Episode #10: Obvious Truths Our Healthcare Policy Still Doesn't Support...

These truths may be obvious to you as a healthcare innovator, but regulators, payors, and sometimes even consumers still lag behind for some very outdated and sometimes odd reasons.

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In this episode you’ll discover:

Why mental health is a vital aspect of maintaining overall health—and why the system is not set up to support that (right now)
How providers, payors, and tech companies can align incentives to achieve better outcomes and lower health costs
Why our system isn’t built for that kind of alignment yet—but it’s getting there

Keep scrolling for a transcript of this episode.

Read the transcript:

Carrie Nixon (00:00):

Value-based delivery and payment models align incentives among patients. They align incentives among providers and they align incentives among payers for better outcomes at less cost than the fee for service.

Speaker 3 (00:16):

You are listening to Decoding Healthcare Innovation With Carrie Nixon and Rebecca Gwilt, A podcast for novel and destructive healthcare business leaders seeking to transform how we receive and experience healthcare.

Rebecca Gwilt (00:28):

Welcome back everyone, to the latest episode of Decoding Healthcare Innovation. Carrie and I are back together now after several episodes apart. I'm so glad to rejoin you, Carrie.

Carrie Nixon (00:41):

I know, I'm so excited.

Rebecca Gwilt (00:43):

Yes. So in our June 30th episode, we started a conversation about some really obvious truths obvious to Carrie and I at least that our healthcare policy in this country still doesn't really support that episode. We talked about the individual preferences for home-based care and a little bit about RPM and the promise of ongoing monitoring of patients to keep them well and lower cost. And today I'm excited to continue that conversation. So we're going to talk about two more obvious truths. One that mental health is a vital aspect of maintaining overall health and the second is new ways that we're seeing to align incentives between providers and payers, even tech companies, to achieve better outcomes and lower health costs. Sort of the obvious truth that our system really isn't built for that kind of alignment yet but it's getting there. So I'm looking forward to discussing both of these.

Carrie Nixon (01:50):

Yeah, seems obvious to me for sure. I can't believe it was back in June that we were talking about these things. It seems like yesterday and we're in a covid time warp, I think. But yeah, I'm looking forward to the conversation. The two that you mentioned seem very obvious to me. Let's dive in on mental health.

Rebecca Gwilt (02:07):

Yes. Yeah. Okay. So I have a particular passion for serving clients in this space. We both have devoted special energy to this since we started the firm. You are likely aware if you are one of our listeners, that there is not only a severe shortage of mental health professionals in the country, just in general, but we're also facing a pretty historic mental health crisis as a result of the pandemic certainly, but also years and years of not lack of access. And I have other theories about why we're sort of falling apart but we kind of have a perfect storm right now of increased need for these services and decreased access. And that I think in the medium term and the long term is going to really affect overall health costs in general. We know that there's a connection between mental health and physical health. I looked up quickly before this, the CDC mentions diabetes and heart disease and stroke, some of the more expensive physical ailments that our health system is trying to address, that those are all exacerbated by mental health issues.

(03:28):

And certainly opioid use disorder has been massive in this country and that is significantly taking a toll on people's physical health. So then what's the issue? If we all recognize that it's a big problem for us and that we need to address it in ways we haven't been able to yet, why is there still an access problem? Well, some of it is that insurers have traditionally paid bottom of the barrel prices for mental health services. Reimbursement is so low for mental health services that the historically a ton of providers have just opted out of insurance altogether. It is the case that if you are contracted with an insurance company, on average, they're paying you less than Medicare rates. So if you're out of network or if you're completely cash pay, your business is going to be more profitable. And that's a problem we absolutely have to address. I mean, it's an equity problem certainly, but overall, I at least know for my child, I've been on a waiting list for 10 months and I'm able to pay cash pay. So if I'm having those kinds of issues, then cost is a real problem and it can be solved by policies that encourage just frankly paying what these services are worth.

Carrie Nixon (04:51):

Yeah, that's a real innovation. Paying what the services are worth, how novel, novel, but that's where we are. I this shortage of mental health professionals has been our status quo for quite some time now. I think Covid just sort of shined a bright light on it. And the upside of that is that we are beginning to see some innovation in how mental health services are reimbursed and provided. And that's really good news.

