Value-Based Care News Digest - January 2021

January 13, 2021

This month's digest recaps the major themes of another busy year in value-based care, spanning policy, research, innovations, payers and providers. You can also scroll down or click here for our roundup of December news.


2020 Year-End Review

  1. COVID-19

The pandemic has had tremendous repercussions throughout health care in more ways that we can catalogue. Here are two of the main themes that stood out in the realm of value.

  • Telemedicine: Health care delivery shifted in a big way during the pandemic.
    • Telehealth visits skyrocketed starting in February, when the CDC issued guidance advising persons and health care professionals to adopt social distancing practices.
      • The CDC identified a 50% increase in utilization of telemedicine in the first quarter of 2020 compared to the same period in 2019.
      • Among those utilizing telemedicine, the Medicare population saw tremendous gains. For example, nearly 1.7 million beneficiaries received service in the last week of April compared to 13,000 beneficiaries a week before the pandemic.
    • In response to increased utilization, the federal government implemented new measures that provide additional support for telemedicine.
      • The coronavirus relief package in early March contained $500 million dedicated to waiving Medicare-specific telehealth restrictions, allowing more beneficiaries to receive care from their homes.
      • The HHS Office for Civil Rights indicated that it would waive penalties for HIPAA violations against health care providers that utilized FaceTime and Skype in good faith to serve patients. According to HHS, providers should notify patients of potential privacy risks with these applications and should enable all encryption and privacy modes when using them.
    • Investors gobbled up the opportunity to innovate in this mode of care delivery.
      • Telemedicine funding nearly tripled in Q1 2020 with $788 million in venture capital funding compared to the $220 million raised in Q1 2019.
      • American Well, a company offering virtual medical visits, raised $194 million to keep up with the increasing demand.
  • Plummeting patient volumes: As COVID-19 cases increased, the number of patients seeking elective procedures decreased.
    • Health systems and providers
      • COVID-19 placed increased financial pressure on hospitals and health systems across the country as patients delayed seeking emergent and non-emergent care. Hospital systems reported huge losses—for instance, $1.4 billion a month across Illinois—and expressed concern over how long they could operate at a deficit.
      • Providers warn that there will be lasting effects as patients forgo or delay care, especially for patients with chronic diseases, which could create a backlog post-pandemic.
    • Payers


  1. Policy
  • The federal government continued efforts to bring more transparency to health data utilization and hospital pricing.
    • Interoperability rule
      • CMS's new interoperability rule released in March requires insurers to share health data with patients with the hope that providing consumers with greater information will help drive better patient outcomes and facilitate better flow of communication between care delivery stakeholders.
    • Hospital pricing
      • In June, President Trump issued an executive order to improve price and quality transparency by requiring hospitals to provide patients with "standard charges" for items and services in a standardized format. Hospitals indicated that they would file lawsuits against the rule on the grounds that it would make many of their trade secrets public.
    • Transparency in Coverage
      • In addition to the above, HHS in late October issued the final Transparency in Coverage rule, which will require employer-based health plans and health insurers to disclose price and cost-sharing information to beneficiaries before they receive care. It also requires that any out-of-pocket cost information for care items and services for specific providers be available online in a consumer-friendly format.
  • New regulations also sought to remove barriers to care coordination and high-value care.
    • Stark and Anti-Kickback Laws
      • In November, the administration issued new Stark and anti-kickback regulations to boost value-based care by making it easier for key stakeholders to work together. The rule reduces provider liability and administrative work in exchange for taking on risk. The hope is that with the added flexibility, providers and technology companies will be able to work together, provide better care and reduce total costs. The rule has received mixed reviews, with some physician groups indicating that more clarity is needed on the changes providers would be required to make in the event they take on more risk. This rule is set to go into effect on January 19, the day before the new president is inaugurated.


