Dr. Frank Maddux: The US Social Security Amendments of 1972 extended universal Medicare coverage to individuals with end stage kidney disease who need either dialysis or transplantation to maintain life. In this episode of Dialogs, I talk with Bobby Sapulpa, CEO of InterWell Health, about how this legislation changed the trajectory of kidney disease care in the United States and led to value based care models of today.
Welcome, Bobby. Thanks for being here.
Bobby Sepucha: Thanks for having me.
Dr. Frank Maddux: Talk a little bit about, you know, what you recall in the story from 1972, wherein 50 years ago the law was passed that created a payment model for kidney disease care.
Bobby Sepucha: To understand what happened in 1972. You certainly have to think about what where we were as a country, as a healthcare system in the sixties and early seventies. Dialysis was a relatively new and novel treatment. It was incredibly expensive. And so you had a lot of patients who were suffering from end-stage kidney disease, from kidney failure, who had a stark choice, which was try and figure out a way to have dialysis funded for them or unfortunately not receive any treatment and die.
So you started to have committees often staffed by people in the community, clergy, business folks, some politicians, who would meet at night, sometimes in secret and literally decide who would receive the treatment and who would not. For all the sturm und drang that happened with Obamacare and the perceived death panels, in the late sixties and early seventies, that's where we were in Boston. In Seattle, you had these committees who were deciding who would live and who would die.
A mother of two who in her forties she might receive treatment, and be saved. A single gentleman with no kids and living alone may not. So, this was untenable for everyone, for obvious reasons. You started to see a groundswell of support by the patient community, the kidney community, to come together and say there has to be a better way.
Through some pretty amazing people you started to see policymakers recognize, okay, it's time to do something different, and especially viewed through the lens of today's political system.
Congress did something rather remarkable, which was, pass a law that changed everything. Defining kidney failure as a disability and saying that disabilities were going to be covered by Medicare. So, whether you were age 16 or 60, if you were on chronic dialysis, you'd be paid for by Medicare.
Dr. Frank Maddux: This triangulation of kidney disease being recognized as a disability and disabilities being added into the Medicare payment system seemed to me sort of this critical triangulation that occurred. Prior to that, the Gottschalk Commission had recognized in 1967 that dialysis care was no longer a research idea but an actual therapy and that seemed to be one of the things that made it untenable for it not to be paid in some way. In the sense, academic institutions and others were going to foundations, going to private pay individuals.
There was this huge disparity in who was able to get access to care independent of these committees that would decide. So, it was it was a really, really difficult time. How has that led to where we are today with regard to value-based care, and this concept that universal healthcare has transitioned into something that's looking much more holistically than simply payment for a treatment?
Bobby Sepucha: I suppose it's a good news, bad news scenario. One of the unforeseen consequences of what happened in 1972, is obvious in hindsight, but that it's with the combination of baby boomers and the changing diet of Americans and the change in lifestyle. You started to see just an absolute explosion in the decades that came in terms of the number of people who were suffering from kidney disease driven, no surprise, by the chronic obesity problem leading to diabetes and hypertension, which obviously leads to kidney disease.
You started to see an explosion both in the number of people who were going to be on dialysis, as well as the cost of care. So in the decades that followed, and really this ramped up in the late nineties and early 2000s, you started to see Congress and the folks at the Department of Health and Human Services and CMS take a really hard look to say this is untenable, the cost of care is simply too high.
For a long time, they focused on just the dialysis rate. But I think some forward-thinking folks, both in the kidney industry and in the policy field, recognized it was about far more than just dialysis. It was about total cost of care. If you look at an average patient, the cost of dialysis is on the order of anywhere from 25 to 40%.
The remaining costs are pharmaceuticals, inpatient care, and hospitalizations. If we're going to get our arms around total cost of care and really trying to reduce that total pie, you have to think about more than just dialysis. That was the problem. The opportunity came from the fact that for the very first time we had, in some respects, a single payer system.
You had the federal government paying for 90% of patients who were on dialysis, You had a single payer really focused on: what can we do for this patient population? How do we involve physicians, nephrologists, primary care physicians, endocrinologists to take a more holistic view of this. As a result, you start to see Health and Human Services and CMS start to get a little creative.
