Chronic Care Management Report
What is Chronic Care Management?
- Chronic Care Management (“CCM”) is defined as any set of activities intended to simultaneously increase patient care and decrease costs associated with chronic conditions.
- Chronic conditions are diseases that result in long-lasting conditions that can be controlled but not entirely cured.
- Better management of chronic conditions can improve patient quality of life; reduce complications; prevent expensive procedures, emergency room visits, hospitalizations, and readmissions; and strengthen patient engagement.
- The fundamental value proposition of CCM is to shift the delivery of care from high-cost environments to lower-cost environments.
- CCM providers typically deliver a tech-enabled service to their clients, building a software solution that integrates with a client’s existing technology platform (EMR / PM) to enable more efficient chronic care management. Representative technology offerings from CCM providers include:
- 24/7 access between patient and care team (e.g., providers, family, payers)
- Integration with existing EHR / PM / CRM systems
- Monthly reporting and reimbursement systems
- Remote patient monitoring and real time access to data
- Business intelligence / Risk analytics
Care Management is a broader subset of Population Health that takes a team-based, patient-centric approach to more efficiently manage a patient’s medical conditions and level of care. This market is projected to grow at a 17.8% CAGR from $6.9BN in 2016 to $15.7BN in 2021. CCM is the largest and fastest growing segment in Care Management, with growth supported by increasing patient volume and multiple macro factors:
According to a report from the Congressional Research Service, the percentage of the population aged 65+ will grow from 12.4% in 2000 to 17.9% in 2025 and 20.2% by 2050. This is meaningful because the likelihood of having multiple chronic conditions significantly increases with older age: nearly 50% of the U.S. population aged 45-64 and 80% of those aged 65+ have multiple chronic conditions.
Healthcare Spend Attributable to Chronic Care
A disproportionate amount of U.S. healthcare spend is attributable to patients with chronic conditions. 86% and 71% of healthcare spend goes towards patients with at least one or more than one chronic condition, respectively. In aggregate, 50% of total U.S. healthcare spend is attributable to just 5% of the population and 85% of the spend is attributable to only 25% of the population.
Shift from Fee-for-Service to Value Based Care
Historically, healthcare providers have been reimbursed under a Fee-for-Service (“FFS”) construct, whereby they are financially incentivized by volume (e.g., patient visits, treatments, prescriptions). The Affordable Care Act (“ACA”) of 2010 and the Medicare Access and CHIP Reauthorization Act (“MACRA”) of 2015 have induced a gradual transition in how healthcare services are reimbursed, away from FFS and towards Value Based Care (“VBC”).
- The goal of VBC is to change how providers are financially incentivized and tie reimbursement to measurable outcomes, thereby lowering costs and increasing the focus on care quality.
- Providers seek outsourced solutions to handle the increased documentation needed to measure outcomes, patient info, procedures and accompanying results that payers require and analyze.
Under MACRA, providers choosing not to implement a VBC approach may be subject to reimbursement penalties of up to 4% in 2019 – the first year reimbursement adjustments take effect. During the transition period, the ratio of VBC to FFS reimbursement will gradually increase as providers take steps to prepare for the new approach.
Providers stand to benefit from adopting CCM practices today during the transition period because it introduces the systems and procedures necessary to succeed under VBC yet still allows them to capture revenue under the current FFS construct.
Based on conversations with industry participants and consultants since the presidential election, we believe both MACRA and the shift towards VBC have bipartisan support and the current consensus is that both are here to stay, though certain mechanics and ancillary regulations may be altered.