  1. Health Systems  
  • Change in focus: Preoccupied with COVID-19 and struggling with patient volumes, health systems shifted their focus away from M&A and horizontal integration.
    • A number of suitable horizontal integrations between health systems were broken off in an effort to preserve resources and decrease costs.
      • Sanford and Intermountain Health care indefinitely suspended conversations about their planned merger in December following the departure of Sanford's CEO. The departure came after his controversial email to employees stating that "he doesn't always wear a mask in public settings because he's had COVID-19 and is therefore immune.". The deal was expected to close in 2021.
      • In late May, Michigan-based Beaumont Health put its acquisition of Summa Health on hold, indicating that it wasn't looking for a partner out of desperation and was looking for one that will invest in the long-term growth of the system.


  1. Technology/Services
  • Kidney care: The ability for Medicare beneficiaries to enroll in Medicare Advantage (MA) plans for the first time later this year has opened the door for new initiatives and companies to help address the unmet needs and high costs faced by this patient population.
    • Value-based initiatives
      • Nephrology Associates, P.C., a Tennessee-based oncology group, partnered with InterWell Health, a national network of nephrology practitioners, to focus on adopting value-based care to patients across the state.
      • Emblem Health and Humana worked with dialysis providers to help develop value-based care arrangements.
    • Companies
      • DaVita launched DaVita Venture Group in May to help fund technologies for patients with kidney disease and related chronic conditions.
      • Monogram Health, an at-home care management company, in May secured $7 million in funding for patients with end-stage renal disease.
      • Somatus, a McLean, Virginia-based company specializing in kidney care and dialysis delivery solutions, in June announced a series C funding round of $64 million co-led by Optum ventures. The company intends to release its app designed to help patients monitor their kidney health goals, connect virtually with care members, watch on-demand learning modules, and track their transplant journey in coming years.
      • In December, Strive Health announced a partnership with Independence Blue Cross to offer specialized care delivery and coordination for MA patients with late-stage chronic kidney disease and end-stage renal disease to slow disease progression and improve quality of life.
  • Risk-based primary care: The primary care market has been growing tremendously, with the expansion of key companies seeking to deliver better care at a lower cost.
    • Oak Street Health announced its $328 million IPO in August. The company has developed value-based agreements for Medicare and MA patients in nine states with plans to continue expansion in 2021.
    • Cano Health entered the public market in November via special purpose acquisition company (SPAC). The blank check deal was valued at $4.4 billion, ranking it the fastest growing primary care provider in the U.S. with a growth rate of more than 7,000% in the past three years.
    • Cityblock Health, a startup company seeking to improve health care for low-income patients with complex medical needs, reached a $1 billion valuation following its recent $160 million capital raise.
  • Health systems have gotten in on the action, developing similar models in-house or through partnerships.
    • One Medical, a primary care startup, entered the public market in January, raising $245 million to help widen its reach and impact.
    • In July, Intermountain Healthcare spun off Castell, which is built on a preventative primary care model and offers analytics and best practices for delivering value-based care.


  1. Deal Activity
  • New entrants: We have seen some exciting (and not so surprising) entrants and expansions into the health care space this year.
    • Companies
      • Amazon continues its step into health care with a new service that will allow customers to receive home delivery of prescription medication. This puts Amazon into direct competition with longstanding pharmacy companies CVS and Walgreens. The behemoth also launched a new wearable technology, known as Amazon Halo, which will allow patients to share data from the wearable to their medical record.
        • Amazon also announced its interest in entering the telehealth market by building Amazon Care, which allows Amazon employees to receive medical care in person or at home.
      • In August, Alphabet-backed Verily partnered with Swiss Re Corporate Solutions to enter the stop-loss insurance business. Verily intends to provide data analytics to the relationship, while Swiss Re Group will provide its experience in managing risk.
  • Fundraising/IPOs: 2020 saw an explosion of deals, setting all kinds of records.
    • Special purpose acquisition companies (SPACs) are proliferating:
      • Hims & Hers: Valued at $1.6 billion, Hims & Hers decided to enter the public market via special purpose acquisition company in a blank check deal with Oaktree Acquisition Corp. The deal is intended to allow the company to further invest in growth, and product development, accelerating its plan to "become the digital front door to the health care system."
      • Clover Health, a Medicare-supplement provider indicated that it would be going public by merging with special purpose acquisition company Social Capital Hedosophia Holdings Corp providing them with an enterprise value of $3.7 billion.
  • Partnerships/M&A
    • Teladoc and Livongo: One of the largest deals in health tech in 2020, the merger creates an extremely large digital health company with a platform for managing chronic conditions.
    • Hims + Hers and Oaktree: Oaktree announced that the merger agreement will be conducted via SPAC and will allow them to enter the public market with the goal of modernizing the delivery and accessibility of health care and wellness solutions.
    • Walmart and CareZone: In Jun, Walmart took another step towards digital health with its acquisition of CareZone—a prescription management technology, an interesting move given recent pharmacy rollouts by Amazon, and United Healthcare.

