The Medicare Playbook for Health Tech Founders, with Abe Sutton of CMS

[on hold music] Welcome back to Startup Health Now, the podcast where we celebrate the entrepreneurs and innovators who are transforming health. Today we're excited to host a fireside chat with Abe Sutton from CMS. Abe is a rare blend of startup founder, policy architect, and now senior leader at CMS. He leads the team responsible for designing, testing, and scaling new payment models that determine how the federal government pays for care.

Let's just jump right in. Can you brief us really on CMS and CMMI really from the perspective of what innovators need to really know? How should we be thinking about its goals, priorities? If I were to sum it up in one word, it's affordability, where you could describe CMS as the most expensive part of the federal government.

We're expensive. So if we could get more bang for the buck and improve the quality of what we pay for, that would be transformative. The innovation center has an ability to deploy new payment models to enable service delivery in a different way. What that means is, as we see innovation in the market, as we see new technologies with promising potential applications in healthcare come to bear, we do not need to wait for Congress to act to say we will reimburse for this.

We don't have to wait for Congress to pass a new law. Instead, we're able to say, "Let's design, lay out the structure, and then start paying off of that and let people come in." What we pay for is an outcome. It's an outcome aligned payment where we track your A1C levels, we track your BMI, and we look at did you drive pat - an improvement for that patient from the baseline recorded to where they are a year later.

But in essence, this incentivizes the achievement of outcomes, and we're paying some - an amount that if people can meet and achieve these outcomes is likely to be deflationary for our healthcare system. If we could improve people's health outcomes on these key metrics for the amount we're paying, it is a good deal for CMS as people engage in this. We will then take that book of business, those unattributed lives, and put them out to bid. And I do see this as another entry point for technology innovators to come in and say, "We will take on accountability for ten thousand lives in this geographic area, in the state of Maryland, in the state of Vermont, in the state of Connecticut."

But one of the most exciting ways we can see this play out is maybe somebody on this call looks at this and says, "We will give everybody on who we get assigned accountability for an AI doctor for free, and we'll take advantage of the Stark and anti-kickback protections that apply here. And we'll engage with these people, help support them and direct them to the right point of utilization in the healthcare system and ensure that there's not an unnecessary emergency department visit, ensure there's not an unnecessary visit and help drive down spend.

And because we're on the hook for it, we certainly can make these investments." One thing that is eye-opening is to go and read the regulations and also to speak to people who are involved in writing them. It's a good way to underwrite stroke of the pen risk, which in a highly regulated industry where the major payer is government, is a helpful thing to do. Regulatory understanding is one of the key things people should have in underwriting for a healthcare investment.

That's full stop. Think through the incentive of why the thing exists. And so to translate that from less vague words than thing, but like, why is it that Medicare is paying for this in this manner? Why is it that Medicare wants to pay for CCM or for use of digital therapeutics?

And understand, is the business model you are building something that aligns with our actual goal, or is it exploiting a loophole that we inadvertently created? In the event that it's a loophole, it's not the intent, it's not going to achieve the result that a regulator is looking for, it may last. It may last for one year, it may last for five years, it may last for fifteen years. But eventually, someone will come along and call it waste and try and close that loophole.

Whereas if your business is built on delivering better clinical care and improving the standard of care in this country, no one's gonna come around with an incentive to say we should try and curtail that. Abe, you're super popular here. You have a lot of questions, so we're gonna do rapid fire if we can. Avonley Christine from Avonley Care.

How are you, Avonley? Hey, nice to meet you. So [clears throat] I'll be very quick. So we are Avonley Care.

We bridge the gap between [clears throat] health plans and the caregiving family. And so our goal with health plans over the next year is we're getting ready to scale with a larger health plan of their Medicare Advantage population. We've identified caregiver data in the millions that they have never used to really tap that caregiver to help mom, who's a member, schedule her mammogram, annual wellness visit, get food, get medications for fill to the home. Because there are three things that matter for encouraging technology innovation in this country.

Speaking with a regulator government hat on, three things. One is market access, right? So either the state license you as a doctor or the FDA gives you a pathway, either you're fall into an exempt category or they actually say, "This is the path of how we allow digital therapeutics to the market." Okay.

Number two is really the thing you're talking about, which is Amy Gleason's health tech ecosystem, the approach there to make data accessible to enable you to innovate and fine-tune the model and know you're intervening in the right way and have the best approach, and then find the right people to support. And then number three is the reimbursement pathway, which is where I come in with the innovation center, and access is one example of that. You kinda need all legs of that stool to actually have the pace of development that we, I think, as Americans, would really wanna see occur in this country.

Access requires participants to do a push of information to the designated provider of the person, the person who's getting the co-management payment, which typically our structure under TEFCAOnly requires you to share things as it's pulled. Thank you, Avonley. Next up, Christopher Ju, Caregivers Insight. Uh, another related caregiving question.

