April 9, 2014

Changing Reimbursement Means New Opportunities

Travis Good, MD

Co-founder & Chief Technology Officer

Health technology is hot. Entrepreneurs are flocking to it and it’s becoming a lot more attractive to investors. A big area of interest, one we are betting on as well, is the power of mobile technology to reshape all aspects of healthcare. Mobile health, or mHealth, isn’t a panacea, but it is a catalyst for new processes, workflows, data collections, and ultimately care, whether that’s self care or clinician-provided care. When we say “mHealth”, we’re speaking to more than apps but also sensors, messaging services, and other connected devices.

What are the hurdles for mobile health? It’s healthcare, a highly regulated industry with payment complexity that’s hard to fathom. Lots of people, and studies, cite payment reimbursement as a major hurdle. Healthcare today is still largely based on delivering care, getting people in the door, and poking and prodding; that’s what keeps the lights on today. Here’s a simple example - getting people to send you a pain score through SMS or a mobile app isn’t reimbursable directly (there aren’t billings codes or modifiers for billing codes for these things). It’s a lot harder to make a convincing ROI argument for mHealth apps and services without reimbursement.

But there are several changes coming to healthcare, some of which are already here but not at scale, that make mHealth more attractive with a more clear ROI. Triple Tree has a good post on four major CMS initiatives that are changing reimbursement.

  • Readmission Prevention - simply put, if a patient sent home (discharged) from a hospital with a certain condition returns to the hospital (and is admitted) within 30 days then that’s a readmission. If rates of readmission for certain conditions are high enough, compared to other hospitals, then the lower performing hospitals, ironically the ones that are probably in more financially precarious positions, will have reimbursements reduced. Right now it’s only 30 days but readmission rates go up considerably at the 60 day, 6 month, and 12 month marks, and organizations eventually will be taking a financial hit on all of those as they take on more risk in payer contracts and as participants in ACOs.

  • Hospital Acquired Conditions - if a patient, while in the hospital, gets a new condition (like an infection), then that is “hospital acquired”. Patients in hospitals are extremely vulnerable, and hospitals are disgusting places from an infectious disease perspective, so hospitals need to get much better at proactively addressing major problems like patient position rotation (laying in bed creates bed sores) and hand hygiene. Like readmissions, this is based on aggregate and relative performance.

  • Value-Based Purchasing - this is a fun one because it’s both a carrot and a stick. Hospitals are compared to other hospitals based on clinical, mortality, and patient experience / satisfaction. Depending on how they score, they can have reimbursements increased or decreased. This is so broad is very hard to tackle other than with large scale, org-wide initiatives. It touches on a lot more than just technology, or just certain conditions.

  • Bundled Payments - this is my favorite from a point of entry perspective if I was a mobile health developer. Hospitals agree to take capitated, or bundled payments (a set amount), for certain conditions. This is great for a hospital because it can choose a certain procedure, and focus efforts on doing that really, really well. If it can reduce the cost for that procedure, the payment for that procedure stays the same and the hospital keeps that delta.

All 4 areas above represent great target opportunities for new technology, and much of that new technology will be mobile, or at least have a mobile component. As the author of the Triple Tree post concluded - “Companies positioned to support hospitals in these new endeavors will find increased interest and engagement from the provider community.” We couldn’t agree more.

Mobile health has huge potential but also large challenges to overcome. These reimbursement changes solve, either directly or indirectly, one of the major challenges related to selling and scaling mobile health, and we’re excited to see companies having success supporting hospitals with initiatives in these areas.

Datica is supporting some of these companies, both with technology as well as with overcoming compliance hurdles when they sell to hospitals. To learn more about how we can help you, email us today.

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