Payer Influence Growing in Home-Based Care

Another in-person event came and went this week, as Home Health Care News hosted its annual Capital+Strategy event in Arlington, Virginia.

And as executives, analysts, private equity representatives and others gathered to discuss the state of home-based care, news dropped that UnitedHealth Group (NYSE: UNH) is acquiring LHC Group Inc. (Nasdaq: LHCG) and combining the provider with Optum.

The deal added an interesting wrinkle to the event while providing a backdrop for the rest of the day’s discussions.

But there was also much more to discuss. Dr. Meena Seshamani, deputy administrator at the U.S. Centers for Medicare & Medicaid Services (CMS) and director of the Center for Medicare, kicked off the day by detailing how the government views home health care.

Then, executives from some of the biggest home-based care agencies in the country spoke, and we learned what they’re thinking.

Next, we learned what large companies like Walgreens and VillageMD think about home-based care, and why they’re leaning further into the space.

Finally, we gained insight into why – and how – startups are breaking into the space.

I dive into some of those learnings in this week’s exclusive HHCN+ Update. Stay tuned for more insights and other Capital+Strategy event coverage in the coming weeks.

Building off the pandemic

Dr. Meena Seshamani acknowledged that CMS and the Center for Medicare are aware of the power of home-based care. But that doesn’t necessarily mean the agency is handing over the keys to providers just yet.

Its focus, as the public health emergency wanes, is on access and equity in Medicare – including in home health care.

“Building off of the pandemic, certainly, care is being provided outside of those traditional episodes and silos,” Seshamani said. “And I think that is something that we need to harness. We need to see what has worked, what hasn’t and then figure it all out moving forward.”

Seshamani additionally said that CMS is committed to getting more into value-based and holistic care models. The new accountable care organization (ACO) REACH Model – “Realizing Equity, Access and Community Health” – is an example of that.

Holding MA plans accountable

Seshamani also mentioned that CMS wants to “co-create” the future of Medicare with providers and make sure that Medicare Advantage (MA) plans are held accountable. That, no doubt, was music to providers’ ears.

Home-based care providers, more and more, are agreeing that payers will own the home in the future. UnitedHealth Group’s pending acquisition of LHC Group, and Humana Inc.’s (NYSE: HUM) acquisition of Kindred at Home, lend credence to that notion.

“Some examples of what we proposed recently: We proposed a [requirement] for plans to report the dollars that are being spent on supplemental benefits, so that we can know what is actually being spent on these different supplemental benefits as a first step towards understanding how that is all working,” Seshamani said. “Is the money that’s being spent then leading to better care? Is it leading to better outcomes?”

But with MA growing rapidly – it will likely own the majority share of Medicare beneficiaries in the next few years – home health care providers are concerned about fair contracts with these plans.

That issue has been top of mind in the industry for the last few months.

“What we’re finding now is interesting loopholes being used by the Medicare Advantage plans,” John Kunysz, the CEO of Intrepid USA Healthcare Services, said at the event. “We go through the process, they deny, they deny, and we finally go through an appeal. But guess who’s allowed to appeal? … Not us. It is the original referring physician. Do you think that original referring physician cares about that? Are they going to give us any time to help us refute that claim? No, they’re not. So the payers are really slick on finding ways to kind of stick it to the providers. That shouldn’t be the game that’s played.”

Intrepid is a Texas-based provider of home health, hospice and personal care services. The company has more than 60 locations spanning 17 states.

A growing influence

In fact, payer influence is going beyond that, too.

In a recent conversation with Eugene Goldenberg, a managing director for health care investment bank Edgemont Partners, he told me that leaders in home-based care increasingly have payer backgrounds.

“A lot of these executives in place now come from a managed care background, from a government services, payer-focused background,” Goldenberg told me. “So they are often now managing the business with kind of a payer hat on.”

Elsewhere, home- and community-based services providers are still bullish on the support from Washington, D.C., for their sector. But, as Deb Oberman – the SVP of government gelations for Help at Home – said, the Build Back Better plan is unlikely to come to fruition.

That does stall more support coming in the form of straight dollars and cents, but that money could still come from a separate legislative vehicle.

“I think the term ‘Build Back Better,’ we’re not hearing that anymore,” Oberman said. “So, is [the next thing] going to be the exact same package that we saw and Build Back Better? Probably not. But I do think there will be something because both at the federal level and the state level, there’s a recognition that [home-based care is] critical.”

Likewise, other home-based care initiatives such as the Choose Home Care Act are currently backburnered, given the war in Ukraine and other pressing political issues.