Caring for oldest, sickest patients now a growth business

“[Oak Street, ChenMed, Partners in Primary Care (owned by Humana), Iora Health, Geisinger] contract with Medicare Advantage plans to provide primary care “on steroids” to older patients with multiple chronic illnesses, as one executive put it. Because they typically take full financial risk from the Advantage plans, which pay them fixed monthly fees for each patient, the clinics make money by keeping patients out of the hospital.

They do that by providing preventive and behavioral health care along with managing chronic diseases and addressing social needs. Working with a team of clinicians and coordinators, doctors see about a fifth as many patients as they normally would so they can see them more frequently and in longer appointments.

[..] In Medicare Advantage, they find more patients to work with and more premium dollars to invest in care programs and technology.

[..] The latest federal data show that 25.4 million people were in Advantage plans as of October, which means that roughly 40% of all Medicare beneficiaries receive benefits through private plans.

[..] a medical practice would receive thousands more dollars to care for a Medicare Advantage patient than it would for a younger, healthier commercially insured patient. Keeping an Advantage member out of the hospital could potentially yield more savings that an at-risk provider could pocket.

Average spending per Medicare beneficiary was $14,151 in 2019, according to the 2020 Medicare trustees report. Spending per person with employer-sponsored insurance was about $5,900 in 2018, according to the Health Care Cost Institute’s latest data. The difference in part reflects the difference in health status. “If you’re starting with a patient population that consumes a lot of healthcare because of their age and health conditions, there’s more of an influence you can wield as a provider working on that patient’s health,” said Stephen Tanal, an industry analyst at SVB Leerink.

[..] capitated primary care isn’t new. Kaiser Permanente and other integrated health systems were built on such models. Capitation was also widespread among HMOs in the 1990s, before an avalanche of backlash from patients and physicians over insurers’ cost-cutting measures ended the movement.

Today’s versions are different. The models depend on data from medical claims, electronic health records and other sources to pinpoint gaps in care and direct resources toward the greatest needs. They spend more on primary care and behavioral health upfront to help prevent acute conditions. And they address nonclinical needs: most of the clinics feature community centers that patients can come to for yoga or educational classes, for instance, which address the sense of loneliness that some seniors may feel.

“This kind of model of capitation 3.0 has matured. You’ve got standards for referral management, better data for monitoring people, a wider acceptance of lifestyle-related issues as they relate to the cost of care,” said Paul Keckley, a healthcare policy analyst. “Fifteen years ago, we really didn’t have that, and that gives this model more of a tailwind.”

[..] Partners in Primary Care, which formed a joint venture with a private equity fund in February to double its centers in three years, has been able to lower 30-day hospital readmission rates by nearly 60% compared with the general Medicare population, according to Humana.

Oak Street and ChenMed tout similarly glowing outcomes. Myers said Oak Street patients are half as likely to go to the hospital than patients with similar health conditions who are not patients of the company’s clinics.

A study by ChenMed and the University of Miami published in the American Journal of Managed Care found that ChenMed patients’ healthcare costs were 28% lower per member compared with other Medicare Advantage members who didn’t receive intensive primary care.

[..] In general, paying clinicians on a per-member, per-month basis is rare. Among physician practices and hospitals, the median percentage of revenue from capitated contracts was 5% in 2019, according to a Numerof and Associates survey.

The COVID-19 pandemic could prompt more medical practices to accept capitated fees or other value-based payment arrangements. While the pandemic sapped fee-for-service providers of revenue when patients stopped seeking care, capitated practices continued to collect their monthly fees, which for many was a financial lifeline.”

Full article, Livingston S. Modern Healthcare 2020.10.31