Home Care Providers Starting To Convert Medicare Advantage To Private-Pay Business

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Whether to engage with Medicare Advantage (MA) plans or not is one of my favorite topics of discussion in home care right now. And that’s for a simple reason: Not everyone agrees on the answer.

The MA debate is one we’ve been discussing on Home Health Care News for a long time now. In fact, there is a similar debate going on in the home health care industry simultaneously.

I first laid out “The Case For and Against Home Care Provider-Medicare Advantage Relationships” in June. That piece positioned Shelly Sun – the CEO of BrightStar Care, and someone who is extremely determined to contract with MA plans – against other leaders that are far more skeptical.


Essentially, with MA membership growing so steadily, Sun believes that it is imperative that BrightStar Care and its franchisees begin working with plans now in order to capitalize on those members when their benefit hours are up. She also believes that early adopters of MA will eventually be the benefactors of closed networks down the line.

At the same time, those that are more sheepish on MA believe it is currently not a financially viable option. As of right now, the pay is too meager and there are too few hours. With MA growing and home-based care needs growing, many of those in this school of thought believe if the MA dynamics change in providers’ favor, there will be time to engage later.

In other words, there’s time to sit on the sidelines and wait things out.


I invited Sun to further explain her case at HHCN’s Home Care Conference Wednesday. We dug into her hypothesis and strategy around MA.

Throughout the day, other provider leaders were happy to agree with her or respectfully disagree.

In this week’s exclusive, members-only HHCN+ Update, I share the highlights of this ongoing debate from yesterday’s event in Chicago.

Investing now

Since MA plans became allowed to offer at-home care through both the primarily health-related and Special Supplemental Benefits for the Chronically Ill (SSBCI) pathways, participation has markedly increased each year.

“In-home support services,” in particular, have been a benefit rising in popularity over the last few years. Those services are defined as services to assist individuals with disabilities and/or medical conditions in performing activities of daily living (ADLs) and instrumental activities of daily living (IADLs) within the home to compensate for physical impairments.

A new report released by the Better Medicare Alliance (BMA) and Milliman on Thursday reaffirms that.

“In-home support services had the largest growth in plan prevalence among these benefits, most notably from 2020 to 2023,” noted the report, which focused on the primarily health-related pathway.

Specifically, the in-home support services benefit is offered by plans in 42 states, making it the most widely available of such benefits from a geographical standpoint. In contrast, according to the BMA-Milliman report, the adult day health services benefit is only available in Arizona and California through just 35 plans.

Better Medicare Alliance/Milliman

Generally, almost all home care providers viewed supplemental benefits as an opportunity when they first became available in 2018 and 2019. Since then, some have backed off.

One provider even said yesterday that its MA engagement has only led to two private-pay conversions over time.

But Sun maintains laying the groundwork now will ultimately end up giving the Chicago-based BrightStar Care – which has 365 franchise locations across the U.S. – a competitive advantage in the end. It has been diving into the MA business since 2018, a tactic that hasn’t always been well-received by all of its franchisees.

“I think it’s the same reason that consumer brands spend so much money on the younger segment where brand loyalty is seeded, right?” Sun told me on stage Wednesday at the Home Care Conference. “If we’re not with our seniors as they begin utilizing their Medicare Advantage benefit, we’re going to miss the opportunity to be with them when they exceed the hours Medicare Advantage pays for and they need private pay.”

In order to test this theory – one that she backs whole-heartedly – Sun has increased BrightStar Care’s company-owned footprint to put her money where her mouth is.

Sun also said that since working with MA plans, her team has been able to get BrightStar Care rate increases, both through establishing relationships and proving value through data. Right now, MA doesn’t pay as much as private pay does, of course, but she said it’s a break-even proposition across “most markets in the country.”

In 2018 and 2019, the company was losing money, but that has changed. In some cases, it even makes money on MA clients.

“I think that it’s really important that we have a seat at the table,” she said. “We’re seeing that about 5% to 10% of our Medicare Advantage enrollees from two years ago are now coming back and becoming private-pay clients. So those successes are starting to occur.”

That conversion rate takes time, anywhere from 18 to 30 months, Sun said.

“I believe it’s about two years. And in 2021, I took 75% off our royalties for franchisees to get them to try it,” Sun said. “We had some participate with us. And then we have our company-owned locations. Now we’re seeing some conversions to private pay. I think that two-year lag time will be similar to what it will take for us to gather enough data, publish the studies and influence behavior with the rest of our franchisees.”

She also believes that for the mission-focused organization BrightStar Care, engaging with MA is a necessity.

“Private-pay rates have had to increase just because of labor, PPE, and recruiting and retention costs, which have increased anywhere from 30% to 45%, on average,” Sun said. “And that makes home care far less affordable than it used to be a few years ago. We’re mission focused, and we want to make sure we can help more people stay in the home, and Medicare Advantage is a great way to do that.”

Sun certainly isn’t alone. FirstLight Home Care, 24 Hour Home Care, Homewatch CareGivers and many others have also been a part of the MA rush from the start.

“We are one of those companies that has been leaning into Medicare Advantage,” FirstLight President and CEO Glee McAnanly said at the Home Care Conference. “I agree with Shelly on the fact that there are going to be a certain number of providers that are going to fill up that pipeline, and once it’s filled, you’re then going to have to wait in line. And so we have made a decision to really test the waters with Medicare Advantage.”

Right at Home CEO Margaret Haynes offered up her perspective on the Medicare Advantage business at HHCN’s Home Care Conference

The other perspective

Particularly as a long-term view, Sun’s perspective makes a lot of sense. But the other side makes sense, too.

For smaller providers – and those that have to work with a franchisee network – diving into MA as a revenue stream is a tough proposition when it’s not much of a revenue stream at all, but still takes operational work.

It could be just that BrightStar Care has the capital, the network and the capability to take on the MA risk now, where others don’t. But there are also philosophical disagreements.

“We’re a little bit on the sidelines and watching,” Right at Home President and CEO Margaret Haynes said at the Home Care Conference. “We certainly are dabbling in a couple areas where it makes sense, but it really does come down to the reimbursement rate.”

The Omaha, Nebraska-based Right at Home has more than 600 franchise locations in the U.S. and seven other countries.

“You have to have scale in order to do that at really thin margins,” Haynes said. “As a small business owner or local owner, sometimes that can be really hard. … If I’m paying the caregivers now, but I’m getting reimbursed maybe 30 days, 45 days later, you know, cash is king. You have to have enough amassed capital to really play in those kinds of programs.”

Caring Senior Service CEO Jeff Salter at HHCN’s Home Care Conference

Some providers haven’t seen the private-pay conversions come to fruition. Sun, on the other hand, says that BrightStar Care has.

It could be that the investment that BrightStar Care has put into MA is the reason for its success on conversions, even if those conversions are still not that sizable.

But for companies like the San Antonio-based franchise Caring Senior Service, it does not want to invest now without knowing for sure that MA engagement will pay dividends in the end.

“Until any of these pilot programs could show us that the clients on these programs use your services after the benefit is up, we’re not interested,” Caring Senior Service CEO Jeff Salter said at Home Care Conference. “It’s too much work. You put so much work in new client set-up and it just causes stress on your teams. Right now, it’s just not worth it for us.”

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