While some ground has been gained, home care’s campaign into Medicare Advantage (MA) territory has sometimes felt like an inch-by-inch progression rather than a full-on assault.
But that shouldn’t be too surprising for those familiar with how MA plans think, according to Jeff Wiberg, the CEO of Family Resource Home Care, a large home care company that operates in the Pacific Northwest. In general, an MA plan seeks to minimize exposure risks and increase its membership base with attractive benefits, often while covering complex, chronically ill populations at the same time.
Home Health Care News recently caught up with Wiberg, a former Disrupt guest, to discuss how Family Resource Home Care’s MA strategy has evolved, why home care has been a “slow burn” under Medicare Advantage and more. Highlights from the conversation are below, edited for length and clarity.
For more insight into Wiberg’s strategic thinking, tune into HHCN’s Medicare Advantage for Home Care Virtual Summit, scheduled for June 24-26. Wiberg will participate in a CEO roundtable discussion with FirstLight’s Jeff Bevis and Right at Home’s Brian Petranick.
For more information or to register for the event, click here.
In 2018, the U.S. Centers for Medicare & Medicaid Services (CMS) announced non-medical home care would have a role in Medicare Advantage as a supplemental benefit. A lot of people were really excited about that. But since, I think that excitement has leveled out.
I would say the 2018 excitement was well-placed. It was an excitement born out of the fact CMS was finally taking notice of the value proposition that home care has. That was a foray into getting some good data on how home care can impact the most vulnerable populations — people with higher acuity, multiple comorbidities, lower functional scores. It’s the holy grail of Medicare patients. We’ve always believed, as an industry, that we can impact those folks very positively. MA plans being able to offer home care as a supplemental benefit was an intro to us being able to demonstrate our value proposition to a payer audience.
You said that excitement has maybe leveled off a little bit? That’s only because a few folks got it into their heads that — because MA was going to be able to offer the benefit — payers would magically start reaching out to home care companies and setting up all these contracts. Those of us who are familiar with CMS and how it operates, we knew that this was going to be a slow burn.
In 2019, for example, only about 3.5% of MA plans across the U.S. filed for being able to offer that home care benefit. This tripled all the way to just north of 10% in 2020. But in reality, we still haven’t seen a lot of penetration here.
Is that demoralizing at all?
No. I think that is indicative of the insurance companies dipping their toe into the water and wanting to collect some data to understand if home care appeals to their subscribers, their members. That’s what they’re trying to do — get people on to their plans by offering these supplemental benefits.
I don’t know that we’re going to get a lot of good data around usage until a few years down the road. The reason why is because the average age of a person who’s jumping into Medicare Advantage is 68. That’s three years after becoming Medicare eligible, but most of the Medicare patients are not going to require some sort of long-term care assistance until their low-to-mid 70s.
It may be awhile before we see some of that data hitting MA plans — and for the actuarial folks to figure out how it affects overall utilization. There are a lot of incentives that are built into CMS’s reimbursement formula. If you have two or more comorbidities, chronic illnesses, and you have functional limitations … then they’re incentivizing MA plans to go after that particular population. They’re going to have to start getting a little bit more aggressive on that population. Anybody who does home care knows that’s our bread-and-butter client. That’s who we serve. When the two dots connect, I think we’re going to start seeing greater movement toward what we all envisioned back in 2018.
I continue to be very bullish about this whole topic. I think it’s going to require a lot of education and outreach to the MA plans, helping them understand what home care offers. It’s going to require collecting some of our own data. That’s where I’m focused.
You brought up a couple of pain points already. Some others I’ve heard are “MA plans only offer home care benefits as a marketing tool” and “rates are far too low.” What are your thoughts on those particular knocks?
The first pain point should be expected. Ultimately, the design of supplemental benefits was a way to be able to say to the MA plan: “If you manage your population well and you end up saving money on your book of clients, CMS will let you keep some of that money. And you could use that money to enhance your benefit and make it more effective for people to subscribe to your particular plan.
CMS is going to keep some of those savings as well. That’s how MA plans are essentially incentivized to try to do the best they possibly can to manage their populations. The whole use of supplemental benefits has that in mind — the marketing opportunity to try to get more people to sign up for a particular plan.
If I run an MA plan, the first thing I’m going to do is see whether or not home care is actually a market-mover: “Let’s see if we can get some more subscribers onto our benefits because we’re offering home care. Does this actually mean something to people?”
Generally, for example, we know that dental coverage means something to people. We as a culture grew up with dental insurance, so we have this concept in mind that we need dental insurance. When an MA plan says it has dental — and regular Medicare does not — then you take notice.
We as an industry have known that people don’t know what home care is. We’ve known that for years and years. We can’t only blame MA plans for not fully understanding our industry or the value of our services.
[Because of COVID-19], we are seeing front-page articles in The New York Times, The Wall Street Journal and other media outlets highlighting how home care providers are keeping seniors safe in their own homes. The more people become familiar with home care, the more its services being offered by an MA plan becomes a value prop.
The second pain point is something we truly have an influence on today. Home care is used to trying to be as low-cost as we possibly can. That’s why we typically operate with very tight margins. What we’re not used to, though, is negotiating MA rates like home health care providers have had to do. We need to understand that payers have a motive in paying as low as they possibly can for services — from any provider. That’s how they can keep their overall exposure down.
We as an industry need to educate ourselves and recognize that the more we go down to the bottom and squeeze those margins, the less able we’ll be in providing the appropriate level of care, training and personnel. We need to really be resistant to signing those kinds of contracts and actually hold the line at rates that are reasonable.
Could you briefly recap how Family Resource Home Care has navigated the MA space thus far? Do you have any pilots with MA plans? What has your experience been like?
Trends within the country, especially dealing with MA, tend to go from East to West Coast. So, we’ve begun early conversations with the MA plans here in the states and the counties that we serve, but those plans have not actually filed for providing home care yet.
What I’m doing is something that I’m encouraging all home care agencies to do: focus on the kinds of data points that MA plans are ultimately going to want when choosing their preferred provider. Also, the kinds of data points that will be really helpful in demonstrating the value proposition we have.
Additional contributions to this story by Joyce Famakinwa