There’s been healthy debate inside the home care industry as to how significant Medicare Advantage opportunities will really be come 2019. Despite the varying outlooks, home care providers by and large are making sure they’re best positioned to take advantage of whatever prospects do arise.
The latest of those efforts is coming from Omaha, Nebraska-based Right at Home, which on Wednesday announced it has struck a new preferred partnership arrangement with Kindred at Home, the largest home health and hospice provider in the country.
In addition to being a leading post-acute care provider, Kindred at Home is partially owned by insurance giant Humana, Inc. (NYSE: HUM). Humana has a significant Medicare Advantage business.
The partnership is the latest strategic move by Right at Home to highlight the value of home care in the post-acute continuum and is a part of its proprietary care delivery system, known as RightCare, according to the company.
“These are the types of partnerships that will continue to drive the quality Right at Home is known for as we strive to provide RightCare to everyone who touches our brand,” Right at Home President and CEO Brian Petranick said in an announcement. “We are hopeful our partnership with Kindred at Home puts us in a position to better leverage the new 2019 Medicare Advantage (MA) opportunity.”
Right at Home offers in-home companionship and personal care services to seniors and adults with disabilities. The franchisor currently has more than 500 franchise locations located throughout the United States and seven other countries.
Kindred at Home—recently purchased by Humana and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe for $4.1 billion—is primarily a home health, hospice and community care services company with annual revenues of about $2.6 billion. The company has about 46,000 employees who provide services throughout more than 600 sites in 40 states.
Both Kindred at Home and Humana are based in Louisville, Kentucky. Humana owns a 40% stake in Kindred at Home, with the two private equity firms owning the remainder.
The Centers for Medicare & Medicaid Services (CMS) announced at the beginning of the year that non-skilled in-home care supports will be included as a supplemental benefit in (MA) plans starting in 2019. In doing so, CMS opened the door to allowing supplemental benefits that include daily maintenance in MA plans.
“Kindred at Home is excited to partner with Right at Home to provide compassionate, patient-focused home care assistance to all who need it,” David Causby, the company’s president and CEO, said. “Our hope is that we can utilize the new Medicare Advantage opportunity to help our patients stay where they want to be—in their homes.”
One of the reasons the partnership made sense, according to the companies, was the fact that Right at Home and Kindred at Home share similar footprints across the county with areas of cross-market coverage.
Right at Home and Kindred at Home will now begin to look for areas of collaboration on local and national levels. Reducing costly hospital readmissions will be among the goals of the partnership, a point that, if successful, would seemingly hold great value for a payer such as Humana.
Humana moves toward value-based home care
Humana posted its 2018 second quarter financial results on Wednesday, with a net income of $193 million and earnings per diluted share (EPS) of $1.39 on a GAAP basis.
Its adjusted pre-tax income and EPS results reflect the execution of the company’s overall strategy, including, among other items, lower inpatient medical utilization and strong MA membership growth, according to the company.
Moving forward, Humana will continue to focus on helping seniors maintain their best health while the company also gradually re-shapes the health care landscape by prioritizing value-based care in both primary care and home health, the insurer’s CEO and president, Bruce Broussard, said during a same-day call with investors and analysts.
“As we previously indicated, we are trying to do something that has never been done before in home health, transform the payment model into one that is value-based, encouraging a transition from maximizing volume to focusing on health and managing chronic conditions such as COPD, congestive heart failure and diabetes to prevent or slow disease progression,” Broussard said. “This movement to value-based care and away from a predominately therapy-based model is aligned with the recent CMS proposal for changes to the home health payment methodology, which was anticipated when we entered into the [Kindred at Home] transaction.”
To that point, Humana immediately launched test-and-learn pilots aimed at operational and clinical improvements in four market following the closing of the Kindred at Home deal, he said. Markets included Dallas and Charlotte, North Carolina, in addition to Virginia Beach and Richmond, Virginia, according to Brossard.
The pilots incorporated pay-for-value mechanisms and transitional fee-for-service payment. Value-based measures focuses on hospital admissions and readmissions, emergency room visits and timely initiation of home care.
“We came to the conclusion that … the home model is going to evolve to be more and more nursing oriented and more and more around chronic conditions,” Broussard said. “So, we see a movement to more of our patient population as opposed to just therapy population.”
This conclusion is borne out, in part, by a proposed new Medicare payment framework for 2020. The Patient-Driven Groupings Model (PDGM) places less emphasis on therapy than the current payment model.
Fee-for-service will remain an important part of Humana’s business in the short run, Broussard said.
Written by Robert Holly