Episode 3 - Chronic Care Management

Please see below a full transcript of this episode:

A small percentage of the population makes up a large portion of our nation's healthcare expenses. What primary care and chronic care management efforts can be effective in improving these statistics?

Welcome to Redefining Health Law, brought to you by the law firm of Parker, Hudson, Rainer & Dobbs, LLP, a boutique law firm with offices in Atlanta, Chicago, and Tallahassee. Your host for this podcast is Tara Ravi, a healthcare partner with prior work experience in both clinical research and patient care delivery.

She is an adjunct professor at the Emory School of Law, where she teaches corporate health law. Tara leverages her past work experience in the healthcare industry to advise healthcare organizations facing growth-related challenges. Although Tara is a partner in the law firm of Parker Hudson, the views expressed in this podcast are Tara's personal views, and not the views of the firm or any of the firm's clients and are not intended to be legal advice. We hope you enjoy this podcast.

Hi there, and welcome back to Redefining Health Law. Today we will finish the third part in our three-part introductory series titled chronic care management. I want to start by clarifying that when I use this term, chronic care management, I'm using it as shorthand for the concept of treating the chronically sick or the chronically unhealthy and for preventing chronic illnesses.

Examples of chronic conditions can include arthritis, cancer, depression, diabetes, high blood pressure, and the term chronic care management does have specific meaning in the Medicare and Medicaid reimbursement context, which we'll get into later. But for now, let's start with some statistics. One statistic that was repeated throughout the early Obamacare years was that a small portion of the population is responsible for the largest percentage of total healthcare spending.

Again, the idea here was that efficient and available primary care incentives could prevent many patients from becoming acutely sick with chronic conditions.  But almost 15 years later, after the enactment of the Affordable Care Act, we see little to no change in that statistic. The Peterson KKF Health System Tracker cites the following alarming, but unsurprising, current 2023 and 2024 statistics.

Here are the top three that stood out to me.  About 5 percent of the population accounts for nearly half of all health care spending. People over age 55 account for over half of the overall health spending. And finally, patients on the top 5 percent of healthcare costs account for 69 percent of home health expenses and 79 percent of all hospital inpatient expenses.

So, what's the point of all these statistics? For me, it's to show that we've spent over a decade dreaming up economic solutions to healthcare and I'm not quite sure that anything has improved, or specifically that healthcare delivery has improved for those who suffer from chronic, acute conditions.

In 2018, I was asked to develop a course focusing on corporate health law for my alma mater, Emory University School of Law. It was coincidental that 2018 also happened to be a fairly big year for healthcare as corporations and Silicon Valley decided to roll up their sleeves and solve issues addressing healthcare delivery. Specifically, Amazon, Berkshire Hathaway, and JPMorgan Chase kicked off 2018 with an announcement that they would form an independent nonprofit healthcare company that would seek to revolutionize healthcare for their US employees, and not to be outdone Apple teamed up with over 100 healthcare systems and practices to disrupt the way patients access their electronic health records. CVS Health and Aetna closed their 69 billion merger in November of 2018 after spending the better part of the year seeking approval from state insurance regulators.

Just a short 3 years later, in 2021, Haven, the Amazon, Berkshire Hathaway, JPMorgan Chase joint venture, announced it would shut down in February 2021. According to a Harvard Business Review article, the reason for the joint venture's failure was indirectly blamed on health systems and their hospitals, which personally I find to be a cop out.

Per this article, Haven couldn't gain market share because health systems had consolidated. The next section, under the sub header of Perverse Incentives, says, “we still live in a world where the larger portion of hospital beds that are utilized, the more they get paid.” And finally, COVID was also to blame.

I found it unrealistic that these heavy hitter corporations were going to magically solve healthcare for all of us, but I certainly didn't expect the operation to fold in just three years, and nor did I expect the Harvard Business Review to finger point at health systems, especially during COVID.