So Christopher, please introduce yourself. Uh, I'm Christopher Ju, co-founder of Caregivers Insight. We empower family and professional caregivers, capture daily observations, things like physical behavior, health, medication adherence, and care needs, with a mobile platform that turns that information into shareable visualizations with the care team. Ultimately, this helps identify changes early, support chronic care management, reduce avoidable utilizations, hospitalizations, e- escalations by making caregivers a more structured part of the care model.

GUIDE is a dementia-focused model, but it's also our only model that explicitly accounts for the role of caregivers. Caregivers have been describing that the supports they're getting are really transformative here. They f- feel less isolated, more confident in the management that they're able to give to their loved one for being on top of their dementia, and for the first time, they're able to take a real break. We'll have the initial evaluation results from the GUIDE model out in twenty twenty-seven, and I'm optimistic that it will show meaningful impact on quality of life, caregiver burden, and long-term cost savings.

Next up, we've got Ailu Kumsaw from Clexa. How are you? Welcome. Hi, Unity.

Thank you, Abe, for being here and talking with us today. That was really insightful. I'm gonna quickly ask about the rural healthcare systems that might be utilizing this model because at Clexa, we work with rural healthcare systems. We are a AI-powered clinical intelligence platform, so we work directly with healthcare systems, embed ourselves into their EMRs, kind of like an intelligence layer, and give them insights based on their data.

There are higher payments for patients who are located in rural areas on some of those tracks, which reflects the higher cost of engaging these patients, reaching them, and therefore the higher interest that our society has and Medicare has in supporting that engagement. Congress has laid out an ambitious program to really transform the face of care in rural America and radically improve access and lean heavily on technology in that journey. All right, we're gonna do rapid fire.

We got so many great questions. Scott Hogue's next from Imaginostics. Welcome, Scott. Hi.

Thanks, Unity. A real pleasure to hear your thoughts on all this, Abe. We're developing a new innovative mechanism for measuring blood flow and blood perfusion in the body through MRI. Our chicken and egg problem is we don't really have the billing, like CMS codes.

We don't ma-neat- match neatly into the CMS codes, but there's clear science, and when we discuss with the physicians about how to use this technology, they say, "Oh, the science is great, but how do we, how do I actually get this into clinical practice?" My key question to you would be, what is the way that your technology is applied in a deflationary manner, and is there a way you are comfortable taking on the risk in that transition? So if you're like, "We are a diagnostic," maybe you're a qualification pathway that can help qualify people for access, and maybe others will be interested in reimbursing you to fuel their participation there.

That would be one way to go about it. I don't know if the economics square and the cost of what you'll need for it to work. People typically look and try and get coverage for their devices, get a code set up. People typically go and look to s- have an approach that says, "Oh, we should get a new technology add-on payment for different things."

My orientation is it would be better as a healthcare system if we incentivize the application of new technologies in a deflationary manner and tied it into cost avoidance elsewhere. All right. It wouldn't be a Fireside Chat without Chuck Yu here from NeuroM. Could you introduce yourself, please?

Hello, Abe. I'm Chuck Papageorge. I'm the CEO of NeuroM Therapeutics. The question, I, I always come at it a little different from everybody else.

We actually have a device with a breakthrough designation from the FDA for treating Alzheimer's, literally reversing the cognitive decline from Alzheimer's disease. 'Cause it's not a new problem. It's been tried many times before, but you have... And if you look at economics, a typical Alzheimer's patients with an eighteen thousand to twenty thousand dollar a year monoclonal antibodies that on average lives eight years on that, it's costing the system two, three hundred thousand dollars, or they can get a device and a therapy that reverses that and cost ten thousand, twelve thousand dollars.

So there is a big thing, but we still can't figure out how to bridge that gap, and I'm interested in hearing your perspective. One thing that I think is important to think about when making policy is, how can I remove stroke with a pen risk for people coming in? How can I ensure that regardless of who the next president is, the thing I do endures? And reaching for the hundred percent answer versus reaching for the fifty percent answer, you have to judge what is the right place to land on any given policy.

Okay. Next up, Shireen from Yumlish. How are you? Nice to see you.

Nice to see you too as well. Thanks so much, Abe, for coming on. Truly appreciate this conversation. Abe, my question is related to, of course, what we do.

So I'm the founder of Yumlish. We provide a web and tech space, so all tech-enabled diabetes prevention programs. We're also moving to an AI-enabled model. My question to you specifically is a- around the MAHA Elevate, uh, applications that you're taking currently.

I wanted to understand a little bit more about how you're evaluating proposals there. I looked through the call itself. It just wasn't immediately clear to me. Are you looking at the strength of the prior clinical outcomes, ability to generate new cost and utilization methods or, or uptake in Medicare Part B population?