Rebecca Gwilt (05:28):

Yeah, I mean, I wish I was seeing innovation from the payer side more. I mean, Medicaid has done a pretty good job and recently the Consolidated Appropriations Act, I think that is the CAA tried to make some changes to encourage more access for mental health services. I wrote a little bit about that in a recent blog blog post, but we're actually seeing a ton of innovation in the telehealth space. So companies like Better Help and Talkspace have been able to reduce the unit costs of mental health services much more than traditional psychotherapy can. I mean, we're talking about $150 an hour to $40 or $50 an hour for services. In addition, that sort of telehealth mental health model has been able to expand access into the non-urban areas that generally have sort of fewer providers. And because private companies are doing this, venture capital investments are way up. We're going to dive into that a little bit more when our friend Russ Glass joins us in up an upcoming podcast. Russ is the CEO of Ginger and I'm super excited to hear his thoughts on this, but this is really a bipartisan issue in Congress. One of the very, very few I think that policymakers could do well to really address when they're talking about how expensive the healthcare system is taking care of people's mental health is absolutely a preventative measure that if incentivized could make a real difference.

Carrie Nixon (07:09):

I mean, it's a chicken in the egg problem. We know that chronic disease or chronic conditions and chronic diseases can lead to mental health issues. Understandably, if someone has diabetes and they are having a hard time getting around because they're having their feet are swollen or they have sores, that's depressing. Their lifestyle has changed.

Rebecca Gwilt (07:33):

Yeah, I totally agree, Carrie. The other side of course is that if you are struggling with mental health, one of the things that can happen is you're unable to make clear decisions. Think about someone who needs to be very carefully monitored on medication regiment if they are oversleeping or under sleeping or the suffering from depression, and that's preventing them from good decision making that's really going to impact their ability to take care of their physical health. So anyway, so that is one thing that I would love to see addressed. And really it is as simple as reimbursing them, reimburse for the value that these services are bringing. You'll have more people entering the profession, so you'll have less sort of a supply issue of the professionals and you will incentivize providers, even primary care providers to provide more mental health services.

Carrie Nixon (08:33):

And I do want to under underscore the innovation around mental health services. It is absolutely the case that the access problem is going to have to be addressed by telehealth and the reimbursement has got to follow there. Absolutely.

Rebecca Gwilt (08:52):

Yeah. So Carrie, let's talk about our favorite thing, and that is incentives alignment.

Carrie Nixon (08:59):

Yeah. So the second obvious truth that we wanted to talk about was really the fact that value-based delivery and payment models align incentives among patients. They align incentives among providers and they align incentives among payers for better outcomes at less cost than the fee for service system that we've had in place for so long. This should be a no-brainer. When you align incentives among all of the players in an ecosystem, the outcomes are better. We started to make a move towards value-based payment even before the Affordable Care Act in 2010. The thinking initially was, Hey, three years from now we'll have this all nailed down and we'll be in a totally value-based system and fee for service will be a relic of the past. It has proven much, much, much more difficult to make that shift.

(09:59):

I am somewhat optimistic now because I think we're seeing more of a combined carrot and stick approach to making the shift to value-based care. And this is really important. But in order for that to happen, we need for our fraud and abuse infrastructure, the regulatory infrastructure that is so critical and so scary in healthcare to change, to keep, to stay in align with that alignment with that shift. So our fraud and abuse infrastructure is totally geared toward a fee for service world where we're trying to disincentivize the repeat utilization of certain types of medical services. We don't want to incentivize over utilization, totally understandable, but the way that the fraud and abuse laws are written means that it doesn't take into account that there are some behaviors by patients that we actually want to incentivize. We want to provide certain services on a regular basis as a means of managing a patient's condition for better outcomes. So we made progress in a little micro level with some changes to the fraud and abuse laws that came into play through a rule that went into effect in January of this year talking about value-based enterprises. And those changes are positive, but I'm not real sure that they go far enough. It is not totally obvious as to how to implement new arrangements where digital health companies and providers and payers can all benefit. So we need to make it easier still, I think, to create these arrangements.

Rebecca Gwilt (11:53):

Yeah, totally agreed. And I will just say our firm has been spending months and months talking about this how to do it, and it is obvious to me that once we figure it out, it is a better way than what exists now. I had a call with a client the other day where I was talking about a model that they were interested in and the fact that they could do that if they were part of an aco and the client almost had a conniption. The client was like, we don't want anything to do with ACOs that or bundled payment initiatives or CMS. It's so complicated. The patient attribution is too difficult, it's too hard. Don't even talk to us about that. And I said to them, I totally get that. I totally get that there are exceptions to the fraud and abuse laws that only apply to ACOs, but this new program, this value-based enterprise program holds promise.