The ESCO program that they launched several years ago was a huge step forward, and that continued with the passage in the Trump administration of their executive order and what we started to see in the recent years.
Dr. Frank Maddux: Policy and advocacy has been a huge part of kidney disease story because at the beginning it was essentially and still is really the only universal healthcare that we have for a particular disease state. How would you consider that having been influenced over the years by various policy initiatives? We've seen additions to quality measures. We've seen additions to trying to not thwart innovation, other things.
Talk a little bit about the importance of policy and advocacy.
Bobby Sepucha: Policy is critical. We'll get to that in a second, but policy can't happen until you first have a consensus in the clinical community. As wonderful as what happened in 1972 is, what I find almost more important was what happened in 2002 when chronic kidney disease was finally acknowledged as a condition, and it was defined by the Chadolcki guidelines.
That happening allowed policymakers to recognize, okay, there's a population of 600,000 Americans with end-stage kidney disease on dialysis. But what about the 26 million Americans who have chronic kidney disease? How do we think about that? Once you started to have that, it's easy to find a solution. Once we had definition around the problem, you start to see policymakers eventually get to the point of how do we do more?
Watching what happened about ten years ago, when dialysis providers, when physicians, when the patient community came together to recognize we need to do more for this population, let's push Congress, let's push CMS to figure out a way to run a pilot program to take more clinical and financial accountability for dialysis patients.
That was the so-called ESCO program that was rolled out several years ago by, again, capitalizing on the notion that this is effectively a single-payer system and helping be constructive with ideas on how we could do more for a small pilot program and then hopefully expand. It has led to some really interesting opportunities. It started out as a shared-savings program for just dialysis. ESCO has morphed into what we've seen in recent years with the so-called KCE program, which is now wrapping in chronic kidney disease.
Late stage, stage four, stage five, and dialysis patients. So, the small pilot has continued to grow, and that has dramatically influenced what commercial payers have done because the private industry is watching what happens in Medicare and taking the lead from Medicare. The pace of change in the kidney space has metastasized in the last five years in a really exciting way.
Dr. Frank Maddux: When I think about what might be missing from the 1972 law, it did create a system where end-stage kidney disease lived in a certain room. CKD was in another room. Transplant was in a third room. And what we found is that patients live in all of these rooms during various times in their life. I'm curious whether the environment we're in today in response to having built up this huge access to end-stage kidney disease care, missed the ability to organize transplant care, end-of-life care, and CKD care.
Bobby Sepucha: I don't think there's any doubt. That's one of the unfortunate downsides of what happened in 1972. I think of the millions of lives that have been saved because of what happened in 72 and because of the Medicare benefit for dialysis. It's remarkable. And yet there were silos created that prevented, holistic thinking.
But before we beat ourselves up too much, obviously that same silo-ization has happened throughout all of healthcare. What you're seeing the federal government grapple with now and policymakers are struggling with now is they've created ACOs in the primary care space. They've created the KCE in the kidney space, and they're doing different things in orthopedics.
They're creating interesting pilots, but by definition, those are setting up silos. You have what's been characterized as an attribution problem. If you're going to have patients attributed to these various value-based care systems, how do we make sure that everybody's talking to each other as opposed to reinforcing the silos that already exist? It's a big, hairy challenge for policymakers.
It's one that I think they're going to continue to struggle with a long time. As providers, I think what we can do is to bring more expertise into the fold in whatever we're doing in kidney care. Again, working with endocrinologists, really reaching out to primary care docs to solidify that
bridge. If we can do that, we’ll do better certainly for the patients and provide a better model for policymakers to follow.
Dr. Frank Maddux: Just to make sure people understand some of nomenclature. Tell us about what an ACO is, what some of these new kidney care models are, and what they mean.
Bobby Sepucha: ACO is what's called an accountable care organization. These were set up first by the federal government under Medicare. And now commercial payers have done the same thing. It’s really a mechanism whereby physicians and other clinicians can come together to create these new entities called Accountable Care Organizations or ACOs and share in the upside. Typically, what will happen is if they provide care and assuming the clinical metrics either stay constant or hopefully increase.
