HealthTech Horizons

Decoding digital health trends with insights into what really matters for you

What’s In This Edition:

Insight Spotlight: Epic's new feature enabling patients to easily share medical records with health apps represents a major advancement in healthcare interoperability, potentially transforming patient data management while highlighting the ongoing challenges and opportunities in digital health innovation.

Innovator's Radar: Digital health companies are attracting major investments across various sectors, with Spring Health, PayZen, Guidehealth, Flo Health, and Headway securing substantial funding rounds, demonstrating strong investor confidence in healthcare technology innovations.

Decoding Digital Health: CMS's proposed 2025 physician fee schedule introduces new digital health reimbursements, including payments for digital therapeutics and expanded telehealth services, signaling a shift towards integrating digital solutions in healthcare while highlighting the need for Congressional action on key telehealth policies.

Industry Pulse: Major health insurers faced significant challenges in Q2 2024, with UnitedHealth regaining top profitability despite cyberattack impacts, while others grappled with pressures from Medicare Advantage, Medicaid redeterminations, and elevated medical loss ratios, highlighting the complex landscape of the health insurance industry.

Hot Topics: MEDITECH's launch of Traverse Exchange, a nationwide interoperability network supporting FHIR-based data exchange and TEFCA connectivity, aims to enhance health information sharing and streamline clinical workflows for improved patient care.

Data Dive: Navitus' Annual Drug Trend Report reveals a 6.8% increase in overall commercial drug spending for 2023, while highlighting the potential of transparent PBM models to reduce costs, as demonstrated by cost decreases for 29% of its clients and significant savings through biosimilars and generics.

Insight Spotlight:

The healthcare sector is undergoing a digital revolution, with advancements in health information technology and data interoperability at the forefront. As we look to the future, the convergence of healthcare and technology promises continued innovation, though uncertainties persist regarding the implementation of new regulations and the industry's overall direction.

• Epic has rolled out a new feature called individual access services (IAS) that makes it easier for patients to share their medical records with health or wellness apps they use.
• This development is part of a broader industry effort, supported by new federal health tech policies, to advance data sharing at scale. It aligns with the Trusted Exchange Framework and Common Agreement (TEFCA), a nationwide network for exchanging patient data that became operational in December.
• The IAS capability gives patients more direct control over their health data, allowing them to access and share their electronic medical records across multiple providers and systems.
• Epic's new feature is expected to be deployed by its customers in the coming weeks. Other organizations, such as Health Gorilla, are also working on IAS use cases, partnering with identity verification companies to launch similar capabilities.
• While this represents progress, barriers to interoperability remain, including technical and cultural hurdles. Some hospitals and providers aren't connected on the same network, and workflow issues persist even among those who are connected.

Why it matters:

The introduction of IAS capabilities by major players like Epic signifies a crucial step towards patient-centric healthcare and improved data interoperability. This development has the potential to transform how patients manage their health information and interact with various healthcare providers and apps. However, the success of these initiatives depends on widespread adoption, overcoming existing barriers, and aligning economic incentives. As the healthcare industry continues to digitize, the ability to seamlessly and securely share patient data will be critical in improving care coordination, enabling innovation, and empowering patients to take control of their health information.

Innovator's Radar:

Here is the latest roundup of digital health financing rounds:

• Mental health benefits company Spring Health hits $3.3B valuation, boosted by $100M series E round.?
• PayZen, a healthcare fintech startup that offers AI-powered patient financing solutions nabs $32M series B, $200M debt facility to fuel market expansion.
• Guidehealth, a company using advanced technology to support health systems and clinical networks in scaling value-based care beyond the inpatient setting, picks up $14M in seed funding.?
• Fertility and period tracking app Flo Health banks $200M to reach unicorn status.
• Headway banks $100M series D round to accelerate expansion into Medicare Advantage and Medicaid.

Decoding Digital Health:?

The Centers for Medicare & Medicaid Services (CMS) has proposed new payments for digital health services in its calendar year 2025 physician fee schedule draft rule, signaling a significant shift in healthcare reimbursement policies.

• CMS proposes creating three new codes (GBMT1-3) for digital mental health treatment devices, including digital therapeutics, allowing providers to be reimbursed for using FDA-cleared devices that deliver behavioral health therapies.
• The draft rule extends some pandemic-era telehealth provisions and proposes to make a few permanent, such as allowing virtual direct supervision for certain services with established patients.
• Rural health clinics (RHCs) and federally qualified health centers (FQHCs) may be allowed to use audio-only telehealth visits and waive the in-person visit requirement for telemental health through 2025.
• CMS proposes significant changes for opioid treatment programs, including permanently allowing audio-only and audio-visual assessments, and permitting telehealth for buprenorphine and methadone treatment induction.
• The draft rule does not address the majority of Medicare telehealth waivers set to expire at the end of the year, which require Congressional action to extend.
• While some changes are seen as positive for the digital health community, experts are still analyzing the implications of other proposals, such as the potential impact on remote monitoring reimbursement.

