LHC Group CEO: Biggest Innovation We Need Is Payment Innovation

When it comes to technology, there’s no shortage of gadgets and gizmos promising to innovate home-based care.

In fact, during trade shows, all of the different technology being highlighted can sometimes feel a little like a scene from a science-fiction show.

“I think we have seen the future of technology — we just haven’t started using it yet,” Bruce Greenstein, executive vice president and chief strategy and innovation officer at LHC Group Inc. (Nasdaq: LHCG), said recently during a presentation at the 2019 Home Health Care News Summit in Chicago. “If you go to the American Telehealth Association conference, there are Star Trek versions of technology [being] used in the home. But very few [providers] want to pay for it, so we aren’t utilizing that technology.”


The real innovation that’s needed, Greenstein and other home-based care leaders say, is payment innovation.

While that’s a sentiment that certainly applies to the adoption of telehealth tools and other technology in the home, it more broadly applies to the steady — but relatively slow — shift toward value-based reimbursement.

Currently, many providers are still stuck in fee-for-service (FSS) payment structures, despite many publicly acknowledging their willingness to take on risk and get paid based on quality over quantity.


On the Medicare side, the Centers for Medicare & Medicaid Services (CMS) has certainly taken some incremental steps toward payment innovation, though its main focus is now on the Patient-Driven Groupings Model (PDGM).

One of the agency’s biggest value-based payment efforts is the Home Health Value-Based Purchasing Model (VBPM), implemented in January 2016. Under VBPM, home health agencies in nine states receive financial bonuses — or penalties — based on the quality of care they provide and how positively they impact patient outcomes.

For example, during the fourth quarter of 2018, Amedisys Inc. (Nasdaq: AMED) received about $250,000 in bonus payments from CMS under VBPM, according to the company. On the year, it received a VBPM bonus of about $1 million.

Although VBPM is widely supported by the home health industry, CMS has yet to expand it further.

“Great care equals great business,” Amedisys CEO and President Kusserow said during the company’s year-end conference call with investors. “We … continue to believe and advocate that this demo should be expanded nationwide, institutionalized as a better way than PDGM for CMS to generate significant taxpayer savings and to drive quality patient outcomes.”

Apart from Medicare, another major roadblock to payment innovation is the way that payers and the managed care world view providers. Oftentimes, payers view providers simply as commodities rather than trusted partners.

Largely, that has meant rationing care or being needly strict with how in-home visits are carried out.

“There is so much opportunity on the managed care side both in the personal care and home health space,” LHC Group Chairman and CEO Keith Myers said, also during the HHCN Summit. “We could lower the total cost of care for [health plans] plans dramatically, but we have to get them to stop rationing care in a fee-for-service model and allow us to partner with them in a value-based model.”

Bayada Home Health Care is a provider that has recently had success on that front.

In March, Bayada announced it had landed a new value-based agreement with AmeriHealth Caritas built on reducing potentially preventable hospital admissions, re-admissions and emergency room visits.

But similar well-publicized examples are difficult to come by.

“The biggest innovation that we need is payment innovation,” Myers said.

Of course, reimbursement remains an issue on the technology side as well, with providers underutilizing telehealth and other innovative technology tools as a result.

“[Providers] are operating on a very low level of utilizing technology that is available today,” Greenstein said.

That’s beginning to change to some extent, as CMS finalized a set of policies designed to expand the use of telehealth benefits under the Medicare Advantage program in April.

“With these new telehealth benefits, Medicare Advantage enrollees will be able to access the latest technology and have greater access to telehealth,” CMS Administrator Seema Verma said in an April statement. “By providing greater flexibility to Medicare Advantage plans, beneficiaries can receive more benefits, at lower costs and better quality.”

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