You're doing better by patients. If you reduce care than the ACO or reduce cost, the ACO can share in that savings. The same thesis is being applied to the kidney space in these new models, whether it's the ESCOS or the KCEs or the new ones, the kidney care entities. It's nephrologists coming together with transplant surgeons and other care managers like InterWell to provide better care, improve outcomes, and reduce costs.
Dr. Frank Maddux: It strikes me that living their life with this difficult chronic disease have been pigeonholed into which part of the play they're in right now as opposed to those plays being brought together. I'm curious whether you think the concept of truly having a holistic renal disease value-based care program is one that that will be able to be achieved? And how do you think the various constituents will come together to bring that to happen?
Bobby Sepucha: I think it's inevitable and it's necessary. I think that's in large measure because what we've seen by an awful lot of well-meaning private plans. They've tried to create their own integrated care system for the broad population, saying: we've got this, we know enough about kidney patients, we can take care of them. When they look at the clinical results and, as a corollary, the financial costs of care of these patients, they realized very quickly that they don't have the expertise. They don't have either the clinical expertise or the care managers who can provide the kind of persistent and constant contact with these patients that their disease requires.
There will always be a need for a dedicated, kidney-based, value-based care program. Again, the question and the challenge for the kidney providers is then: all right, what are you doing to bridge to the rest of healthcare system? Because if you remain in your own silo, then these patients not being able to access the kind of care they need.
I'll give you a great example. As we think about dialysis patients, I think the world has a decent understanding of how to provide care. And the nephrologist is taking the lead because the
kidney is obviously driving the care of this patient. As you start to move further upstream to stage five, stage four, again, the kidney is still taking the lead.
The nephrologist should be the center point of care primarily. Stage three is a different story. You've got primary care docs who need to be part of the decision and part of the care team. Perhaps the most curious is when we go out and work with stage three patients and engage them and say: we're here to help you with your kidney disease. Their response is kidney disease?
I'm not sick. So it's really educating the patient about the disease and condition they have and then providing the care around them. That's impossible if you are not engaging the patient and the care team holistically.
Dr. Frank Maddux: When I think back to 1972 and what they did at that time, they created broad access to care and the government made a fundamental choice that is quite interesting. They said well, we're not going to do it, we'll pay for it, but we're going to let private industry develop this.
Many other countries chose to do otherwise. They kept it all very focused on the public payer and the government payer, and they actually set up government-owned facilities. But in the US, that didn't happen. They allowed private industry to build this broad access to care and that led to a lot of infrastructure that was based on traditional incenter hemodialysis.
What's happening today to try to create the right infrastructure for this broader based, holistic care that gives patients, doctors, and the system more choices than it's had in the future. Where do you think that's leading us?
Bobby Sepucha: Whenever I look at my crystal ball, I get in trouble because my crystal ball gets very murky very quickly. But I don't think that the federal government, that we as a society, are prepared to change the fundamental determination that you just talked about, which is, are we going to have our federal government step in and dictate the sorts of delivery models, or are we going to have them create incentives and then let the private marketplace figure out where to go from there?
I think it will always be the latter. But in terms of what I've been most excited about in the last five years, especially as you're starting to see with the advent of physicians, and as a corollary, the companies that are surrounding physicians take on more clinical and financial accountability that allows them to get more creative. People ask all the time: integrated care, value-based care?
This makes perfect sense. Why wasn't this done ten, 15 years ago? Because there was never the payment model to recognize that it's okay to pay something to physicians today in the hopes of saving money tomorrow. If you pay a capitated rate, if you pay a percent of premium, if you come up with these value-based models to pay providers dollars today, that gives them the wherewithal and the resources to do some really creative things. Especially with what's happened with COVID in the pandemic: the recognition that we do have to engage the patient at home. That's better for the patient. It's better for the system. Alternative delivery models like that. So, it's an interesting mix now of traditional brick and mortar, virtual in-home. We certainly haven't seen the last of it, and it'll be interesting to see where it shakes out.
