The Increase in Digital Health Utilization
By Maria Geraghty and Stephen Hunter
In the last few years, we have seen a massive uptick in the development of remote patient monitoring (RPM) tools. A recent study from Health Affairs indicated an almost 4x increase in the utilization of these tools during the peak of COVID. In a vacuum this increase is significant, but in terms of the total number of US healthcare encounters (over 800M per annum), these 20K digital visits are not even a fraction of a rounding error.
As that same study notes, the increases are being driven mostly by a small number of primary care physicians, with 0.1% of physicians driving 69% of that utilization. At the beginning of the pandemic, there was a significant incentive for physicians to move away from in-person visits as little was understood about COVID-19 transmission and operationally disruptive precautions were being taken to protect those at highest risk. Many of the larger systems have not sustained that performance in the aftermath.
Large Promise but Misunderstood Risks:
Scanning the landscape, there are scores of tools for monitoring chronic conditions (e.g., diabetes, Chronic Obstructive Pulmonary Disease “COPD”, Congestive Heart Failure “CHF”, etc.) and the start-up ecosystem is no different.
On a weekly basis, we meet with companies that believe their business model for reimbursement will be RPM. There is a real need for digital tools that enable patients to be seen in the home and tremendous potential for these tools to improve healthcare. However, there are also many challenges and risks that are greatly underestimated by most of the teams we see. So, before you fall into a trap, let us get the facts straight about the new remote monitoring Current Procedural Terminology (CPT) code.
- Yes — CMS has recently approved RPM codes, a move that was years in the making but was expedited by the needs arising from the pandemic, which indeed cover remote monitoring tools.
- No — this does not mean there is an easy payday.
- No — practices are not going to massively augment their revenue stream by monitoring thousands of patients concurrently and billing for all of them.
Companies building RPM tools need to think very critically about the business model before they try to bring it to market.
Key Market Realities for RPM tools:
1. One-off solutions are hard to justify
First and foremost, most health insurance plans have established their own platform or tools. Since all of the major plans have already deployed tools for chronic disease management (diabetes, COPD, CHF, etc.) or entire ecosystems for health and wellness, tools in development will need to integrate easily into an existing platform. The consensus from medical directors is that plans intend to cover solutions that they helped to develop or fit into these existing platforms. Integrating point solutions into the workflow and deploying across multi-state footprints already has challenges but the idea of multiple tools for different subsets of patients also creates barriers to adoption.
Each new digital health tool requires IT integration, security review, and education for both the patients and the clinicians. Just as we have seen the health systems consolidate on EHRs, we expect there to be a consolidation of “front doors” to digital health tools, at least if they are reimbursed.
2. The math does not work for payers
We frequently see startups come with a per member per month (PMPM) business model for a large population. For instance, an X company will describe a Y model covering a Z population for $3PMPM. On the surface, this may seem reasonable, but when considered from the health plan perspective, it is important to realize that there are dozens of other products pitching different improvements in care but covering the same population. If a health plan has to pay $3PMPM each for knee, heart, OB, anxiety, etc. services, the economics quickly fail.
3. Plans are incentivized to cover a narrow population
Health plan medical directors told us that most plans do not intend to globally cover every start-up’s new digital monitoring solution. For those solutions that are included, there is an expectation that the physician is still going to spend time reading, interpreting, and taking action based on the findings from these tools. Some of the codes actually include specific time guidelines for how long a physician should spend analyzing the data and acting on it.
Here is the issue — there are specific use cases where monitoring has an impact on care. However, for the majority of patients, there is not a demonstrated impact on outcome.
An example: consider the data collected by a smartwatch while a patient is working out. In that context, an elevated heart rate might be expected, but that same elevated heart rate while sleeping may not. In both scenarios, the opposite could be true based on a patient’s pre-existing or documented conditions. Without having the full context, the only thing that is gathered is data, not actionable information.
Further, physician colleagues have articulated that without knowing the patient’s context of the collection — the data may not be actionable for treatment or may not have been gathered in a method approved by the FDA.
With the hype associated with digital health tools long exceeding the reality of use, look for a slow adoption rate by both plans and providers. Look at how the industry did with the migration to electronic health records (EHR). Was that transition successful at making healthcare more efficient and mitigating costs?
4. Finally, data to support real-world outcome improvements is lacking
The tendency to use healthier, commercial populations and small samples, is misleading, in addition to potentially exacerbating health inequity. Let us be clear, most of tools are developed on small data samples that “cherry-pick” data from the healthiest and/or most well-off patients (i.e., commercially covered populations). This remains the path of least resistance to get through the FDA process. What comes with it is the downside that deployment in the field, where economic segmentation is no longer possible, yields wildly different results. The population that many of the interventions are designed to target is least represented in pilots or training data.
The importance of better including individuals from public sector insurance programs like Medicaid and Medicare is only growing. According to the Kaiser Family Foundation, 28% of the population was covered by Medicare and Medicaid in 2010 and by 2021 that had increased to 35%. In the next decade, this trend is expected to continue.
- The industry has been badly burned by new cost categories — Payers know this area is ripe for abuse. Since the early aughts, both Durable Medical Equipment (DME) and associated supplies have been a hotbed for over utilization, non-delivery, and/or kick-back schemes. In recent history, fraud schemes(Always Medical Supply, Metro DME Supply LLC and Ortho Pain Solutions LLC, and 130 other DME Companies), procedures like cardiac monitoring tests (BioTelemetry Inc.) serve as cautionary stories; this has cost the industry billions.
In reaction, payers made massive investments in tools and human capital associated with investigating these kinds of claim submissions. The Office of the Inspector General (OIG) and payer Special Investigations Units (SIU) are already preparing evaluation plans for the influx of new claims not excluded from medical policy.
All of this is not to say that solutions in this space should not be developed. Just the opposite — this is the next evolution of medicine.
Over the next decade, the industry will see a shift to adopting many of these tools. However, knowing and understanding the proper approach is critical to launching them successfully. Here are the three key takeaways to help companies hoping to bring these tools to market:
Have a clear use case and ensure productivity gains — Tools that can replace labor expense with technology driven productivity gains have the highest likelihood of adoption. If the tool only changes the format of doing one patient to one clinician visits (i.e., moves the location out of the clinic to the web), then adoption will still be slow.
Consider licensing into an existing platform — Payers and providers have invested millions into EHR and health and wellness platforms. They want to differentiate their investments against their peers. “Seamless” integration into existing workflows and tools is likely a recipe for success. Similarly, if this tool can make demonstrative improvement to an existing vendor solution, then leverage their already established network of buyers.
Know your customer and have a clear economic value proposition — We ask every business these three questions:
- “Who is your customer?”
- “How do you make money?”
- “How does your customer make money?”
Make sure you understand who within the organization you are selling to. Do not rely on teams that are not the decision makers or influencers of the decision makers. When you do pitch, make sure to clearly articulate the value proposition to each of those stakeholders.
Long gone are the days of finding a doctor to be the sole champion. The company needs to identify the finance leads, the procurement experts, and the operators and ensure there is value creation that each party can understand.
These core principles are more important than ever given the chill in private capital markets. Companies with clear, succinct go-to-market strategies and a thorough understanding of their value to stakeholders will differentiate themselves in what is sure to be a period of reduced deal flow
