Flare Capital Partners’ Gwendolyn Lee & Dr. Dan Gebremedhin highlight digital health startups taking advantage of Medicare and key opportunities within Parts A-D for others to make their mark.
In Part 1 of this article, we introduced Medicare and its covered services, along with rationales for digital health startups to engage with the nation’s largest payer. These motivations include Medicare’s large and growing beneficiary base, access to the nation’s largest and most influential payer, and movement toward value-based care.
Despite these opportunities, startups have been relatively slow to service the Medicare space, instead choosing to focus on employers, commercial payers and direct-to-consumer offerings. We hypothesize one reason for the delayed entry is Medicare’s complex, rigid structure and stringent reimbursement regulations.
In Part 2 of this article, we brainstorm ways that early-stage companies can penetrate the Medicare market. We highlight several early-stage companies, many VC/PE backed, that have seen meaningful traction in the Medicare market. In keeping with our framework in Part 1 we describe each startup in the context of which part of Medicare the company serves: Parts A and B of Original Medicare (OM), Part C or Medicare Advantage (MA), and finally Part D, the prescription drug plan. Finally, we offer recommendations for emerging startups seeking to innovate in Medicare.
Key industry stakeholders
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There are a handful of key Medicare industry stakeholder roles startups will either embody or interact with when delivering products or services to the Medicare population. We feel it’s important to understand these profiles and their incentives when positioning in the Medicare market.
Institutional providers and facilities
Providers include hospitals, skilled nursing facilities (SNF), home health agencies (HHA), clinics, opioid treatment programs and other institutional providers that have entered provider agreements under Medicare. Providers must submit an application to enter a Medicare-approved patient care services agreement.
Startups often deliver software and services to Medicare providers, who then pay these startups fees which are a small fraction of Medicare services revenues. Some startups will assume the costs and other regulatory requirements and apply for Medicare provider status themselves.
Payers
While the Centers for Medicare and Medicaid (CMS) is the payer for OM, Medicare’s ecosystem involves other payers and at-risk entities, such as MA plans. MA plans that seek to offer insurance products to Medicare-eligible patients must submit a Notice of Intent to Apply two years ahead of entering the market. The MA plan application itself is heavily scrutinized, and, once approved, MA plans must continue to meet Part C reporting requirements.
Source: Mobihealth News