I'm not sure we're going to get to a point where the government is going to say, no, this is the delivery model we're all going to follow.
Dr. Frank Maddux: You spent the last few years building out some novel patient engagement strategies and tools and mechanisms. Talk a little bit about that aspect of going directly to patients and finding ways to engage them with their healthcare team. That's beyond the traditional doctor patient visit.
Bobby Sepucha: What's happening in kidney care is spectacular. I don't think any of us who have been in this space for a little while ever imagined that there'd be this much interest, this much investment, this much innovation outside of dialysis. And yet, in the last 3 to 5 years, that's exactly what we've seen. InterWell Health is doing some really remarkable things, and it's capitalizing on what's happened at Cricket Health.
The fundamental insight is this is all about changing patient behavior. You cannot change patient behavior unless you first fundamentally change the way in which we engage patients. That insight seems fairly obvious, and yet I think it's incredibly profound. It's informed everything we're doing at InterWell in terms of identifying the patients.
How do we use data and analytics? How do we use predictive models to identify not just the patients who have a disease? A lot of folks don't even know they have kidney disease. But once we've identified they've got the disease, who's most at risk for hospitalization, for progression, for dialysis in the next three months, six months, 12 months?
When you identify the patients who are most at risk, you can figure out who most needs care. The second is then the clinical model. Once you know your patients, what kind of clinical model you're going to deliver? High-risk patients require a different clinical model than low risk patients.
And then finally, the way in which you engage the patients. A traditional call center where a nameless, faceless bank of nurses is calling up a patient is rightfully in the past. Now, you have to create an environment in a place where patients can immerse themselves in knowledge about their disease. Is that using technology and creating a virtual environment?
Almost assuredly. Give them the facts the videos, push information to them in a stage-appropriate manner so that when they're diagnosed, they're learning about their kidneys. As they progress towards kidney failure, they're learning about what their treatment options are. And then providing an environment where they can engage with their clinicians, their physicians, their nurses, their social workers, their pharmacists, virtually, synchronously asynchronously.
Whether it’s 2:00 in the morning or 2:00 in the afternoon, they’ve got someone to talk to. That holistic virtual, combination of virtual and in-person environment is critical. You can't engage patients in a single mode. It's a multi-modal problem. It requires a multi-modal solution.
Dr. Frank Maddux: It strikes me that as you're delivering information to people based on the stage they're at and where they are in life. It brings out the obvious discussion that's begun to happen in the kidney disease field that there are wide disparities and backgrounds of people. People that need to be engaged in different ways that are culturally appropriate for them.
All of the social deterrents of health, all the cultural aspects become a big part of how do you actually get somebody's attention on the things that are important to them? I would imagine that within InterWell Health you're looking to try to really broaden the base of how you approach populations that are disadvantaged, populations that are highly knowledgeable about all the different aspects of people that we deal with.
Bobby Sepucha: No question. There is an unfortunate part of our healthcare system here in the US that it is easy for providers and companies to start and get capital funding, venture capital, and private equity funding, and go after the patients who can pay for it. That doesn't work in kidney disease. These patients are lower on the socioeconomic spectrum.
If we're true to our mission of trying to improve the lives of as many kidney patients as possible and help them live their best lives, then you can't just go after commercial patients. You have to tackle the Medicare Advantage patients, the dual eligibles, the Medicaid population. That's a challenge. Not every Medicaid patient can be treated in the same way as a commercial patient.
They have different socioeconomic status. They have different home environments. They engage with folks differently. It's a lot of text as opposed to phone calls or in-person visits. Recognizing that you have to engage patients in different modes, but you also have to emphasize in-person visits, perhaps a heck of a lot more for one population versus another.
It's one of the reasons why so many folks have railed against the United States of looking at our home dialysis rates and saying they're too low. Clearly, the reimbursement system has a significant role that needs to change. Policymakers are trying to change that, but we also have to work with patients to meet them where they are.
