The Case For and Against Home Care Provider-Medicare Advantage Relationships

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Shifting health care payer trends have home-based care providers stuck between two battling business decisions: “adapt or die,” or sustainability.

Those two decisions may look like one in the same to outsiders, but for home care operators grappling with whether to engage with Medicare Advantage (MA), they sometimes posit providers on different sides of the aisle.

The tense relationship between the home health care industry and MA has been covered extensively on Home Health Care News. Providers are trying to fight back – as MA grows its market share among Medicare beneficiaries – against what they feel are unfair reimbursement rates from plans for home health services.


Conversely, we’ve often written about MA involvement as an opportunity in non-medical home care for providers in that industry. To some extent, it still is. Primarily health-related benefits and Special Supplemental Benefits for the Chronically Ill (SSBCI) offer a new revenue stream and client base for providers.

But not all home care agencies view MA as just another opportunity or revenue stream. After all, they deal with similar issues to the home health care world when it comes to working with MA: rates are meager and, additionally, the resources it takes to staff those cases is sometimes not worth the yield.

On the other hand, some providers think that engaging with MA now will be worth the return on investment down the line.


In this week’s exclusive, members-only HHCN+ Update, I try to paint the whole picture on the MA conundrum through the perspective of home care leaders.

The case for MA engagement

Potential profit from working with MA plans is currently not there for home care providers. Hours are few and far between, and pay is not near what it is with private-pay clients. Add in staffing concerns, and there are a lot of reasons why some agencies are staying away.

But BrightStar Care sees the situation differently. Shelly Sun, the CEO and founder of the company, believes that some of those tricky bottom-line issues with MA now are just the cost of doing business.

“We’re leaning very heavily into Medicare Advantage,” she told me last month. “I think that’s going to be a big change in how home care must evolve over the next three to five years. We’ve benefited over the last 10 years, up until the change in Medicare Advantage, from consumers just coming to you through marketing or through hospital discharge, right? If 7 out of 10 new Medicare enrollees are enrolling in Medicare Advantage, and 50% of Medicare, will be Medicare Advantage in the next 10 years, well, that means that every single enrollee that is accessing their benefits is going to start with hours of personal care being paid through the Medicare Advantage plan. Only those additional hours beyond that will be private pay.”

The Chicago-based BrightStar Care is a home care and medical staffing franchise. The company’s network includes over 365 locations and more than 15,000 caregivers.

Sun believes if you’re not around during those MA hours early on, you won’t get the hours – potentially thousands of them – of private-pay services from that prospective client later on.

Dealing with the MA plans now allows you to form relationships with those potential clients, she believes, so that they choose you when they need more home care down the line.

So, the initial hours from MA may not be financially sustainable in a vacuum, but she compared it to having a sales team – or any other front-end, operational cost. And she’s right that no one would argue that having a sales team is not a worthwhile investment.

Where others – who we’ll get to – see the MA model as financially unsustainable, Sun sees not engaging with MA plans now as financially unsustainable. If those connections aren’t made now, the theory goes, there will be 30% or so fewer clients to service later on.

“I think it’s critical [to get involved with MA],” Sun told me. “I think you have to look at it as a client acquisition and the cost of doing business. Two years ago, I would have had more franchisees with dedicated salespeople that would’ve been calling on hospitals for discharges. That took a salesperson. You didn’t know if you were ever going to have an ROI on a salesperson. Now, I have a built-in mechanism for having our franchisees get referrals through Medicare Advantage.”

In fact, as BrightStar Care is building up more company-owned locations in its network, Sun is most focused on buying out the franchisees that are unwilling to engage with MA plans. 

“We have to realize that the paradigm of client acquisition has completely changed with Medicare Advantage,” she said. “That’s what I’m preaching to our franchisees. Where they’re not participating, those are the ones I’m most interested in buying out, because we will absolutely participate in a company-owned market, and that’s how I’m prioritizing where I want to be and why I want to be there.”

The case against MA engagement

Other home care companies do not see MA as vital to their future, at least for now.

“Not in its current structure – I wouldn’t touch it with a 10-foot pole,” Caring People CEO Steven East told me this week. “We’re all dealing with supply shortages on the labor side. So you’re telling me I’m going to use my limited supply on a very low-margin business? That, to me, is a recipe for disaster. When that model changes in a way that incentivizes us a little bit more, then we can re-engage in those conversations. But for now, we’ve stayed away from that.”

Caring People is a home care company that is a part of the portfolio of the private equity firm Silver Oaks Services Partners. It operates 18 locations across New York, New Jersey, Connecticut, Florida, Texas and Massachusetts.

I asked East what would have to change, specifically, for Caring People to re-engage.

Firstly, he still doesn’t believe all MA plans have a total grasp on the value home care agencies provide. This tends to be generally true, as supplemental benefits – and the idea of the two sides working together at all – is still relatively new.

“That’s why they don’t quite understand that you can’t give business to private home care companies at 20% margins, especially when I have a client down the block who’s willing to pay us at 40% to 45% margins, right? It would be one client with eight hours per day as opposed to five clients doing two hours per day. So, unless their per-unit reimbursement goes up significantly, there’s really no attraction to that product for us.”

Caring People is not a franchise, so it’s different from BrightStar Care in that aspect.

But Caring Senior Services is. And its CEO, Jeff Salter, believes he cannot in good conscience recommend his franchisees get involved with MA given the current structure of those relationships.

“We’re being really careful with our recommendations on how to pursue those contracts and work with those organizations,” Salter told me. “Because the benefit amount is so low, it’s a challenge for businesses to have to service those low-hour clients with minimum benefits. If you’re a company trying to provide a high level of service – with high-touch and great caregivers – and then you end up with a client payment source that’s only giving you a few hours per week, that can be tough.”

The San Antonio-based Caring Senior Service has about 50 locations across 20 states.

It’s hard, for instance, to make supervisory visits and maintain a high level of care and standard with those clients, while also managing the cost in a way that turns a profit.

And Salter doesn’t want to reduce the standards of care that Caring Senior Services has or lead his franchisees down a financially turbulent route.

The company is investing in technology and software in order to make achieving that standard of care more seamless, which could change the equation. But still, for now, he thinks organizations have to be all in or all out.

Interestingly enough, that almost validates both Sun and East’s thought processes.

“I think I’m a bit of an outlier on it,” Salter said. “But if you want to set your business up to service those clientele primarily, then I think you can make a business out of it. But I think you have to focus on that.”

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