After a record-breaking year of funding in 2017, 2018 is off to a promising start for digital health companies due to a flurry of changes in the healthcare industry. The biggest question for digital health companies: how will these changes impact your business?
Berkshire Hathaway, Amazon and JP Morgan Chase Join Forces
Over the past ten years, healthcare costs have been rising at or above the rate of wage increases, according to data from the Kaiser Family Foundation. On January 30th, Berkshire Hathaway, Amazon and JP Morgan Chase announced that they will join forces by creating a company designed to provide more affordable healthcare to all of their employees. The joint effort represents a major paradigm shift in how medicine is delivered – by the employer itself.
A new and revolutionary healthcare model like this will likely lead to more focus on innovation in the healthcare world and an increased willingness from employers, insurance carriers and hospital systems to invest in digital health solutions if they can prove cost savings potential. It also signifies a shift toward employers taking more control over their healthcare by investing in innovative ways to provide quality care for their employees at lower costs.
Overall, this announcement is great news for digital health companies, as it will likely open up many business opportunities, accelerate adoption of digital health solutions and also have incredible revenue building potential.
Bipartisan Budget Act of 2018 & Telehealth
Signed into law on February 9th, the Bipartisan Budget Act of 2018 contains a number of provisions that will advance the ability of digital health providers to receive Medicare reimbursements. Historically, one of the biggest challenges faced by digital health providers has been the struggle to monetize telehealth visits and to get Medicare approval for certain procedures being provided in a home-based setting. The new bill helps solve a number of these challenges, including:
- Stroke assessment telemedicine reimbursements. Historically, stroke assessments were only approved in underserved rural areas in specific locations and situations, but the new bill lessens these requirements. The Department of Health and Human Services (HHS) still has some leeway in determining whether a patient’s home is an appropriate site or not, but all hospitals, mobile stroke units (as HHS defines them) and critical access hospitals will be approved for stroke assessments as of January 1, 2019.
- Dialysis reimbursements. The act dramatically expands the ability for dialysis services to be reimbursed if provided in a home-based setting or an independent dialysis facility. There are still some requirements for periodic face-to-face visits, but the ability to have much of the telehealth service reimbursed is a significant improvement.
- In-home services for Accountable Care Organizations (ACOs). Effective January 1, 2020, ACOs will have the ability to include in-home services where CMS deems appropriate, anywhere across the country.
- Medicare Advantage telehealth services. Beginning in 2020, Medicare Advantage plans will be able to include telehealth services as a part of their base benefit packages. While HHS has not fully determined which telehealth services will be included, they will be defined before the change takes place.
Both of these major developments will have a positive impact on the digital health industry. These events will help increase adoption of digital health technologies, and help existing digital health providers to significantly improve revenue generation and valuations to obtain additional funding.
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