Recently Proposed CMS Rules to Shape Opportunities in Advanced Patient Monitoring and Wearable Devices Markets

Recently Proposed CMS Rules to Shape Opportunities in Advanced Patient Monitoring and Wearable Devices Markets

This blog covers markets treated fully in the recently released Kalorama Information market research reportsAdvanced Remote Patient Monitoring Systems, 8th EditionandThe Market for Wearable Devices.

The Centers for Medicare & Medicaid Services (CMS) released proposed rules and funding changes this month for reimbursement of home health and nursing home care. These actions on the part of the largest payer for home health and nursing care in the United States create both opportunities for advanced patient monitoring and wearable devices as tools for compliance and improved efficiency and challenges as such investment becomes more difficult for providers facing resource shortages. If the past is any indicator, however, the proposed rules and funding changes are likely to spur additional vendor solution innovation and drive demand for patient health monitoring devices that alleviate staff workloads and contribute to value-based healthcare payment models.

Proposed CMS rules for nursing homes cover a wide territory from the use of antipsychotic drugs (for the treatment of resident dementia), meal times, antibiotic usage, electronic health or medical records (EHR/EMR), resident rights, staff training, and other safeguards for standard of living. The proposed rules are significant for the projected added costs to the nursing home industry, and may dampen investment in remote patient monitoring systems in the short-term. The long-term implications of desired reform, however, will prove more beneficial to the nursing home market for advanced remote patient monitoring. EMR adoption, in particular, is expected to pick up among nursing homes after relatively minimal penetration compared to other healthcare channels. The integration of electronic records into nursing homes will ease subsequent investment costs for connected devices used for patient monitoring. Added costs for compliance coupled with persisting staff shortages will require greater efficiency from nursing home staff, and will be achieved in part through more effective remote monitoring of residents. Transition of reimbursements to value-based models from fee-for-service will also incentivize investment in assistive technologies such as advanced remote patient monitoring.

Overall, the nursing home market represents a growth proposition for many medical device players. Growth in demand for non-hospital care centers for the aging is most conspicuous internationally, particularly in Europe, Japan, and China. In many developed European countries, for example, the majority of elderly care facilities are between 5 and 10 years post-construction and most are independently owned. For comparison, the number of U.S. nursing home establishments has decreased over the past decade, but is showing stability in recent years due to an eminent population shift to older age. The low-margin sensitivity of the U.S. nursing home industry drives home the need for greater efficiency that can be provided in part through improved remote monitoring. Such systems should also be deployed in developing industries abroad that face rising resident volumes.

Similar to the nursing home industry, the home health industry has also struggled with low profitability in the United States. Its largest single payer, CMS, proposes to cut Medicare reimbursements for home health by $350 million in 2016. The rule proposal also included encouragement to meet interoperability standards in healthcare information technology (HIT) as part of HER implementation among home health agencies. The imposition of value-based payments and pressure on personnel costs will also encourage the adoption of remote patient monitoring systems already integral to the treatment of home-based patients with acute and chronic illnesses. Lower payments for home health services may challenge sales of advanced remote patient monitoring devices including wearable devices - and some wearable device companies have already diversified out into wellness and fitness applications - but overall transitioning to progressive value-based models supported by HIT are expected to encourage greater usage of such devices in home health.

Related titles to this blog post, Advanced Remote Patient Monitoring Systems, 8th Edition and Wearable Medical Device Markets, were recently published and are available for purchase.