Faced with mounting reimbursement pressures, home-based care providers are rethinking their playbook, diversifying payer mixes and forging local partnerships to stay viable.
Across the industry, leaders describe an environment shaped by the cumulative weight of incremental cuts, shifting policies and uneven reimbursement across payer types. To cope with these changes, providers are expanding their payer networks and advocating, with the help of data, to improve the reimbursement landscape.
“It’s death by 1,000 cuts,” Joe Shannon, vice president of business development at HomeCentris Healthcare, said at Home Health Care News’ Capital+Strategy event in Charlotte. “You know, it’s a little bit here and a little bit here, a little bit on the Medicare side, rate stagnation on the Medicare Advantage side. It just continues to put pressure.”
Owings Mills-based HomeCentris is Maryland’s largest Medicaid home care provider, and also operates in Virginia and Pennsylvania. The company offers skilled home health services in Maryland and Virginia.
Uncertainty and complexity across payer types
Across the home-based care reimbursement spectrum, providers have reported slimming margins due to reimbursement rates.
In Medicare-certified home health, the Centers for Medicare and Medicaid Services (CMS) has cut the base payment rate for several years running. Medicare Advantage plans often reimburse at slim rates, causing negative margins in some cases.
“A home health agency, they might take a fee-for-service patient that they could do well on, but they’re also taking, you know, one or two Medicare Advantage patients that they’re negative margins on, ” Hillary Loeffler, vice president of policy and regulatory affairs at the National Alliance for Care at Home, said. “Overall, the picture is not as rosy as MedPAC is painting.”
The Medicare Payment Advisory Commission (MedPAC) has repeatedly voted to recommend cuts to the base Medicare home health payment rate, arguing that providers are operating on strong margins.
Beyond payer pressure, providers are faced with other economic challenges, with inflation and wage rates rising faster than payment rates, Loeffler said. Economic pressures are also reshaping the population of people who can afford private pay services.
Between cuts to the Medicare home health base payment rate and rate stagnation on Medicare Advantage, a slew of small operating challenges can add up, Shannon said.
“Each year we deal with it, and each year we figure it out, and we come up with efficiencies and increase volume and whatnot,” Shannon continued. “But it just continues to put pressure and maybe keeps you from doing some other things, … moving into new spaces, new programmatic efforts. It’s real, but it’s not draconian either.”
On the non-medical home care side, states are looking to reduce their Medicaid budgets, Loeffler said, placing personal home care and home- and community-based services in their crosshairs.
Providers of care to veterans also experienced a note of uncertainty when the U.S. Department of Veterans Affairs slashed rates in parts of Texas and New Mexico, Aaron Stapleton, the founder and CEO of Trinity In Home Care and board president of the Home Care Association of America, added.
While factors like reimbursement can complicate operations for providers, demand for home-based care has remained a strong tailwind for the industry. Still, while the need for home-based services continues to grow with an aging population, economic shifts are adding yet another layer of pressure to the financial landscape.
“Our middle class is shrinking,” Stapleton said. “Those individuals that aren’t getting the care through Medicaid and don’t have the funds through private pay, they are getting larger.”
Cincinnati, Ohio-based Trinity provides in-home services, including assistance with activities of daily living (ADLs) and licensed nursing. The company employs over 210 people and has assisted over 1,500 clients since its founding in 2011.
The role of diversification and data
In response to reimbursement and economic pressures, providers are adapting their strategies, including by expanding their payer networks and harnessing new data capabilities.
For example, the shrinking number of people who can afford private pay home care has led Trinity to provide care through Area Agencies on Aging (AAA) and Veterans Affairs. These programs allow Trinity to care for more people, Stapleton said. Still, the home care provider must work “extra hard for smaller margins,” he said.
When determining whether a program is the right fit for HomeCentris, Shannon considers several factors.
“Is this good business for us?” Shannon said. “Who’s administering the programs? What county agencies, and how do we potentially leverage that to accelerate our core business? Is that going to put us in a different position? Is that going to give us different leverage? Is that going to introduce us to new people that are going to help us beyond this program and certainly beyond this individual case?”
HomeCentris has also become involved in CMS’ Guiding an Improved Dementia Experience (GUIDE) Model, working with several large physicians’ practices in the company’s markets to do so. The program comes with its own logistical challenges, however.
“It’s a lot of work for few hours … and the rates, the rates are CMS established rates by geography, which for us, pretty much aligns with, like a private pay rate,” Shannon said. “So certainly not, not terrible. But instead of a 40-hour-a-week case, it’s four hours once every so often.”
Still, the program allows HomeCentris to build relationships with physician practices, Shannon said. Additionally, people receiving care through GUIDE may need more in-home care in the future, making them a potential fit for a private pay client in the future. Participating in several low-hour models adds up over time, Shannon said.
In addition to taking advantage of new programs and expanding into new payer relationships, providers have found that advocacy, data and cost reporting are crucial levers to improving the status quo. When working with policymakers, data is key to demonstrate quality, Stapleton said.
“I think data is the key here to switching that from half empty to half full,” he added.
Cost reporting must also be a priority for providers, Loeffler said.
“We need to get better as an industry on being accurate on our cost reporting,” she said. “Some of our consultant partners have highlighted that a lot of agencies aren’t even putting supply costs on their cost report. That is going to make it seem like you’re making more money than you otherwise are, because you’re not reporting all your costs. So then when MedPAC goes to calculate the margins, it looks like you’re making more money than you are. … You don’t get paid off the cost report, so it seems like a paperwork exercise, but it’s used by MedPAC, and it’s the cost reports have been used in the past to completely rebase home health payments as well.”
Loeffler also encouraged providers to speak up to advocate for a more stable reimbursement environment.
“The provider voice is probably the most important,” she said. “Just don’t be afraid to reach out and to share your stories and share what your pain points are.”
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