New Company to Help Large Insurers Set Home Health Payments

Some home health providers in Pennsylvania will soon have their payments tied more closely to quality outcomes, as a major insurer joins forces with a newly formed and first-of-its-kind post-acute management company.

The new venture, HM Home and Community Services LLC, stems from Allegheny Health Network (AHN), an integrated health care delivery system that serves 29 Pennsylvania counties and parts of New York, Ohio, and West Virginia.

Starting in 2013, AHN began building out a post-acute network through a series of acquisitions, which ultimately resulted in an umbrella brand called Healthcare@Home, offering a range of services such as home health, medical equipment, infusion therapy, and palliative and hospice care.

The success of the Healthcare@Home model attracted attention from AHN’s parent company, Pittsburgh-based Highmark Health. As the third-largest integrated health care delivery and financing system in the country, Highmark also was the insurer of Healthcare@Home’s patient population.

“If you think about what makes Healthcare@Home successful, it’s because AHN operates an end-to-end [post-acute] service model and has a health system to continually feed the model,” says Brian Holzer, MD, senior vice president of home and community services for AHN and the leader of Healthcare@Home. The idea is that by controlling the whole continuum, AHN is able to direct patients to the most appropriate setting and is able to more closely control cost and quality.

In the process of essentially educating Highmark about what made for an effective post-acute care model, Holzer was asked how that could be brought to scale for the whole Highmark footprint. It is a sizable footprint, involving 5.2 million insured members in Pennsylvania, West Virginia, and Delaware.

Realizing that replicating the AHN approach would involve spending tens of millions of dollars to acquire post-acute operations in all those areas, Holzer and Highmark instead went the route of creating a post-acute management company—the newly launched HM Home and Community Services LLC (HM HCS). Holzer is the company’s president, and he also will continue in his role with AHN.

HM HCS will begin by providing post-acute management services for Highmark in Pennsylvania, and will be drawing on many of the same approaches that led to success for Healthcare@Home. This includes creating networks of post-acute providers whose payments are pegged to quality, as determined by scorecards developed in-house by Holzer’s team and their partners.

Not Rocket Science

HM HCS basically has two mandates, Holzer tells Home Health Care News. One is to manage post-acute networks and the other is to be a “solutions aggregator.”

“Instead of looking at pieces of the puzzle, it’s scanning the marketplace for pieces and putting them together,” he explains, regarding solutions aggregation. “We’ll be looking for private equity and venture capital-backed solutions to add further efficiency and value [to post-acute management and delivery].”

As for managing post-acute networks, starting with Highmark’s, this will hinge largely on developing and supporting high-performance provider networks. So far, the process is further along for skilled nursing facilities (SNFs), and home health will follow much the same path, says Holzer.

Since 2014, Highmark has been working with naviHealth, which gathers and crunches data to help health systems and other stakeholders drive more efficient post-acute care. Armed with that data, Highmark was able to establish targets for metrics such as 30- and 60-day hospital readmission rates in order to score SNFs across the network. The 180 SNFs in the network have been ranked and now some low performers will be cut, while top performers will receive additional payments.

The plan is to repeat this process for home health providers, but the process is somewhat complicated by the need to risk adjust, says Holzer. For example, the top scorers currently are providers focused on total joint replacement patients, and Holzer and his team do not want to create an incentive system that benefits these providers but dings those caring for complex patients.

However, a home health scorecard already is in development. Highmark’s network includes 80 home health providers, and executives with the 20 largest already have been invited to meet and discuss potential metrics for inclusion, Holzer says.

Including providers in the process is one way that HM HCS is gaining buy-in; Holzer also emphasizes that the plan is to provide robust resources to help providers achieve desired quality goals, not to cull the field and create ulta-narrow networks.

“We can’t create member disruption,” he says. “The goal is to be as inclusive as possible and prop up providers to help them achieve … we’re not going to end up with 10 providers.”

While Holzer would not share a specific percentage that payments might be cut or increased based on performance, the approach to payment risk and reward will be calibrated carefully, he says.

“It’s not rocket science,” he says. “What we’re trying to do is come up with a number to drive behavior change. It doesn’t take double-digit percents to drive behavior. We’re trying to come up with a number to drive meaningful change, so it’s not, you win or you go out of business.”

All the Ingredients

HM HCS is likely to be watched closely by health care leaders, policymakers, and others, given that it is pushing an innovative approach to post-acute management.

“This is completely unique in terms of how we’ve put all this together,” Holzer says. “There are pieces of this in other places, but what makes this unique is the size of Highmark Health, with both payor and provider capabilities.”

In other words, other companies have been formed to do post-acute management, but they don’t have all the leverage of HM HCS.

“We are an internally owned entity that is able to more easily align the membership with our own insurance company to our own model,” Holzer says. “We’ve got all the ingredients.”

Highmark arguably has even more leverage to drive change in its post-acute sphere than the Centers for Medicare & Medicaid Services (CMS) has had in pushing similar pay-for-performance models in various markets in recent years, Holzer says.

That said, HM HCS is set up to go into other markets and contract to provide post-acute management to other health systems, accountable care organizations, or other potential clients. But Holzer is blunt in stating that the model they’ve developed relies on having an insurer with similar market capture as Highmark. Otherwise, in more fragmented markets with multiple insurers, home health and other post-acute providers can simply opt to not work with payors if they don’t like the terms.

That may sound ominous to some, given that consolidation among already massive insurers has sparked concerns of monopolies. But Holzer says he sees it differently.

“We’re in a position to drive meaningful transformation in a space that needs it,” he says. “If we didn’t have these levers, we couldn’t drive it. Market power gives us the privilege and ability to do something, and we can be a leader.”

Written by Tim Mullaney

Photo Credit: “Cubicle Wall” by Seth Sawyers, CC BY 2.0