How CareBridge Won Over Investors, MCOs in $140M Funding Round

CareBridge, a Nashville, Tennessee-based tech and telehealth startup, is tackling one of the hardest challenges in health care.

And the moxie it takes to do so — and do so while taking on financial risk — has helped it woo investors to the tune of $180 million over two funding rounds.

The latest funding round secured $140 million from the venture capital firm Oak HC/FT, which led the round, and entities affiliated with four of the nation’s largest managed care organizations (MCOs): Anthem Inc. (NYSE: ANTM), Optum Ventures, CVS Ventures and HLM Venture Partners, investing on behalf of Centene Corp. (NYSE: CNC). 

Michael Tudeen, CareBridge’s CEO, told Behavioral Health Business the key to its fundraising success has been providing a service that holds the promise of magnifying the efforts of MCOs and home care companies serving Medicare-Medicaid dual-eligible patients using home- and community-based services (HCBS).

It doesn’t hurt either that CareBridge has some skin in the game when contracting with MCOs. It serves HCBS members at risk based on a member’s historic spending.

“I think there’s not a lot [of companies] that are doing it or taking risk on the home- and community-based Medicaid population,” Tudeen said. “I think us being willing to do that and having solutions that are proven is giving us a lot of traction, and I think it’s attractive to these MCOs.”

CareBridge doesn’t have workers in patients’ homes. But it does partner with home care and home health companies who use CareBridge’s electronic visit verification (EVV) and session-data tool. The 21st Century Cures Act mandates EVV for all Medicaid-funded home health services by Jan. 1, 2023, with many states already far along in the rollout.

CareBridge also places dedicated tablets in HCBS members’ homes so that they, household members or paid caregivers can get 24/7 access to medical care and support services.

“I believe it’s been an underutilized component of our health care system,” Tudeen said of home care and home health companies.

CareBridge uses the data it generates and other data to further guide decisions on member benefits and care decisions.

Tudeen said CareBridge’s solutions act as an early warning system that helps caregivers and clinicians get ahead of potential issues. They also equip members and their families to be more collaborative with the member’s primary care provider.

CareBridge operates in a narrow lane of health care and serves a very small population. But it’s the smallness of this population, in part, that makes investors and insurers alike eager for innovation.

The dual-eligible population totaled about 12.2 million people in 2019, according to statistics from the Medicare Payment Advisory Commission (MedPAC) and the Medicaid and CHIP Payment and Access Commission (MACPAC).

On the Medicare side, these members make up 19% of the population but account for about 34% of Medicare spending, or $275.9 billion out of $811.8. On the Medicaid side, they make up about 14% of the population but 30% of the spending, or $164.3 billion of $550.3 billion.

Medicaid spending covers almost all spending on long-term supports and services (LTSS) including HCBS. When considering Medicaid only, 3.3% of enrollees used HCBS in 2019 but account for 21% of all Medicaid spending, according to MACPAC.

Spending on the care of people that received LTSS is significantly higher than for the average American. Per capita spending for people with intellectual and developmental disabilities (I/DD) totaled $48,900 in 2019. That’s 2.8X higher than for seniors and adults with physical disabilities, at $17,600, according to an analysis by the Kaiser Family Foundation. 

In the calendar year 2020, federal care expenditures averaged $12,530 per person, according to data from the Centers for Medicare & Medicaid Services. 

While one of the company’s objectives is to reduce the historic care costs for Medicaid and dual-eligible members using HCBS, Tudeen was keen to point out that CareBridge’s goal is to be proactive, not reactive.

“Their historic cost is the benchmark or the basis for the risk, and we’re then responsible for making sure that it doesn’t go up,” Tudeen said. “We’re responsible for making sure that, where appropriate, it is reduced.”

Again, CareBridge does that by providing “more care in the home” that’s designed to get in front of adverse health events well before they happen.

“We’re able to provide more intervention and more access to the member that results in avoiding high-cost situations like ER visits, hospitalizations, short-term things and nursing home [stays],” Tudeen continued.

CareBridge doesn’t reduce all spending on high-cost items, Tudeen said, but he added that the company is able to do enough to curb costs and help members stay in their homes.

Looking to the future, Tudeen says that the company plans to grow organically as it works with the MCOs that placed investments with CareBridge. Collectively, those MCOs oversee the care of about 60% of all HBCS members in the U.S., he noted.

There are still other big MCOs and regional or local MCOs that have large HCBS memberships that could make ideal customers in the remaining 40% of the market, he added.

The company isn’t presently on the hunt for mergers and acquisitions, with the company’s clear priority being organic growth. But Tudeen didn’t totally discount the prospect of making deals.

“I think we can grow as large as we’d like this company to grow organically,” Tudeen said. “But if we come across something interesting, we’re not opposed to running that down: But the plan is organic.”