December 2020 News Roundup

Industry News


  • BCBS of Michigan has taken its Blueprint for Affordability program statewide, with the addition of seven more providers. Its value-based care program launched in December, providing financial incentives to participants who meet annual cost-of-care targets. BCBS of Michigan estimates that "initial participants account for 30% of its membership in commercial PPO and Medicare Advantage PPO plans and accounted for $4 billion in health care spending."
  • Humana announced the launch of its Primary Care First model, an expansion of its current value-based program portfolio. The new model aims to ease the financial stress experienced by primary care groups by expanding the availability of coordinated primary care for those covered by MA plans. The model is scheduled to launch in July 2021.
  • UnitedHealth Group founder and former CEO Richard Burke announced his intent to acquire businesses serving seniors via a SPAC and will look to raise $300 million to scoop up companies focused on providing care to seniors.


  • Oak Street Health announced its 2021 growth strategy, with plans to enter into new markets including Louisiana and South Carolina, as well as its intended expansion in existing markets, among them Ohio and North Carolina.
  • Excelsior Medical Group, a primary care focused physician group, recently formed a partnership with Stellar Health, a technology company that provides real-time information and actionable incentives for improving quality of care, to advance value-based care in New York. The partnership will allow Excelsior to take on more risk-based contracts with health plans and provide more meaningful care.
  • St. Luke's Health Partners is partnering with Humana to offer a new value-based care agreement for Humana's Medicare Advantage HMO members. The agreement will offer more personalized care, proactive screenings, additional technologies and reimbursement, to improve the patient experience and provide more quality care.
  • Walmart plans to invest $1 billion in its partner VillageMD to open 500 to 700 physician staffed clinics within its drugstores over the next five years. This decision will significantly expand its presence in primary care and help establish Walmart stores as a destination for medical care.
  • Ro, a digital health startup, is entering the home-based care market with its recent acquisition of Workpath, a software company with a technology platform that will help integrate virtual and in-person care.
  • Cityblock Health, a startup company utilizing a value-based care model to improve care for low-income patients with complex medical needs, has reached $1 billion in valuation with its recent $160 million raise. Founded in 2017, the company currently provides care in Connecticut, New York, Massachusetts and Washington, DC, and intends to use the recent raise to expand into new markets and further advance its technological capabilities.

Health Systems

  • Multi-Care, a nonprofit health system in Washington, is partnering with Dispatch Health to offer a new "hospital at home program." The program aims to reduce the total cost of care by allowing acutely ill patients to receive care from their home, rather than in the hospital. The program also provides the option to continue monitoring post "hospitalization" to continue to drive patient outcomes.


  • Olive, an AI company focused on mending the broken health care process by facilitating connections between patients and providers with its new technology, secured $225 million in financing to help accelerate product development.
  • VirtaHealth, a type 2 diabetes management company, secured $65 million to scale its provider-led virtual care delivery platform. The platform focuses on safely and sustainably reversing type 2 diabetes without medications or surgery.
  • Everlywell, a home health care company, recently raised $175 million to expand its virtual health care services and scale their at-home testing. The company launched an in-home COVID-19 test kit that was recently approved by the FDA and has seen massive consumer demand. Its products are currently available in more than 10,000 retail locations.

Survey Says / Studies Show

  • A recent report on the credit outlook for health insurers deemed 2021 stable, as increased use of telehealth and value-based care models help reduce costs.
  • An analysis funded by Better Medicare Alliance found that MA achieves better outcomes for its beneficiaries compared to traditional Medicare on several quality measures including preventive services and decreased unnecessary hospitalizations.

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