A Financial Case Study: Tales of a Medicare Care Coordination Operation

Physicians and their staff have long been advised of the quality of life improvements afforded through the implementation of care management, wellness, and prevention programs for Medicare patients. 

But do they really understand what is to be gained financially?

Care coordination.  Value-based care.  Population health. 

These catchphrases resonate with everyone in the healthcare industry (unless you live under a rock). By getting ahead of the medical and behavioral conditions from which patients suffer (or are bound to based on complex data analysis), particularly for those patients who demonstrate the greatest amount of risk (poor health, limited education, socioeconomic challenges, etc.), we can generate significant improvements in both health outcomes and costs of care.

A genuine, if not a benevolent, idea, which on the surface seems achievable, yet hasn’t been at nearly the levels that it should be; patients with a minimum of one chronic condition account for 99% of the Medicare spending, while issues related to obesity alone amount to nearly $200 billion in healthcare costs. 

While patient accountability and willingness to engage with clinical professionals continues to be a noticeable hurdle, many physicians play a role in the slow transition to a preventive model of care.  How can we further entice them to move more quickly in the appropriate direction?  Well, here’s another well-known catchphrase: Money talks.

In the paragraphs below, I tell a story about a chronic patient named Jane Doe, a 67-year-old diabetic with hypertension.  In this story, we’ll uncover several preventive and care management services for which she qualifies, discuss their delivery, and end on a happy note through the demonstration of improved clinical outcomes and overall health quality – a tale as old as time! 

Following its completion, we’ll revisit this story in the context of services provided to Jane and their claim reimbursement opportunities, and we’ll talk about what this can mean to the primary care practice at scale.

The Story of Jane Doe

Now, let’s tell Jane’s story.

Jane is a frequent visitor to her primary care doctor, Dr. Godla, but these visits are for the wrong reasons – she has regular bouts with acute illnesses, resulting from her overall well-being (or lack thereof).  In her latest visit, Dr. Godla advises that Jane should undergo an Annual Wellness Visit (AWV) to set a baseline health status, identify opportunities for improvement (as well as their barriers), and set goals for future achievement. 

As part of her wellness visit, Dr. Godla and his staff perform a health risk assessment, which includes logging vital measurements such as heart rate, blood pressure, weight, etc.  They advise Jane that she is eligible for Nutritional Counseling (per her Diabetes), Behavioral Therapy for Obesity (due to her high BMI), Counseling to Prevent Tobacco Use (she is a pack-per-day smoker), and Depression Screening.  She is also advised of her qualification for enrollment in a Chronic Care Management (CCM) program (due to her multiple chronic conditions) and is provided with a glucometer and a blood pressure device for the Remote Monitoring of vitals.

Three days following Jane’s visit with Dr. Godla and his staff, she receives a call from Patti, her newly assigned case manager. Patti takes Jane through a care plan assessment to not only further define Jane’s clinically-oriented goals but to discuss what “quality of life” means to Jane and identify goals that Jane sets, with Patti’s assistance, for herself.  Patti and Jane will forge a close-knit relationship over the coming months. 

During a future engagement between Patti and Jane, Jane advises Patti that she hasn’t felt like herself for quite some time and has experienced a frequent series of heavy mood swings.  Patti guides Jane through the Mood Disorder Questionnaire (MDQ), and Jane scores in a range that qualifies her as having a Bipolar disorder.  Patti advises Dr. Godla of the assessment, and Dr. Godla formally diagnoses Jane with this condition.  Jane is now enrolled in a Behavioral Health Intervention (BHI) program, and Patti will continue to provide care coordination services for her complete set of comorbidities.

Over the course of the coming months, Jane starts noticing improvements in her health.  Her conditions and vitals are frequently monitored, and she continues to engage with Patti on a regular basis; Patti tracks Jane’s personal and clinical goals and the outcomes of their engagements.  The information is collectively summarized and sent to Dr. Godla for review, with clinical recommendations provided to Jane, and her care team, as needed.

After 9 months in the CCM and BHI programs, Jane shows tremendous improvement in her health.  She has lost weight and her BMI is now below the obesity line; her blood sugar and HbA1C levels no longer demonstrate significant risk; her blood pressure is below an abnormally high level; she experiences fewer mood swings; she has quit smoking, joined a fitness center and follows a healthier meal plan. Most importantly, Jane has met many of the personal goals that she set for herself per her definition of quality of life.

