Managed care insurers in one of the largest states in the country are facing tough new limits on how many home care providers they can contract with.

New regulations in New York will impact licensed home care services agencies (LHCSAs), placing some restrictions on the state’s managed care providers as the number of enrollees continues to swell. LHCSAs provide private duty care and may also contract to provide services to Medicare or Medicaid beneficiaries with certified providers in the state.

There are 1,500 licensed home care agencies in New York state, which is on a Medicaid managed care system for long-term services and supports. This means that private sector insurers contract with LHCSAs to provide in-home care to the elderly and disabled.

In 2012, the state required all long-term Medicaid home care services to be provided through managed care contract. Prior to that, LHCSAs could contract with Medicare-certified home health agencies to provide care for Medicare or Medicaid beneficiaries, but more of their contract business is increasingly with MLTCs, as patients have undergone mandatory enrollment into MLTC. As of March 2018, New York had more than 229,000 patients enrolled in Managed Long Term Care (MLTC).

The 2019 budget plans limit the number of agencies each Medicaid plan can contract with, down to one contract per 75 enrollees, according to Roger Noyes, director of communications with the Home Care Association of New York State (HCA-NYS). The rules go into effect Oct. 1, 2018.

The change is a “boomerang in state policy,” according to Noyes, who says the limitations swing from previous years of encouraging more managed care enrollment.

That limit is higher than was originally proposed by Democratic New York Governor Andrew Cuomo, but still presents issues for both MLTCs and agencies. Some managed care plans across the state have contracts with up to 200 LHCSAs, according to Noyes, as these providers are often small, specialized providers.

“We are very concerned about the impact of arbitrary contract limits on continuity of care and individualized contracting relationships that might have specific clinical, cultural or language value, even if the LHCSA does not have the case volume to help an MLTC stay within its contract limit,” Noyes said.

For one such Medicaid plan for people with disabilities, Independence Care System, the change will reduce its network by more than half—from 150 agencies to 65 by October 2019, Crain’s New York reported.

The limitations will likely encourage consolidation in the space at a time when more agencies are looking to open their doors in New York; the state has received at least 50 more license applications in 2018 compared to 2016 and 2017, according to Crain’s.

Welcomed reform

At the same time, some of the changes in the budget could be beneficial toward reform efforts, including taking stock of the number of agencies that are active in the market.

“One component of the budget we think is a step in the right direction is to get a better handle on how many of these agencies are out there in the system actively serving patients,” Noyes said. “Many of these agencies are just sitting on licenses inactively.”

The budget does this by improving the requirements for registering, assessing and approving the licensing process.

“A lot of our members are LHCSAs and see there are other LHCSAs in the field that are inactive, holding a license, not, in come cases, complying with requirements,” Noyes said. “So they’ve wanted to see some higher requirements.”

Written by Amy Baxter