October 1, 2023

Rising up in Detroit with out medical insurance, Cesar Herrera struggled to search out entry care — his household’s solely saving grace was federally certified well being facilities. That’s a part of the explanation he based his startup
Yuvo Well being, which is targeted on serving to FQHCs take part in value-based fee fashions.

Yuvo contracts immediately with payers — together with Medicaid, Medicare and industrial well being plans — for numerous danger preparations. The startup then companions with FQHCs, whereby these well being facilities delegate the danger of their attributed sufferers to Yuvo. As the corporate’s CEO, Herrera is proud to carry value-based care to Medicaid populations, however he needs there was extra innovation exercise devoted to those beneficiaries, he stated Thursday at HITLAB’s Innovators Summit in New York Metropolis.

In his view, there are two important obstacles that stop startups from launching initiatives or partnering within the Medicaid realm. The primary is ignorance. Many individuals within the healthcare area nonetheless lack a developed understanding of what the Medicaid inhabitants wants and the way Medicaid fee buildings work, Herrera declared.

“Organizations have tried doing issues in Medicare and translating that into the Medicaid area. Then they are saying, ‘This doesn’t work in Medicaid,’ and mechanically assume it’s as a result of Medicaid is the issue or the communities which might be being served by Medicare are an issue — however these are two vastly totally different populations. What may fit in a Medicare inhabitants mustn’t and would ever be relevant to a Medicaid inhabitants — you must do one thing totally different,” he defined.

The opposite impediment stopping innovation in Medicaid is that folks assume they will’t make any cash on this area because of the truth that Medicaid has a lot decrease premiums than Medicare. 

Herrera doesn’t assume that is true, however he stated it’s “actually exhausting to match” alternatives for revenue in Medicare versus Medicaid due to “the relative dearth of precedent within the Medicaid innovation area.” He famous that this lack of exercise within the Medicaid market has led some healthcare stakeholders to attract the conclusion that Medicaid populations don’t wish to be engaged, however he contended that this isn’t the reality.

Medicaid and CHIP serve a couple of third of the U.S. inhabitants, so there’s loads of alternatives in each state to strive new fee fashions and create higher pathways to care entry, Herrera identified.

Whereas the Medicare market has a way more established presence within the value-based care world than Medicaid does, Herrera acknowledged that Medicaid innovation has made some strides in recent times.

“We’re seeing numerous states selecting to be rather more revolutionary —whether or not proactively by selection or as a result of they don’t have any selection. It’s because Medicaid is a 3rd of their price range they usually’re attempting to determine easy methods to be financially sustainable with their taxpayer {dollars}. That’s creating plenty of room for various innovation, which we’re not simply seeing in blue states. In lots of closely pink states, we’re seeing plenty of attention-grabbing innovation taking place with different fee fashions in Medicaid as a result of they need to be sustainable,” Herrera declared.

Different healthcare stakeholders share Herrera’s view that Medicaid is in dire want of innovation. In April, Justin Norden, companion at GSR Ventures, advised MedCity Information that corporations in search of to innovate the Medicaid area face little competitors.

He added that there’s additionally an “unimaginable want” for startups to give attention to this area, as Medicaid beneficiaries usually wrestle with care entry and poor well being outcomes.

“There’s been nearly $20 billion in startup funding in the direction of Medicare Benefit which has a roughly $300 million annual price range. That is contrasted with Medicaid, an space that generates nearly $700 billion per yr by way of spending within the U.S., and solely about $1 billion {dollars} of startup cash is invested in that area,” Norden stated.

Photograph: zimmytws, Getty Photos