Again, we’ve all heard a story like this before – preventive and case management services do indeed work for the patients they serve.  But how do they work for the practice? 

Reimbursement Example for Care Management Services

Let’s look at the claims submitted on Jane’s behalf, along with their national (non-facility) fee-for-service reimbursement average:

In a 12-month timeframe, the practice receives $6,494 in reimbursements for Jane’s preventive and case management services.  Could it be that Jane is an extreme outlier, and most patients won’t produce reimbursements anywhere near that amount? It appears to be quite the opposite: Most Medicare patients more closely resemble Jane’s health status than otherwise. In fact, the numbers are rather staggering and define quite the financial opportunity.

If we review the average one-doctor primary care practice in the United States, we find that approximately 700 of its patients are provided coverage through Medicare (Part B, Part B with supplemental insurance, or Medicare Advantage).  Of these 700 patients, two out of every three are likely to have two or more chronic conditions, qualifying them for the CCM program; one out of every five has a behavioral/mental/substance abuse condition, qualifying them for the BHI program; and 100% of them qualify for an AWV, depression screening, and RPM.

Knowing that people are, unfortunately, a combination of fickle and lacking in both trust and accountability, let’s say we enroll 50% of eligible patients into a monthly CCM and BHI program. We provide, over the course of a year, an AWV and Depression Screening to 70% of the population, and we convince a quarter of the population to monitor their health on frequent occasions each month through approved medical devices.

Here are the potential financial results over the course of a 24-month period, assuming a 6-month timeframe to maximum projected enrollment into CCM, BHI, and RPM:

The enrollment numbers from above seem relatively conservative, particularly in terms of program eligibility.  Let’s review the potential results for a single doc practice where 3 out of 4 patients are CCM eligible (with 60% of eligible enrolled), 1 out of 4 patients are BHI eligible (with 50% of eligible enrolled), 80% of patients are provided an AWV, and 1/3 of patients engage through remote monitoring:

∗Net profit total accounts for both staff salaries and estimated technology fees

When including additional preventive and wellness services in their portfolio, a single physician, in two year’s time, that meets the parameters defined above can generate close to $1M per year to the bottom line, with a 60% net margin that factors in dedicated staffing (one medical assistant per 250 patient claims) and technical solutions/services.  A hefty revenue boost within a business model that sees, on average, net margin percentages that register in the low teens

Critiquing the Arguments Against Care Management 

It is understood that many/most will find incredulity in the financial value provided through a collection of value-based fee-for-service programs.  Let’s walk through a few of the arguments:

• Practice revenues already include money generated from preventive/care management programs. According to a 2017 study, only 41% of (surveyed) primary care practices had instituted a CCM program, and 44% provided AWV services to less than 40% of their Medicare population (only 1 in 10 had provided AWVs to more than 80% of their Medicare population). While this is not a net-new revenue source for all, it is for most.
  
  
• Physicians don’t have the time to oversee and/or provide consultations to these types of programs, so doctors spend up to 49% of their workday on EHR/desk work. What does this work include?  Lab/test reviews, prescribing medications, patient charting, etc. What is the common denominator of these activities?  They all qualify as CCM/BHI-eligible non-face-to-face services.  
  
  
• Patients don’t engage. Fair point and acknowledged in both my commentary and calculations above. Of course, just because they don’t doesn’t mean they won’t. Healthcare providers need to do their part and offer more ways to engage beyond the in-person clinical setting.  Telehealth provides this; wearables and other medical device technologies provide this; patient portals provide this. All of these complement the services addressed as part of our case study.
  
  
• More value-based services and healthier patients result in fewer office visits and a reduction in revenue already generated. Maybe there is some offset here, but office visits won’t end altogether, and be reminded that per MACRA regulations and quality reporting mandates, clinicians will be graded on the type and amount of fee-for-service claims that are submitted. For those reporting through MIPS, cost will account for 10% of your 2018 score, 15% of your 2019 score, and 30% of your 2020 score. As discussed in my MACRA whitepaper, by promoting health and wellness through reimbursement programs and the reduction of unnecessary claims, clinicians can actually make money … by making more money.

Studies show that almost 61% of physicians believe that value-based care will negatively affect their practice; 63% believe that a transition away from volume-based care will also have a negative effect on their earnings. 

Jonathan Swift once wrote that “a wise person should have money in their head, but not in their heart.” Through highly profitable proactive care services, maybe this is an opportunity for clinicians to further live by these words.