For patients who are lower in the socioeconomic spectrum, it is entirely possible that home dialysis is too much of a challenge. They don't have the resources at home. They may not have the caregivers at home to help them with it. As you move upstream into helping folks manage their meds, manage their diet, especially for folks who live in a food desert, this is a huge change, a huge challenge. A one size fits all approach is going to fail and fail miserably.
Dr. Frank Maddux: Home dialysis is a is a good example of where maybe we've created our own too narrow definitions and limitations on things. I have always thought that one of the problems in calling it home dialysis, it assumes that it happens at your home and this concept that you could have dialysis occurring in a variety of venues, some distinct healthcare facilities, some less healthcare related, but more community related.
Offer opportunities for us to rethink how this therapy is delivered. And certainly that requires more intuitive machines, more engaging mechanisms that people understand. How do you think the doctors that are part of our partners and part of the organization that are InterWell Health are ready for the kinds of changes that are going to be needed to rethink how treatments are delivered.
Bobby Sepucha: I think you bring up a great point, and it's interesting you talked about policy earlier and how that can influence things. The policymakers have defined home dialysis as home dialysis and helping them understand that dialyzing in a physician's office or at a skilled nursing facility, anywhere other than the home, needs to be incorporated. There's been some significant work being done on that front, and it's a long, slow slog.
But to your question about the physicians, the network of over 600 docs at InterWell are very excited and fully engaged in moving towards value-based care. But they're all starting from different starting points. There are some practices who have made significant investments in renal care coordinators and advanced practitioners who are ready today to succeed and thrive in value-based care.
There are other practices who recognize this is where they need to go, but they haven't made the investments yet, and they're looking for help. One of the things that we're doing at InterWell is not just providing the care management and the data and resources to work directly with patients, but also providing resources, back office resources to physicians so that they have the tools, the workflows in place, the EHRs in place so that they're ready to run their practices more efficiently.
Run their practices in a way that is set up to thrive and succeed in value-based care. It cannot just be about patient care. It also has to be about setting up the practice for success.
Dr. Frank Maddux: If we look back to 1972 to bring this back around, has universal health care worked for this disease state?
Bobby Sepucha: I think it has. It has led to some challenges, to be sure. It has led to some unforeseen consequences. The high cost, the exploding numbers that no one anticipated, and the laser-focus on dialysis rate as opposed to total cost of care. But when I think about the rest of it, compared to the rest of the healthcare system in the US, in many respects, kidney care has been the vanguard for some really exciting change.
Bundling became all the rage in the last 7 to 10 years. Bundling happened in kidney care and dialysis decades ago. It has really been the tip of the spear in terms of experimentation on what we can do differently. I think led to some really exciting innovations, not just within the kidney space but within the broader overall healthcare system.
We have a bigger question here in our society, which is how is our overall, do we have a public health system? The answer to that is, no, we don't. You asked earlier about or you commented earlier about the fact that the government did not prescribe how dialysis can be delivered in 1972.
That was probably the right call. However, if you look at the nation's response to the pandemic, it's pretty clear that there were some shortcomings. As we think about the next generation of healthcare reform, we've tried to tackle health insurance reform and providing coverage to more folks. Now, how do we think about real healthcare reform?
How do we think about spending in the final years of life? How do we think about making sure that we're not rationing care? These are really big, hairy challenges that, if you think about it, is exactly what Congress and the public system had to grapple with in the kidney space back in 1972. So, I think there are an awful lot of lessons to be learned from what happened in the kidney space.
I think it has worked, generally. But I think the fundamental point is if you don't have the public-private partnership, where you've got the public policymakers trying to do the right thing and relying on the commercial payers and the private physicians to be able to deliver the highest quality care, then it's going to fail. So that's the partnership we need to make sure we retain.
Dr. Frank Maddux: Thinking about the last 5 to 10 years of our political environment here in the US, do you think we're in a reasonable position with all the polarization that's occurred in many areas of politics, that this is one area that people can come together on?
Bobby Sepucha: I think so. I may be overly Pollyannish, but I think that's where we're going. I think in the last ten years, the dirty little secret in healthcare, especially given all of the polarization that happened around the Affordable Care Act and Obamacare, is that there is far, far, far more agreement on the notion of where we need to go in the healthcare system among the parties than there is disagreement.
