Home Health Providers Still Lack ‘Bargaining Power’ In Negotiations With MA Plans

David Grabowski wears many hats. In addition to being a member of the Medicare Payment Advisory Commission (MedPAC), he is also a professor of health care policy at Harvard Medical School.

Over the years, these positions have allowed him to emerge as an expert in the long-term care and post-acute care spaces. As such, Grabowski is in a position to offer insights on a variety of topics that are top of mind for home health care providers, among others.

Last month, Home Health Care News caught up with Grabowski at the Home Care 100 conference, which took place in Orlando, Florida.


During the course of the conversation, Grabowski talked about how he views home health providers’ “bargaining power” in negotiations with Medicare Advantage organizations, how they can help patients better navigate long-term care and how MedPAC came up with its recommendation for home health care payments.

HHCN: Years ago, you explained to HHCN readers why home health providers often lack “bargaining power” in their conversations with Medicare Advantage plans. Has this begun to change at all over the years?

Grabowski: Maybe marginally so, but I don’t think this has really changed. I don’t know if they’re in any better position today than they were 5, 10 years ago.

Thinking about what Medicare Advantage pays in different sectors, relative to traditional Medicare — you look at a hospital, physician sectors, it’s almost even. You look at dialysis, [that sector] actually gets more from Medicare Advantage. They’re so concentrated and so powerful.


On the flip side, skilled-nursing facilities and home health agencies are paid less in Medicare Advantage. I still don’t think either of the post-acute care sectors have that bargaining power. They might in the coming years.

We know that home health is going to be a big part of the post-acute care space going forward. I think the pandemic created this pivot. I don’t know that it’s pivoting back to skilled-nursing facilities. My sense is that Medicare Advantage is going to need to partner with home health, because it’s going to be a big part of the solution. Where I’m less clear is, what’s that tipping point, and how does home health gain that bargaining power with Medicare Advantage?

MedPAC recommended a 7% Medicare home health cut in 2024. Can you give us some insight into why, and how MedPac came to this conclusion?

This was recommended by the commission. It’s a broader decision, it’s not just mine, but I did vote in favor of it.

The reason I supported the recommendation is that the industry looks really strong across all the metrics that we’ve looked at. Access is good, we think most beneficiaries are able to get home health care across the country.

Looking at the margins, they were incredibly healthy from Medicare. This is one of the real points that needs to be understood, we can’t look at all payers. There are some payers — Medicaid and Medicare Advantage — that maybe don’t pay at-cost, but traditional Medicare is a really strong payer and the margins look really healthy. In our discussion, there was an acknowledgement that home health, much like skilled-nursing facilities and other kinds of post-acute providers, are facing some labor issues. That’s something we need to monitor.

For both home health and hospice, when the 2023 rates were announced, there was this question of why MedPAC was using 2019, pre-pandemic data. Can you talk a little bit about this?

There was a lag. It’s one of the great frustrations that we can’t get data from today. That said, we can, now, look at data into the pandemic and home health and skilled-nursing facilities are both doing really well during this period. I know that both of those sectors have faced some challenges with labor, COVID and lot’s of other issues, which shouldn’t go unacknowledged. But when we look at the metrics, which drives update recommendations, they’re looking very healthy.

You recently wrote an op-ed about the difficulty of navigating long-term care. What ways can home-based care providers help? What should they be doing?

The typical beneficiary and their family knows very little about home health. They don’t know about the benefits, what it can provide, and how it connects to other parts of the health care system.

I think being a good partner in that way could really ease some of the burden on patients, in terms of that navigation. At some point, it’s going to need to be more centralized. Hopefully, home health is going to be a part of those more centralized networks where they’re providing information.

This is a topic we have previously discussed at length — what is the status of a unified payment model for post-acute care services?

I think it’s kind of on pause right now. I think when the Congress first designed, or conceptualized, the unified payment system, the world was very different. If you think back five or 10 years ago, Medicare Advantage wasn’t as prevalent. Alternative payment models, such as ACOs, weren’t as common. Certainly, the new payment systems for home health and skilled-nursing facilities weren’t online yet. It was just a very different landscape, and I think unified payment was really important. I’m less convinced, today, that we need a unified payment model.

Both payment systems and the sort of models of care today are very different than 5, 10 years ago. My sense is that the urgency around the unified payment system is way down. That was a huge issue, and it’s really kind of pivoted.

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