Walgreens reported in spring 2024 that it lost nearly 6 billion in its second quarter as the company struggles with the loss in value of its investment in VillageMD. The company announced the closure of 140 of its VillageMD primary care clinics and plans to shutter 20 more to boost profitability.

My understanding of the Aetna CVS merger was also intended to be something similar. Aetna would deliver CVS brick and mortar minute clinics to deliver efficient primary care hubs and chronic care management to its enrollees. In early 2024, Walmart announced that it would close 51 health care centers across three states, including Georgia. The company launched the clinics in 2019 and expanded its telehealth program but concluded that this was not a sustainable business model.

The summary of all of those stories is that delivering primary, efficient care, it is hard, unprofitable, and difficult even for the big corporations. The company said in a statement that this is a difficult decision, and like others, the challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time.

The truth of the matter is that it's very difficult to operate profitable primary care clinics. They are low margin and chronically ill patients take a lot of time and resources, which time historically has not been reimbursed appropriately under the federal programs. Reference to a challenging reimbursement environment brings me to the concept of value-based care and reimbursement for primary care services generally.

Health systems that have been successful in the retail healthcare space, where Walmart, Walgreens, CVS, and Amazon compete, have touted their successes to the strength of their clinical integration and the quality of their physicians. The takeaway seems to be that location and convenience are not the only relevant factors to effective healthcare delivery.

They are not the only two reasons why a patient would choose one primary care clinic over another. Patients seek authentic personal relationships with their physicians, and to some extent, with health system brand recognition, combined with access and convenience. So, let's redefine some health laws.

Episodes under the sub header of Chronic Care Management will examine the legal and practical frameworks that shape the delivery of primary care and chronic care management services to individuals in both urban, suburban, and rural areas. This third episode buttresses the first episode in that these efforts are generally aimed at preventing hospital overcrowding, which we described in the first episode, by accomplishing three things.

Preventing chronic conditions from becoming acute conditions, directing patients to the appropriate outpatient setting, and decreasing utilization of the emergency department as a safety net. This episode is an introductory episode, and there will be episodes dedicated to examining each relevant legal sub areas in more detail, but I wanted to cover some high-level initiatives that we're seeing within the retail healthcare and chronic care management space.

First, we'll start with Medicare and Medicaid reimbursement. Recent changes related to Medicare reimbursement for evaluation and management services have helped ease the slim profit margin generally attributed to primary care practices.

Evaluation and management visits, which we shorthand as E&M visits, are the billing code generally used for primary care visits. This code was recently revised to include physician time spent on medical record review and coordination of care and documentation. Before a doctor would only get paid for the time they spent with you, but for more complicated and complex cases, the physician needs to review your old medical records, your current tests and to coordinate care with you, and as a result, there's more time spent with you and the more complicated cases that before didn't get reimbursed, but now would get reimbursed.

Because these sicker patients took more unpaid time, it was more profitable to see a high volume of healthy patients as a result, physicians opened limited spots for patients with chronic illnesses or acute conditions. The reimbursement system was a disincentive. The code was subsequently revised to permit reimbursement for the additional time spent on sicker patients, which includes significant coordination of care.

We have seen an uptick in private equity investments across the nation investing in platforms that assist family practice or primary care practices in coordinating care for their chronically sick patients. We thought this was a little bit unusual from the beginning, because like I said, chronic care practices, or family practices, or primary care practices typically don't have a high margin and aren't the type of practice that a private equity platform would be interested in because there's not a surgical element.

While these platforms offer huge efficiency advantages to primary care physicians, they run into several regulatory hurdles, including state corporate practice of medicine laws, stark and kickback issues when determining reimbursement between the practice and the coordination platform, and in Georgia, state certificate of need issues where the platform seeks to provide home health services.

