LHC Group CEO Frustrated by Managed Care Reimbursement

LHC Group (Nasdaq: LHCG) has long been considered the home health industry leader when it comes to making inroads with hospitals and health systems thanks to its joint venture strategy.

However, despite a growing managed care population in the broad health care landscape, low reimbursement models will continue to challenge home health providers, according to LHC Group CEO Keith Myers, who spoke at the Jefferies Global Healthcare Conference in New York City on Tuesday.

While LHC Group sees potential gains in the long term for partnerships with managed care companies and Medicare Advantage plans, home health currently is not valued enough by many of these organizations and their reimbursement rates for services are too low to be sustainable or scaleable.


“I’ve voiced frustration with some of our managed care colleagues for quite some time,” Myers said. “It’s been very frustrating to me … that they did not see the value potential of home heath and to put forth a model that would be value-based or a gain-sharing model, similar to work we did with Ochsner [Health System].”

Still, LHC Group has been scaling out its personal care services division, something that MA plans are calling for, Myers said.

Beyond managed care, LHC Group is also positioning itself for ongoing regulatory shifts in the space.


A seat at the table

The home health industry is currently facing a number of upcoming regulations and possible reforms, including an overhaul of the entire payment system. While these changes could be sweeping, Myers notes that home health providers have a strong voice as the details are worked out.

While the industry has had some success shooting down a major proposal last year that would have reduced payments by $950 million if implemented, a new model is still under development. However, providers in the space can count on one major win in the next payment system proposal, according to Myers: budget neutrality.

“Nothing trumps budget neutrality,” Myers said. “Budget neutrality is budget neutrality. They can change the regulations, but as long as they have budget neutrality, that’s huge to us.”

Budget neutrality was guaranteed in the Bipartisan Budget Act of 2018, which requires a new home health payment model by 2020, as was a change to a 30-day unit of service to replace the current 60-day episode of care.

Fortunately, LHC Group and other industry stakeholders have been able to provide more input into the regulatory process, with the creation of a technical expert panel (TEP) to advise CMS and policymakers.

“Back in the 90s, we couldn’t even get a seat at the table,” Myers said. “[We now] have a meaningful seat at the table and are able to be part of the process as regulators think through new rules.”

Written by Amy Baxter

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