Why it matters:

These proposed changes reflect the growing importance of digital health in the healthcare landscape and CMS's efforts to adapt payment models accordingly. The new provisions could significantly impact how providers deliver care, particularly in mental health and substance use treatment. However, the exclusion of core telehealth waivers from the proposal highlights the ongoing uncertainty in telehealth policy and the need for Congressional action. As healthcare continues to digitize, these policy changes will play a crucial role in shaping the future of care delivery, access, and reimbursement models.

Industry Pulse:

Major health insurance companies faced significant challenges in Q2 2024, particularly related to Medicare Advantage (MA) and Medicaid, with varying impacts on their financial performance.

• UnitedHealth Group regained its position as the most profitable company in the industry for Q2, reporting $4.2 billion in profit, despite ongoing financial impacts from the Change Healthcare cyberattack.
• Elevance Health reported $2.3 billion in profit for Q2 but led in profits for the first half of 2024 with $4.5 billion, compared to UnitedHealth's $2.8 billion.
• Centene and Elevance Health faced pressures from Medicaid redeterminations, with Centene reporting a 87.6% medical loss ratio in Q2, attributed to enrollment changes and higher member acuity.
• CVS Health and Humana experienced challenges related to Medicare Advantage, with Humana expecting to lose "a few hundred thousand" members due to benefit adjustments and market exits.
• The Cigna Group, with less exposure to the MA market, reported a medical loss ratio of 82.3% and seemed less affected by the ongoing struggles in that sector.
• UnitedHealth maintained the highest revenue among the six national payers, reporting $98.85 billion in Q2 and $198.65 billion for the first half of 2024.

Why it matters:

These Q2 results highlight the ongoing challenges in the health insurance industry, particularly in Medicare Advantage and Medicaid sectors. The varying performances across major insurers underscore the impact of regulatory changes, market dynamics, and external events like cyberattacks on financial outcomes. As companies navigate these challenges, their strategies for addressing elevated medical loss ratios, membership fluctuations, and market pressures will be crucial in shaping the competitive landscape and potentially influencing healthcare access and affordability for consumers.

Hot Topics:

EHR vendor MEDITECH has launched Traverse Exchange, a nationwide interoperability network to enhance health information exchange capabilities for its customers.

• The network supports secure health information exchange across EHRs and networks compliant with interoperability standards.
• Traverse Exchange leverages FHIR-based data requests to enable real-time data sharing, moving beyond static document exchange.
• The offering includes tools for compiling and curating data to provide a comprehensive view of patient health information from multiple organizations.
• It aims to simplify data access for physicians by embedding interoperability directly within their native workflows.
• The network supports TEFCA through connectivity to the Health Gorilla Qualified Health Information Network (QHIN).
• Traverse Exchange will be available starting Q3 2024.

Why it matters:

MEDITECH's Traverse Exchange marks a significant advancement in healthcare interoperability. By facilitating seamless data exchange and TEFCA integration, it has the potential to enhance care coordination, streamline clinical decision-making, and accelerate the adoption of advanced interoperability solutions, ultimately improving patient care and outcomes.

Data Dive:

Navitus, a pharmacy benefit manager (PBM), has released its Annual Drug Trend Report, revealing insights into prescription drug spending and cost-saving strategies. Key highlights include:

• Overall commercial drug spending trend increased by 6.8% in 2023, with specialty drug spend rising 5.7% and non-specialty up 7.9%, primarily due to increased use of costly brand medications.
• Despite the overall trend, 29% of Navitus' commercial clients saw a decrease in their prescription drug costs between 2022 and 2023, attributed to the company's transparent, pass-through PBM model.
• GLP-1 medications for diabetes management, such as Ozempic and Mounjaro, were the most significant contributors to increased spending.
• The introduction of adalimumab biosimilars provided up-front cost savings, reducing total costs by 20% for clients previously using brand-name Humira.
• Generic launches in multiple sclerosis (MS) and high generic utilization in oncology offered significant cost-saving opportunities, with generic utilization exceeding 60% in the MS category.
• Navitus customer Texas Association of Counties reduced pharmacy costs by $160 million over five years after switching to Navitus' transparent model in 2019.

Why it matters:

This report highlights the ongoing challenges in managing prescription drug costs and the potential impact of transparent PBM models. As drug prices continue to rise, especially for specialty medications, the findings underscore the importance of cost-saving strategies, including promoting biosimilars and generics. The success of transparent models in reducing costs for some clients suggests a potential shift in the PBM industry towards greater transparency and pass-through pricing, which could have significant implications for healthcare affordability and access to medications.

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The Topflight Team