I think Republicans and Democrats alike understand we need to move to a more value-based care system. We need to give more clinical and financial accountability to clinicians to care for patients and to do more creative things. If you look at how Medicare Advantage plans have really grown over the last several years with the support of both parties and are really doing some really, truly innovative things for their members, I think that gives an awful lot of comfort.
If you look in just in the kidney space, the ESCOS were launched under a Democratic president. President Trump launched the executive order to really dramatically expand access to transplantation, access to home dialysis, and has led to the most recent iteration in the KCEs. So, I am encouraged by the healthcare thinkers on both sides of the aisle. And I am cautiously optimistic they're going to continue to work together.
Dr. Frank Maddux: The models and maturing of the kidney disease care in the United States frequently is looked at in other countries and overseas. How do you think some of what's happening in the value-based care arena will apply to other parts of the world at some point in time?
Bobby Sepucha: Well, the fundamental premise of value-based care is giving more clinical and financial accountability to providers. More and more countries are starting to realize for complex populations that are very expensive, difficult to treat, populations like the kidney care space and kidney patients, the traditional models of whether it's fee-for-service or a centralized payment schedule, don't work anymore.
You have to create an environment where you can foster innovation, foster creativity. You do that by granting more accountability to clinicians themselves. There will continue to be real interest in what the United States is doing. But the reverse is true, too, and I would encourage all of us to not think too myopically and look elsewhere to say what can we share and learn from each other? That's what I think is pretty exciting about what's happened in the last ten or 15 years globally.
Dr. Frank Maddux: Certainly, there are opportunities, and I think of transplant as one. There are some countries that have been very effective at how they've managed transplant rates, avoiding high organ discard rates, and other things like that. Both sides can learn from each other and in what might work. But I think you're right, there are no countries that aren't facing the issues of an increasingly complex population of patients that are both costly and utilizing a lot of resources.
That's something that clearly has to be dealt with as we look to make the process more streamlined and simplified for patients.
Bobby Sepucha: No question. as countries begin to develop their systems, change their diets, changed their method of activity changes the entire society. All these societal changes impacts the health of the overall population. A country may not have had a significant obesity problem as it evolves commercially, that can create too many Big Macs, too much of a sedentary lifestyle for its population, can lead to things like kidney disease.
It's a fascinating development. It's a fascinating set of overall evolutionary trends. That's where you're going to start to see more countries look to folks like the United States and Europe and say, how do you handle this? What do we need to be thinking about this?
Dr. Frank Maddux: As we end, any final thoughts about Interwell and the new journey that you're on as we finally brought these companies together.
Bobby Sepucha: I couldn't be more excited. I spent the last four years at Cricket Health trying to do something different to approach the problem in a far different clinical manner, go upstream, identify patients early, and focus on patient engagement, recognizing that that's the key to unlocking real behavioral change.
We've made some wonderful strides. To think of what we've built from a technology perspective, from a clinical model perspective, and incorporating that now with the network of InterWell physicians, as well as the phenomenal work and scale that has been accomplished by Fresenius Health Partners, bringing these three entities together in the new InterWell Health. I couldn't be any more excited.
What's been fascinating over the last several weeks and months, as we've talked to physicians and payers across the country, the reception has been spectacular. More than one very large national payer has looked at us, shook their heads and smiled, saying it's about time. We've been waiting for the care management processes and workflows to come together with the physician practices, and that's exactly what InterWell Health is doing.
I'm incredibly bullish about the future. The clinical outcomes that we're delivering in terms of improving home dialysis, reducing hospitalizations, and the total cost of care reductions we've delivered already over the last couple of years. We have a phenomenal foundation for success, and I'm excited about what the future is going to bring.
Dr. Frank Maddux: Thanks so much for joining me today, Bobby. It's been good to connect what happened 50 years ago to where we are today and the maturing of our system. And I appreciate your being on this Dialogues segment.
Bobby Sepucha: Thanks for having me.