Summary
- HIV Special Needs Plans (SNPs) offer extra layers of services specialized for the HIV/AIDS patient and can generate attractive savings particularly in reduced in-patient costs
- A new partnership in Miami-Dade is creating a for-profit model in what has historically been a space pursued by mission-oriented non-profits
- Recent Florida legislation mandating HIV positive Medicaid members join an HMO specialized in HIV/AIDS sharply expands the potential market for SNPs and was likely critical for the for-profit venture
- In contact to the condition-specific provider ACO, SNPs are likely better suited for addressing conditions where patients have a complex mix of clinical, economic and social issues and where the savings are generated by better patient behavior (vs. provider behavior)
HIV/AIDS SNPs provide their members with specialized services including networks of HIV-capable providers (and the right access to specialists), care support services (such as treatment adherence) and social support services (such as housing, legal assistance, special programs for the homeless and long-term care). Managing HIV patients in specialized plans reduces the risk of cherry-picking lower cost (non-HIV positive) patients to which general managed Medicaid plans might be tempted. HIV SNPs are usually paid a monthly capitated rate per member which can be based on patient location, age, and stage of sickness.
The model originated in the mid-nineties as a Medicaid plan (Positive Healthcare) in a contract between Medi-Cal and the AIDS Healthcare Foundation (which also delivered much of the care). Positive Healthcare since expanded to Florida and three other Medicaid HIV SNPs were launched in the New York metro area in 2003. In addition, Positive Healthcare and one of the New York plans (MetroPlus’ Partnership in Care subsidary) have also formed Medicare Chronic SNPs under the framework in the Medicare Modernization Act of 2003.
Value creation and financial viability
There’s good evidence that the specialized model create real value. The Lewin Group looked at the New York plans in 2008 and compared SNP patient costs vs. modeled FFS benchmarks (we’ve used their mid-point scenario here). The SNPs delivered a 40% reduction in IP costs driven by a combination of reduced admissions, shorter stays and use of lower cost hospitals:
The study also showed that, while taking $400 out of the PMPM in-patient cost, it also added back ~$50 in Rx (likely a good thing) and ~$200 in admin. A net savings (including the incremental admin cost) of 5% is not stellar, but keep in mind that the SNPs were subscale when the study was done (2008 data), so it is no surprise that the PMPM admin costs were high. Since then, however, these SNPs have grown between 2.5x (MetroPlus’s Partnership in Care subsidary) and 8x (AmidaCare), creating a larger volume over which to allocate fixed admin costs.
Here’s a quick back-of-the-envelope on the potential impact: Financial data for AmidaCare (the only plan with clean data available through the IRS 990 submissions – the others appear to be folded into the parent organizations) suggest that PMPM admin costs declined by 34% between 2008 and 2010 (latest available) as membership increase by 2.9x. Modeling out the implied fixed and variable costs across all three NY plans suggests that PMPM admin costs are about 30-35% lower now which (based on Lewin’s estimated PMPM costs) would imply an additional $60-70 in potential savings. Perhaps the plans kept some of this for themselves: AmidaCare profitability went from ~2% in 2008 to ~10% in 2009 and 2010 (or 6-8% excluding other revenue sources).
Enter the for-profits
Historically, HIV SNPs have been run as mission oriented non-profits. The AIDS Healthcare Foundation (parent of Positive Healthcare) is the largest and among the oldest providers of HIV/AIDS medical care in the US in addition to caring for patients globally and being active in policy and advocacy. Two the New York SNPs are tied with major providers (one a subsidiary of MetroPlus Health Plan which is itself a subsidiary of the New York City Health and Hospitals Corporation; another a subsidiary of the New York Presbyterian system) and one is owned a consortium of 7 community-based organizations.
That has now changed with the deal between Magic Johnson Enterprises, Simply Healthcare, the University of Miami and private equity investor (MBF) to start a new plan called the Clear Health Alliance in the Miami area. PE-backing confirms that the HIV SNP is now seen as a money maker!
Why now? It seems like the financial viability of the model has been clear for a while. Our guess is that the most important recent change was the introduction of mandated enrollment. One week before the announcement regarding Clear Health Alliance, Florida passed a law which will require patients to enroll either in a HIV SNPs or other HMO which has an academic delivery system specialized in HIV/AIDS included in its network. (It is worth noting that, as of 9/10, New York had a requirement that HIV positive patients in Medicaid join a managed care plan. The requirement was less stringent, however, because the plan did not have to be specialized in HIV). Mandates dramatically expand the market and reduce the value of a mission orientation in recruiting members.
With smart money, one can also expect smart strategy: locking up key partnership assets and having a real focused target customer. Clear Health Alliance includes the University of Miami (recently designated as a Center for AIDS Research– one of only 21 in the nation) in the partnership and Jackson Memorial Hospital in network. Further, plan appears to be focusing on the will focus on Hispanics: “aligning with Clear Health Alliance and doctors with the University of Miami will bring a comprehensive approach to caring for many Hispanics affected by HIV/AIDS who, up until now, may have not had access to adequate care.” Miami-Dade’s is the highest-ranking county in terms of new AIDS cases, which are distributed primarily among the Latino or black populations.
Clear Health Alliance may well be blazing the trail for other for-profit entrants into the HIV SNP space (though it may be a while before others follow — investors will want to see how well the for-profit model with celebrity backing can, in fact, attract patients). With the three largest metro concentrations of people with HIV/AIDs (New York – 110K, Los Angeles – 66K and Miami – 66K) now having SNP options, other potential target communities might be San Francisco with 44,422 infected people, Washington, DC with the highest diagnosis rate (26.6 per 100,000) and 37,916 infected, and Chicago with 35,074 people living with HIV.
Comparison vs. condition-specific ACO
The condition-specific SNP contrasts with the condition specific provider ACO we discussed in an earlier post – naturally raising the question of which circumstances make one model more appropriate than the other. Indeed, HIV and oncology have some similarities:
- Medical cost concentrated in pharmacy and appropriate use of medications can have major cost implications
- Specialists deeply involved in the on-going care of the patient
- Care strategies for co-morbid conditions need to take the core diagnosis and treatment into account
But there are also important differences:
- The key savings opportunity for oncology appeared to be in more cost-effective use of medications while in the case of HIV/AIDS it is in avoiding the hospital
- Provider decision-making (which chemo agents to use) enable the oncology opportunity while patient decision-making (compliance, self-management) is perhaps more essential for the HIV/AIDS patient
- HIV/AIDS patients are disproportionately minorities and economically vulnerable (e.g. 50% are eligible for Medicaid) making assess to multi-cultural and social services essential
This analysis suggests a hypothesis: The greater the role of patient behavior and the wider the variety of medical and social support needed by patients, the more suited a SNP model may be to optimizing care and cost-effectiveness. With conditions with inverse characteristics, the more appropriate an ACO strategy might be.