Medicare Reimbursement Under CPT 99490
In January 2015, CMS introduced a new Medicare reimbursement program specifically catered to CCM – CPT 99490 – that pays providers ~$41 per month for providing at least 20 minutes of non-face-to-face care to Medicare beneficiaries with two or more chronic conditions (“Medicare CCM”). This is a massive greenfield opportunity for both providers and vendors who can provide software and services for providers to facilitate the necessary requirements. Generally, these services involve communication between the patient and his or her care team (e.g., doctors, specialists, family) that follow the mutually agreed upon care plan created at the time the patient provided consent for the services. See Appendix A: Summary CPT 99490 Billing Requirements and Appendix B: Medicare Chronic Care Management – Reimbursement Mechanics for additional detail related to the program.
CMS states there were 55MM Medicare beneficiaries in 2015 and projects that number to increase to 80MM by 2030. Roughly 68% of Medicare beneficiaries suffer from two or more chronic conditions and qualify for reimbursement under CPT 99490. Assuming a provider is able to meet the 20-minute monthly requirement for at least six months out of the year, the total addressable market for this code alone ranges from $9.2-$18.3BN. By 2030, this increases to $13.3-$26.6BN.
From a provider’s perspective, this new code provides a new income stream that requires additional resources (specifically, labor) to implement. Outsourced solutions alleviate opportunity costs of using existing clinical staff and result in a clear ROI. Estimates vary depending on how many unique patients the provider sees each month and how many months per year the code is billed, but the low end represents roughly $73k per year of new revenue and up to $291k per year for larger practices. Importantly, only one provider per month can be reimbursed under CPT 99490 for a specific patient (i.e., if one patient has three doctors, only one can receive the ~$41 per month).
From a patient’s perspective, these programs create more transparency into his or her care plan (e.g., for family) and provide 24/7 access to care. Importantly, depending on the insurance plan, some patients are required to pay a monthly co-pay ranging anywhere from $8-$60 while they are enrolled in the program.
From a payer’s perspective, implementing these programs assists Population Health initiatives by reducing costs associated with the care of their chronically ill members.
It is important to note that the current market opportunity for this new code contemplates Medicare payments only. Based on our conversations with industry participants, we expect other payers such as Medicaid and private insurers to follow suit with their own CCM reimbursement programs.
The reporting requirements providers and payers must adhere to are significant, particularly as they relate to Medicare CCM. Providers must provide additional documentation, correctly and accurately bill for reimbursement and adhere to strict deadlines – all of which create additional time burdens on providers faced with a limited labor supply and high opportunity costs.
Accordingly, we believe the CCM market is best thought of as a subset of the larger BPO market, with solutions consisting of both software and/or services and the end customers being providers and/or payers. Given its nascency, the market is extremely fragmented and is largely comprised of businesses seeking to facilitate Medicare CCM and its reporting requirements (CareSync, MD Revolution, Oculus Health, Smartlink), businesses providing CCM solutions as part of a larger Population Health offering (Citra, Wellcentive, Enli), or businesses offering solutions catered to specific chronic conditions (AbleTo, Quartet, Big Health). As in other BPO markets, more tech-enabled businesses will sustain higher margins while more services-centric businesses will have lower margins due to the labor component. (Refer to our market map for an illustrative market overview.)
Appendix A: Summary CPT 99490 Billing Requirements
- Medicare Beneficiary Requirements:
- Patient is diagnosed with two or more chronic conditions expected to last at least 12 months
- Service Requirements:
- Initial in-person meeting with beneficiary to create care plan and receive written consent for services
- 20+ minutes of non-face-to-face care management services, per month
- Beneficiary has access to care management 24/7
- Follow-up after ER visits
- Coordination of care
- Billing Requirements:
- Only one provider per month can bill each patient for the code
- Cannot be billed in conjunction with transition care management, home health management, hospice care management or certain end-stage renal disease services
- Technology Requirements:
- EHR must satisfy certification standards and include patient data encompassing: demographics, problems, medications and medication allergies
- 24/7 availability
- Provider must be able to transmit records for care coordination
- Document communication to and from home and community-based providers
- Allow provider to create and store an electronic care plan
Appendix B: Medicare Chronic Care Management – Reimbursement Mechanics