relationship building, trust, creativity, leadership) and Science (data, dollars, timelines, project management). In this case, planning the project convinced the plan they could just do it themselves, without the need for a 3rd party investor to “de-risk” it.
As Brendan O’Connor, lead author of the report put it to us:
“The process of methodically structuring the Pay for Success project led the partners to build the trust and confidence required for a direct contract — which is the goal of Pay for Success in the first place!”
We go through a lot of reports about SDOH innovation, but we’d urge all of our readers and industry leaders: Check this one out to get a few steps ahead of the curve on two critical business trends emerging in the SDOH market:
- Moving beyond the grant-funded pilot era: What is it really going to take to develop self-sustaining, multi-year social interventions with a large payor or hospital as an anchor partner?
- Selling to MA plans in 2020: This “fail forward” case study represents the tip of the spear, where social innovation will need to pierce through some serious regulatory barriers. Plans will need help, starting very soon.
A big kudos to the QV team for sharing these insights with the rest of us in the spirit of learning our way forward.
