Citing ‘Inadequate’ Managed Care Payments, Nonprofit Home Care Provider Announces Layoffs

Lengthy payment delays, negative operating margins and severe labor shortages have contributed to a challenging financial environment for home-based care providers doing business in the state of New York. The financial hardship has even triggered layoffs in some cases, including at one of the state’s certified home health agencies serving the largest number of patients in New York City.

Brooklyn-based MJHS Home Care — which provides services across New York City, plus Westchester and Nassau counties — outlined plans last week to lay off more than 100 employees in mid-April. Part of the nonprofit MJHS Health System, MJHS Home Care offers a range of services, including home care, hospice and palliative care, as well as rehabilitation and nursing care.

Crain’s New York Business first reported on the layoff plans on Friday.

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“Without a doubt, inadequate payments from managed care companies, along with a decline in reimbursement from governmental payers, has led to growing operating losses for MJHS Home Care and other home care agencies throughout New York,” MJHS Provider Services COO Timothy Higgins told Home Health Care News in an email. “MJHS Home Care will continue to provide quality care that is delivered with compassion, dignity and respect.”

MJHS’s new home care model will focus on those who are already under the care of MJHS Health System, including Elderplan and HomeFirst members, along with sub-acute patients being discharged from Menorah and Isabella Centers for Rehabilitation and Nursing Care, plus limited outside sources, Higgins said.

“This reduced scope model gives MJHS Home Care greater control over its future sustainability,” he added.

MJHS Home Care had 261 employees upon filing Worker Adjustment and Retraining Notification Act (WARN) notices. Of those, 112 received a WARN notice, though roughly one-third will receive — or have already received — offers for other positions throughout the MJHS Health System.

When it comes to contracting with managed care companies and inadequate payments, issues aren’t limited to just the Empire State. In recent months, home health leaders have preached caution and patience in working with health plans under expanded Medicare Advantage (MA) opportunities.

“There are some plans that have recognized the value of home health services and have embraced it in so many ways in order to bring patients from in-patient settings home — or keep them home in the first place,” National Association for Home Care & Hospice (NAHC) President Bill Dombi told HHCN during a Disrupt podcast episode released in January. “But when you look at it in the aggregate, you see the following with MA: We see administrative headaches and burdens, having to jump through hoops to get a visit authorized here or there. We see bad payment rates coming from MA plans.”

Widespread pain

Days after the report came out detailing MJHS Home Care’s layoff plans, the Home Care Association of New York State (HCA-NYS) released its annual financial and trends report for the home- and community-based care sector, which serves about 500,000 patients and families statewide. The HCA-NYS report pairs the latest available state Medicaid financial information with findings from a provider survey to shed further light on home-based care challenges and payment problems.

On average, New York home care agencies report an accounts receivable of 58 days, according to HCA-NYS. Accounts receivable represents money owed to an entity from outside payers, meaning it takes, on average, more than eight weeks for a home care agency to collect payments from all sources.

Partly because of that lag time, 72% of certified home health providers had negative operating margins — or costs exceeding revenue — as of 2017, the latest year of reported data. The average margin: -11.95%.

About 65% of licensed home care services agencies had negatives margins as of 2017 as well, according to HCA-NYS.

Roughly 29% of New York home health agencies have to use a line of credit or borrow money to pay for operating expenses.

In general, the vast majority of New York’s home health and personal care services are covered under the state’s Medicaid program. The New York State Legislature convened on Tuesday for a Medicaid budget hearing. A final state budget is due on April 1, HCA-NYS President Al Cardillo told HHCN in an email.

“It is imperative that the state ensure sound premium rates and, in turn, infrastructure support for providers to ensure their viability,” Cardillo said.

Similar to peers throughout the United States, the financial well-being of New York-based home care providers is further threatened by acute labor shortage, according to HCA-NYS. Its report found that between 28.25% and 38.95% of a provider’s potential or actual case admissions, on average, are delayed or hindered by labor shortages in home care.

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