How New Payment Models, Big Data Are Disrupting Home Health Care

While technology behemoths and up-and-coming startups are often cited as the industry’s top disruptors, it’s innovative payment models and big data that will likely have the greatest impact on home health care delivery over the next several years, experts predict.

Additionally, as long as gaps exist throughout the hospital-to-home transition process, further disruption is sure to come from non-medical home care providers and entities operating on the fringes of the in-home care space.

“Somewhere between a $3,000 home health episode and going home with nothing, there’s a gap in care for people who might not need intense home health care, but need some support and assistance with the transition from hospital-to-home,” Tony D’Alonzo, director of clinical strategy and innovation for Bayada Home Health Care, said.


D’Alonzo highlighted macro-level trends and other factors disrupting the home health industry during an April 10 panel discussion at Home Health Care News’ Capital + Strategy Forum in Washington, D.C.

Rexanne Domico, president of home health care and rehabilitation services for BrightSpring Health Services, joined D’Alonzo on the panel. As did Dr. Roy Beveridge — who recently retired from his role as chief medical officer for insurance giant Humana Inc. (NYSE: HUM).

With more than 28,000 employees and 360 offices in nearly two dozen states, Moorestown, New Jersey-based Bayda is one of the largest home health providers in the country. In addition to its U.S. footprint, Bayada operates across six countries.


Formerly known as ResCare, Louisville, Kentucky-based BrightSpring provides 11 different lines of home- and community-based services. The company was acquired by global investment firm KKR and an affiliate of Walgreens Boots Alliance Inc. (Nasdaq: WBA) in March for $1.32 billion, then subsequently merged with pharmacy powerhouse PharMerica.

Humana — also based in Louisville — has more than 16 million medical members across 50 states, Washington, D.C., and Puerto Rico. The insurer acquired a stake in both Kindred at Home and Curo Health Services last year, backed by private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe.

Payment methodology and big data

Broadly, changing payment models are at the top of the list when it comes to home health industry disruption, according to Beveridge.

That includes the Patient-Driven Groupings Model (PDGM) — the most significant payment overhaul home health providers have seen in nearly two decades — in addition to mechanisms such as value-based and bundled payments.

Among its changes, PDGM — set to go into effect on Jan. 1, 2020 — will likely change how and when home health providers delivery therapy services by removing perceived incentives based on visit volume. Moving forward under PDGM, reimbursement for therapy services will be more closely tied to patient characteristics and need.

As a result of the shift, agencies that have historically provided ample therapy services will have to become more cost-effective, a reality that may lead to an increased use of telehealth and telemonitoring tools.

PDGM will also disrupt the home health industry by forcing providers to take a more detailed approach when it comes to classifying their patients, as reimbursement levels vary based on admission source, timing and a handful of other determinants.

The home health industry may likewise see further consolidation and a spike in bankruptcy filings because of PDGM.

“Payment methodology is forcing change and disruption,” Beveridge told forum attendees.

From a value-based payment perspective, the Centers for Medicare & Medicaid Services (CMS) launched its home health Value-Based Purchasing Model (VBPM) in January 2016. Under the demonstration, which is currently active in nine states representing each major U.S. region, participating providers compete on value, with their payments adjusted accordingly based on certain quality metrics.

As they await an expected national expansion of the demo, several home health providers have entered into their own value-based arrangements with insurers. That list, for example, includes Bayada, which entered into a new value-based agreement with AmeriHealth Caritas in March.

“I think the payment mechanisms we’re all going to have to live with are going to force disruption upon us,” Beveridge said. “If you look at the industry as a whole, as we look at value-based payments in any part of the medical sector, there’s tremendous transformation happening.”

Meanwhile, under the Bundled Payment for Care Improvement (BPCI) program, health care providers from across the continuum agree to split a set reimbursement amount for a patient’s single episode of care, with the overall goal of reducing costs.

CMS first introduced BPCI in 2012 and it has largely seen mixed results ever since.

Big data and Amazon

Increased data collection and sharing efforts are also poised to disrupt the home health industry, according to Beveridge. That’s especially true as remote patient monitoring technology becomes more advanced and as interoperability capabilities are strengthened across the health care sector.

“Once you have data, that opens things up to the Googles, Amazons and Microsofts,” Beveridge said. “But also a lot of other people who can be very focused in this field. I think the entities that will disrupt us will be people who understand the data.”

Amazon (Nasdaq: AMZN), in particular, has the potential to become a serious home health industry disruptor in multiple ways, recent moves suggest.

Earlier in April, for instance, the Seattle-based online retail giant announced that six companies would be allowed to create HIPAA-compliant skills for its Alexa virtual assistant, a move that could eventually encourage the use of voice recognition technology among home health providers.

“I think the biggest thing is, who are they going to partner with?” Domico told forum attendees. “Amazon is clearly in the home. They’re clearly there in one way or another.”

But Amazon also presents a disruption threat on the labor front.

In October, the company announced it was raising its minimum wage to $15 for all full-time, part-time, temporary and seasonal employees, regardless of where they work or what their position is. Already facing intense hiring pressure, home health providers risk losing staff to Amazon, which offers competitive wages for less demanding work.

Hospital-to-home transitions

Besides payment models and data, home health industry disruption is also likely to come from non-medical home care providers and emerging operating models delivering different types of care in the home setting.

“There’s a gap in post-acute care right now,” D’Alonzo told forum attendees. “You’re starting to see community-paramedics programs and care coordinators, along with call centers, for example.”

These players and models include Denver-based DispatchHealth, which provides mobile urgent care to 10 markets across the country.

They also include individual home care franchises such as the Right at Home location in Columbia, South Carolina, which has been working with nearby Lexington Medical Center to reduce the health system’s readmission rates for certain patient populations following discharge.

While non-medical home care providers and other entities operating in the home don’t provide direct competition to home health providers, they present partnership opportunities that could change how the industry has traditionally delivered care.

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