The new Medicare Advantage opportunity for home care providers will break out in 2020 and boom in 2021. But while providers are already building the infrastructure and the partnerships necessary to capitalize on this enormous play, three major red flags remain.
For Medicare Advantage (MA) to fully benefit from the power of home care, these three problems will need to be addressed.
1. The payer partnership problem
Home Health Care News recently outlined the six steps home care providers must take to succeed in Medicare Advantage. One of those six was the need to educate payers on the basic differences between home care and home health, an issue indicative of the larger problem: navigating an entirely new partnership.
“[Payers view home care] as a red-headed step child, as a variant of the home health world,” Jeff Bevis, CEO of Cincinnati-based franchiser FirstLight Home Care, told HHCN. “They place us far down the food chain — that’s maybe the way to put it. Not really acknowledging the value that we can provide them as a payer, and certainly as a service to their policyholder.”
For the home care-MA plan partnership to work, each side is going to have to adjust how it does business.
Home care providers will have to build new technological infrastructure and, potentially, new organizational infrastructure, such as 24-hour capabilities. They will have to learn how to work with insurance companies, including new challenges in billing, coding and data collection, as they move away from private pay on a client-by-client basis. They will have to learn how to work within national ecosystems with organizations powered by massive bureaucracies.
Payers, meanwhile, will have to learn the differences between home care and home health. They’ll have to learn how to measure success in home care. They’ll generally have to learn how home care can deliver the outcomes they want for their members.
“I think there is going to be a really steep and fast learning curve for the Medicare Advantage plans themselves between now and 2022,” Medicare Advantage expert Anne Tumlinson, founder of Washington, D.C.-based research and advisory services firm Anne Tumlinson Innovations, told HHCN. “They’re trying to understand a variety of different things around not just home care benefits but all of the things they can offer under the supplemental benefit flexibility.”
2. The reimbursement problem
Between the timing of the MA expansion announcements, the lack of historical data showing the value of non-medical services on a senior’s health and the getting-to-know-you relationship that is building between major insurers and home care providers, the non-medical supplemental benefits packages have been slow to reach the market.
But there is another element that is slowing down the rollout from the provider’s perspective that also explains the as-of-now low expectations from providers on revenue opportunities: the reimbursement rates.
“We were looking at these benefits — Anthem, for example — and saying, ‘This doesn’t work for us,’” Doug Robertson — health care regulation and compliance manager at Omaha, Nebraska-based Right at Home — told HHCN.
What he saw was a benefit from Anthem that reimbursed a home care session of up to four hours for $40. If the home care session lasts just an hour, and the home care agency bills $30 an hour, that’s a $10 reimbursement, he noted.
But if the session lasts all four hours of the benefit, the agency has charged the client $120 and only received $40 from the insurance company. And because MA prohibits value-based care plans from using “balance billing” — where the client pays out of pocket for however much of the service is not reimbursed — there is no financial incentive for the home care provider to participate if the reimbursements are too low.
“Because the home care benefit in MA is so new, payers are still exploring what a reasonable reimbursement could be,” Right at Home Vice President of Business Development Kerin Zuger told HHCN. “We have learned of reimbursements that range from $10 an hour to $22 an hour, so it is going to take a few Medicare plan cycles for payers to determine the right reimbursement based on supply and demand.”
3. The unchecked creativity problem
The CMS rule expansion in 2019 for the 2020 plan year was monumental, giving MA plans a level of flexibility and creativity that is basically unchecked. For example, the final call letter for MA plan year 2020 notes that “MA organizations have broad discretion” in determining what’s called the “Special Supplemental Benefits for the Chronically Ill,” and includes “pest control” as a possible benefit.
But unchecked creativity brings its own problems. Take home modifications, for example.
While there has been some buzz around home modifications in the new MA landscape, the reality reveals the inherent challenge at the heart of MA’s home care expansion: the double-edged sword of creativity.
The value of home modifications within MA is simple to understand: It’s an aging-in-place play. The problem is that the MA expansion is for people with chronic conditions, and home modifications — such as grab bars in the bathroom, non-glare lighting in the home or wider entry doors — are best done proactively, before a person could definitively say they are chronically ill.
So aging-in-place modifications have a much stronger value proposition when done proactively, and yet proactive work is a harder sell to MA plans. Instead, home modifications are more common after a person falls and returns from the hospital, and by then it’s too late.
“That’s a bad time to do it,” Louis Tenenbaum, a former home modifications contractor who now runs the home mods policy and advocacy organization HomesRenewed, told HHCN. “It’s not easy to do it as a contractor when the family’s in turmoil. And it doesn’t have the prevention aspect to it if you wait until after an event.”
That’s one major roadblock. Another is that unlike other MA benefits, a home modification is a capital improvement to a person’s home, meaning they then own the benefit.
Let’s say a senior is choosing between two insurers — MA Plan A and MA Plan B. MA Plan A buys into the notion that home modifications improve a member’s social determinants of health, and that these modifications must be done proactively.
In the first year with MA Plan A, the senior builds the modifications. But because this is a proactive measure, the financial benefits to MA Plan A might not be realized until the second, third or fourth year that the senior is in that plan.
Yet because the senior now owns the home modification forever, there is nothing that would prevent that person from changing after a year to MA Plan B, which does not offer home modifications but offers other benefits that MA Plan A does not.
Despite those challenges, as well as the lack of definitive, outcome-based data showing the value of home modifications, Tenenbaum is hopeful that this new landscape of creativity from CMS will lead to an uptick in home modifications done early, and done correctly.
“I think we’re on the cusp of recognizing the value of home modifications,” he said, “and making it something that people can take advantage of.”
This article draws from HHCN’s new report, “The New Medicare Advantage Opportunity in Home Care.”
Click here to access the complete report, which includes a guide to the five key challenges home care providers will face in MA as well as a comprehensive five-step process for finding MA plans that offer specific supplemental benefits related to home care, including instructions for combing CMS.gov.