(12:57):

And I almost had to talk them off the ledge to even consider a new model given how complicated CMS has made working around these fraud abuse rules in the past in a value-based context. We did see recently, and Carrie, I'd love your thoughts on this, a sort of marketed as a first of its kind value-based arrangement between Prime Therapeutics, which is owned by the Blues and Pear Therapeutics, which is a developer of prescription digital therapeutics. And it sounds a lot like these value-based enterprises, though I don't have enough information to tell whether that's the case or not. But Carrie, what do you think about that kind of partnership and what we're likely to see similar to that in the future?

Carrie Nixon (13:47):

Yeah, I think it's the commercials payer sector sort of taking charge and taking the lead on this front. They are recognizing that alignment of incentives is important. You can come up with some really interesting arrangements that reward thing entities like digital health companies like Pear Therapeutics, right? For implementing a prescription digital therapeutic tool that is going to move the needle in this case on substance abuse disorder. And if indeed Pear succeeds at this, they're putting their money where their mouth is, right? They're saying, we're, we're going to go slightly at risk depending on the outcomes that we achieve with the patients who have a Blues, one of the Blues' plans. So I think that we're going to see more and more private sector entities entering into value-based arrangements like this. And hopefully this is a case where the government will take a look and go, oh yeah, that's kind of how we should do it. That's a good idea.

Rebecca Gwilt (15:05):

I mean, we've had clients that have almost done sort of a capitation model. So digital health clients will go to the Blues or Cigna or Aetna and they'll say, okay, my digital therapeutic or my platform patient engagement platform, for instance, is really going to move the needle on your chronically ill population. And so if you pay me a per member per month fee, I'm going to be able to provide this service to these folks and it's going to and then I get to keep whatever incremental difference in revenue I earn based on reducing prices or reducing costs of care. That is the current model outside of these value-based arrangements. But what if they could say, okay, here's a set of outcomes that we together are going to drive toward not just me digital health companies saying, I think I can do this and let me negotiate a price that gives me some wiggle room. But what if

Carrie Nixon (16:14):

Vacuum, right?

Rebecca Gwilt (16:15):

Yeah, exactly. What if we work together to identify the exact outcome measures we want to impact and we enter into an arrangement together where we mutually decide if we both do what we set out to do, we both win here, just not permitted under the current laws, outside of these value-based arrangements. And I, I'm really bullish on this being sort of a great opportunity, number one for digital health, but two, an absolute incentive alignment.

Carrie Nixon (16:48):

The innovation here is really bringing all of the players together to create the right arrangement that works in that particular circumstance for that target population. I don't think we're really used to doing that in healthcare. I think it's a vendor goes in and says, this is my price for doing this. Or a payer says, well, this is what we're going to pay, period. There's not a lot of bringing all the players to the table and saying, Hey, how can we create the best outcomes for patients and for all of us? And that's really the innovation. So before we sign off, I want to let our listeners know that Rebecca and I are going to be at the HLTH conference in Boston October 17th through the 20th, which is rapidly approaching, I think it's actually we'll be in the midst of the HLTH conference when our next podcast drops. So if you are going to be there, please reach out. We would love to connect with you. I'm sure we'll have some really interesting insights to bring you from the conference and we're really looking forward to it.

Rebecca Gwilt (17:54):

That's right. Carrie has her very own avatar which in HLTH world is a big deal, and we're both on the app. We're learning the app right now. I don't know if any of you have been through the clear app. It is Abe, I would start now.

Carrie Nixon (18:10):

I haven't started. I need to start it.

Rebecca Gwilt (18:12):

Make sure you schedule your, make sure you schedule your Covid test 72 hours beforehand. It's a whole rigamarole, but you can find Carrie on the app and certainly you can reach out to us on social. And I would also say that we're going to put into the show notes a couple of the kinds of things we're reading certainly the Prime and Pear press release, and a little bit more about the articles we've read that are relevant to this. And I would just say before we close on the value-based enterprise topic, if you're a digital health company and you believe that your innovation can move the needle and you've got a good relationship with somebody at the payers, just start that conversation. Start the conversation with them. This is going to be on their radar starting now. It's at least on the radar of the blues. And if you ever have a question about what that conversation looks like certainly Carrie and I and our team are at the ready.

Carrie Nixon (19:19):

Yep, sounds good. All right, we'll hope to see some of you at HLTH and we'll talk to you next time.

Rebecca Gwilt (19:24):

Take care.