Healthcare VC Sarath Degala Shares Commentary on Chronic Care Management in MGMA

In June, Sarath Degala, our healthcare focused lead at BIP Capital published a new article for the members of MGMA: The Medical Group Management Association on how medical practices could leverage new solutions for their patients’ chronic care management to drive significant revenue stream and reduce costs. In the commentary, Sarath shared:

Approximately 71% of the total healthcare spend in the United States is associated with care for Americans with more than one chronic condition. Among Medicare fee-for-service beneficiaries, people with multiple chronic conditions account for 93% of total Medicare spending.

A large proportion of these costs are for acute care hospital and emergency department (ED) visits that could be prevented by earlier intervention. Placing a greater focus on public health programs with an eye toward preventing chronic diseases is one way to address these costs, as are payer incentives for not smoking and other good health practices. But there is another way for physicians to address these costs.

Benefits of Medicare reimbursement for chronic care management

In 2015, Medicare began reimbursing for chronic care management (CCM) services using CPT Code 99490. The reimbursement covers non-face-to-face services for Medicare patients with multiple chronic conditions. Following the Centers for Medicare & Medicaid Services (CMS) move to reduce chronic care spending and improve outcomes with more attention paid to chronic care prevention at the primary care level, the reimbursement provides an incentive for physicians to try a new way to treat their sickest — and costliest — patients.

The program is working. The Center for Medicare & Medicaid Innovation (CMMI) recently released a report showing the program’s association with lower growth in Medicare costs, reduced hospital admissions and increased connections with community-based resources for patients. The CCM program reduced costs by $74 per beneficiary per month (PBPM) over the 18-month period studied.

In addition, patients in the CCM program had lower hospital, ED and nursing home costs. CCM was also linked with a reduced likelihood of hospital admission for people with diabetes, chronic obstructive pulmonary disease (COPD), congestive heart failure, urinary tract infection, dehydration and pneumonia.

The program is good for physician practices, too. A 2015 study published in the Annals of Internal Medicine estimated that healthcare practices that billed CPT code 99490 for CCM services provided by nonphysician healthcare practitioners (i.e., registered nurses, etc.) could expect an annual practice revenue increase of more than $75,000 if a minimum of 50% of eligible patients were enrolled in the program. That’s no small chunk of change.

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