Could you help me understand that a little bit? It's not looking at existing uptake in Medicare Part B because there typically would not be. It's things that are not covered. I am interested in both what is the evidence base from a, you've applied this with a different sizable population that is not Medicare eligible, and therefore we have reason to believe, or Medicare eligible that are not getting it through Medicare, and therefore we have reason to believe it will work.

I would love to have a set of great interventions that we could then offer to everyone in Medicare at the end of this and know that enough people will take it up.And see an impact. And we've got, we got close to 1,600 letters of intent in. There's a lot of strong interest.

Okay, thanks. Brian from Phenobiome, you're up. Thank you, Abe. Great to have you.

Thanks for the insights today. Hey, so Phenobiome microbiome analysis reporting, a precision care type nutraceutical product. Been working with Chris Klomp on some policy changes around how we incorporate microbiome around preventative care, specifically to the CMS population. He pushed that or punted that over to CMMI as a starting point, as an innovative project.

Just any insight into how to expedite moving that through? I know it's a slow process, but any insight into how to expedite moving those types of projects through? The core thing, I think, for anyone engaging with CMMI is broadening out from this is a particular pilot for our company, which people who are, you know, they've pitched to MA plans, they've pitched to others. They're often like, "Oh, we could do a small pilot."

They're pitching us wrong when people come and bring that in. Every single model needs to go through the same clearance pathway. Me, the administrator, the secretary, Office of Management and Budget, Domestic Policy Council. Why would I use a shot on goal on something small?

So what's more exciting and helpful, frankly, is to have people come in and say, "Here's a way that something you were already doing could be adopted to enable this." Mm-hmm. Expand it out. Or, "Here's something that is actually getting at core challenges that is a big thing in our system, that applies to many different areas, where you should take it on."

Then whichever way you frame that, what is the case of why doing this will produce savings, and how compelling will that be to the Office of the Actuary? And to the extent that it's something that has a meaningful impact and produces real savings, where the risk to the taxpayer is low, we get interested. All right. Nandan, how are you?

Nice to see you. Starlight. Yeah, thanks. I'm doing great.

I... So I had a question around the financing ecosystem. You mentioned a couple things. One, uh, you're looking to create a lot of new initiatives that are really focused on companies taking risks, and also them being deflationary to the system.

And I just wonder how you look at or whether you monitor early stage financing ecosystem and how well that aligns with new companies trying to do both of those things, when I think about often taking risk involving technology, actuarial, and sometimes clinical service delivery, so human, financial, and technological expertise, which may or might not be aligned with sort of early stage financing. I see a lot focus, especially nowadays, on pure technology or individual pieces and less delivery.

What we've found so far in access is people have been willing to underwrite it. Either it's because people had existing commercial oriented cash pay type of businesses and now are moving into Medicare and see this as a way to do it, or people have been able to tack capital and tell a narrative given the scale of the market that has been made available. Historically, you did have a really slow go to market in serving a Medicare population because you typically serve a... The regulatory approval of coverage was, like, not on the table original Medicare, but you'd go to the Medicare Advantage plan or the commercial plan, and you'd have a long process where maybe it's a pilot program, and then you'd have steps to walk through to prove out before you get payments.

And so our process where we're just putting it out and anyone who gets onto, who's accepted into the program could go direct to consumer and try and engage them, does remove some time length that previously you would have had to go through for the sales process of an enterprise sales that we've just knocked out. It's a fair question of you have decided that in order to do this and play in the Medicare space, you have to be willing to take on this incremental risk, and that will deter some players from coming in.

We are coming up on time. Abe, we just are so grateful for your wisdom, your candidness. I especially loved your line, "Why waste a shot on goal on a small opportunity?" I think that's words of wisdom.

We think about health moonshots. We focus on health moonshots and every health transformer here. Go bold, go big, and it's more likely to get through. Abe, any last word of wisdom you wanna share with the ecosystem?

I'm excited about the next five years and what we'll see unlocked in terms of giving everyone in this country great access in a more affordable manner, because frankly, we've been on an unsustainable pathway. We don't always have everything right. We often get something wrong. That is typical because we do not have the expertise of being out there and operating and running into the barriers, and hearing what the barriers to people doing the things we are saying we're trying to incentivize you to do are, is incredibly helpful.

And so thank you to those of you who have already reached out and shared insight in the past, and I encourage you, those who have not, please reach out. We'll help connect you to the right person on the team, but we do really value that input. [outro music] And finally, an invitation to all of the extraordinary health transformers, whether you are a startup, someone building the future of health, or whether you are an investor, funder, or buyer of the solutions out there in the marketplace, this is an invitation to you to join the Startup Health member community.

Learn more at startuphealth.com. Look forward to hopefully seeing you soon.