It's likely because of these hurdles that integrated family practices can be more successful because the health system assists with the care coordination activities and additional administrative work.  Additional coordination of care provisions were implemented in the 2024 Physician Fee Schedule. CMS created an add on code for E&M visits to recognize the resource cost associated for visits with patients who have significant clinical, mental, behavioral, or psychosocial issues.

And CMS also increased reimbursement for psychotherapy and behavioral health services. Certainly, there's more of an emphasis on mental health and chronic care illnesses related to mental health. CMS has established payments for caregiver training by practitioners including physicians, non-physician practitioners, and therapists for certain severe diseases or illnesses such as dementia.

CMS will now pay for certain coordination of care services that involve healthcare support staff such as community health workers, care navigators, and peer support specialists.  The takeaway is that it does take a village to coordinate the care for the acutely sick in the community, and CMS at least has recognized that those individuals also need to be reimbursed.

Some of these funds are also directed to the state Medicaid plans, and some are intended for Medicare beneficiaries with high-risk conditions such as dementia, HIV, AIDS, or cancer. These type of programs is where there's more opportunity for private equity investment as a successful setup can be leveraged to a Medicare managed care program or even to integrated family care practices.

We have also seen in recent years PE roll ups in the primary care space and these initiatives make those practices more revenue friendly.  Other areas that would be relevant to the treatment of chronic care illnesses is expansion of telehealth services reimbursement, and certainly that was a trend we've been seeing since COVID.

Providers will be able to continue to bill for physical therapy, occupational therapy, speech language pathology, and diabetes self-management training, and medical nutrition therapy services provided via telehealth. We also see coordination of care services at the Medicaid level for the elderly. In Georgia, the Community Care Services Program is a Medicaid home and community-based waiver services program that provides community based social health and support services to eligible consumers as an alternative to placement in a nursing home.

Again, this is like we referenced in the first and second episode, which is independent aging. Available services include the following, adult day health, alternative living services, emergency response services, home delivered meals, home delivered services, out of home respite care, and personal support services. This is like creating a village for the elderly, trying to keep people out of nursing homes, for which we discussed in the second episode, we both have a shortage of beds, and the reimbursement framework is just not that great. To receive these Medicaid services a care coordinator is assigned to ensure the appropriate services are delivered. We also see some tech developments for at home monitoring devices or wearable technology and Medicare reimbursement for those technologies. As much as I love tech and AI, I do think that services involving people actually coming to your home and checking on you and then coordinating with other people who know what services you should be getting is a little bit more valuable than at home tech.

To the extent we can use at home tech to coordinate those people who are coordinating you, that would be great, but I just don't see tech as the panacea to everything right now.  As I summarize these chronic care management initiatives, I want to talk a little bit about the Stark and Federal Kickback Laws.

A couple years back, they were revised to address some value-based practices, and in my opinion, those revisions remain somewhat unworkable and wholly unuseful. They don't really inspire any new innovations. One simple area that I wish could be addressed, or redefined rather, is the use of telemedicine where there are ancillaries involved.

This comes up in the context of setting up rural clinics, rural outpatient clinics, and rural outpatient psychiatric clinics, or intake centers, where professionals are delivering services via telemedicine, but certain labs and ancillaries are furnished on site. CMS has been quick to revisit telemedicine during and after COVID, but there could be additional flexibilities built into the Stark Law as well particularly as we deliver mental healthcare services.

I hope that gives you a fulfilling primer on preventative care and coordination of chronic illnesses. If you have listened to my introduction episode, you'll know that some episodes will be legal heavy, and some will be legal light, and the next couple episodes are likely to be legal heavy, starting with The Stark Law.

Hope to see you next time, and thanks again for listening to Redefining Health Law. If you haven't already, I invite you to subscribe on your favorite podcast player so you won't miss an episode. And of course, if you have any topics you would like to hear discussed, please don't hesitate to email us at redefininghealthlaw@phrd.com.

We would love to hear from you. Thanks for listening, and until next time, I'm Tara Ravi.