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Medicaid care enabler Waymark secures $42M

Illustration of a phone wearing a doctor's coat and a stethoscope.

Illustration: Aïda Amer/Axios

Medicaid provider enablement startup Waymark raised $42 million from returning investors and new backer CVS Health Ventures.

Why it matters: While most digital health investment is targeted toward the private insurance market, a fast-moving trickle is headed at startups like Waymark that court the 83 million Americans in public Medicaid programs.

Details: Lux Capital led the unlabeled round, which consists of $22 million in equity and $20 million in credit and follows the company's $45 million Series A in 2022.

  • CVS Health Ventures joined as a new investor, and previous backers Andreessen Horowitz and New Enterprise Associates joined.
  • The round brings Waymark's total funding to $87 million.
  • Funds will be used to hone the company's tech and expand its market reach.

How it works: Based in San Francisco, Waymark strikes risk-based contracts with Medicaid managed care organizations (MCOs) to deliver care and helps primary care practices move toward more value-based arrangements.

Zoom in: Structured as a public benefit company, the startup matches primary care practices with care teams comprised of community health workers, pharmacists, therapists and care coordinators.

  • The company deploys machine learning-based risk stratification tools to prioritize people likely to be admitted to the emergency room or hospital.
  • The internally developed triaging system incorporates data from local emergency rooms and primary care practices with information from social services databases and health plans.

Flashback: Former Oxford University colleagues Waymark CEO Rajaie Batniji and co-founder Sanjay Basu reunited at Batniji's last health startup — Collective Health which was valued in 2021 at $1.5 billion — before coming together again to start Waymark.

Be smart: While the majority of health tech startups court the relatively affluent, a growing cohort of companies is using tech to serve populations disadvantaged by structural racism and other factors.

  • This is often done by deploying risk-based contracts to match these populations with wraparound services such as support for food and housing.
  • Those arrangements see companies like Waymark get an annual lump sum from Medicaid MCOs to serve their patients and, if they can keep them out of the hospital, they split the savings with the insurers.
  • If the plan doesn't work, the company loses money.

Yes, but: Value-based care has yet to take hold in this segment of insurance — most Medicaid services are still billed using the traditional fee-for-service approach.

But, but, but: While commercial insurance users remain the biggest adopters of digital health tools, that's changing as more payers align with value-based care models and more startups cater to Medicaid beneficiaries, per a recent Rock Health report.

State of play: The growing cohort of Medicaid-focused startups includes...

  • Cityblock Health, a hybrid primary care company focused on Medicaid patients, in 2021 raised $400 million in Series D funds at a $5.7 billion valuation.
  • UpLift, a virtual-first mental health provider that contracts with insurers including Medicaid and Medicare, in July collected an $11 million Series A.
  • Medicaid-focused and tech-enabled medical group Galileo in 2021 raised $50 million in Series D capital.
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