Although home health providers want to see as many patients as possible to keep up with demand, it is impossible to do so under current circumstances.
With that in mind, providers are questioning why they would willingly take on Medicare Advantage (MA) beneficiaries knowing they’d be sacrificing dollars. Some industry experts believe providers should, at the very least, be more aggressive in negotiating MA contracts.
To do that, self-evaluation and relationship-building with payers will be key.
“Ultimately, the provider community is going to get a lot more aggressive or it’s going to become a big issue, especially as more and more patients are doing Medicare Advantage,” McBee Associates President Mike Dordick told Home Health Care News. “Many providers that offer home health services have not pushed back on managed care providers for years. We are now at a point, with the Medicare margins being cut so deep, that the providers need to get paid a fair rate from managed care for the services they perform.”
McBee Associates is a health care services and consulting firm that works with providers in a wide range of states.
To have leverage in these conversations, home health providers need to have their own ducks in a row.
“Having a strategy to plan around this growth, capturing it and keeping your business healthy as a provider is really, really important,” Elara Caring CEO Scott Powers told HHCN. “From our perspective, we’re definitely a scaled platform and we’re coming from a position of strength because we’ve been very selective about what Medicare Advantage business we’ll take and which agreements we’ll operate in.”
The Dallas-based Elara Caring is a provider of home health, hospice, palliative, behavioral health and personal care services in over 200 U.S. locations.
What providers should know and ask
Before beginning these negotiations, it’s important for providers to be realistic and pragmatic about where they are financially and operationally.
“Home-based care providers have no choice but to protect their bottom line when it comes to negotiating managed care contracts,” Healing Hands Healthcare CEO Summer Napier told HHCN. “It’s obvious that the sustainability of your organization depends on it. Before beginning any negotiations, you will need to know and truly understand the current state of where your agency stands.”
The Texas-based Healing Hands Healthcare provides home health, hospice and private-duty home care services across 22 counties in North Central Texas.
Over the past few years, MA beneficiaries have become a larger share of Healing Hands’ business. Traditional Medicare used to take up about 70% of that business. Now that number is closer to 60%.
Napier said there’s been a steep learning curve when dealing with MA, but the company has gleaned key insights along the way.
For instance, knowing direct costs, indirect costs and total cost per visit are key figures to keep in mind when negotiating, Napier said.
“If your direct cost is $97 but you accept a contract that pays you $70 a visit, it won’t be long before your organization is out of business,” she said. “You need to know if those contracts include supply cost or do not include supply cost. Not paying attention to the intricate details tucked away in a managed care contract can make or break you. You need to know what their payment time frames are so you can predict cash flow accurately.”
At the negotiating table, providers also need to ask critical questions that glean information from payers about how they operate.
So much is made about provider transparency, but that’s a two-way street in these situations, Napier said.
“You need to know the payer operations before you negotiate a contract with a managed care payer,” she said. “Do they have a large denial rate? Do they have a reduction in authorizations? Do they slow pay? In my experience, no contract is better than a bad contract in most cases. Everyone loses when a bad contract puts a great provider out of business – the patient, the payer and the provider.”
Meeting in the middle
Avoiding MA completely is off the home health table at this point. With that in mind, providers and payers meeting closer to the middle is likely the best way ahead.
“Clinical capacity is tight and the Medicare Advantage business is growing,” Powers said. “There’s been a long history of Medicare Advantage companies not understanding the value — and the industry not communicating the value — that we provide for their membership. As a result, that’s created the situation we’re in where we have limited visits and low rates and the industry has kind of put up with it for a long time because they weren’t good at articulating the value proposition, in my mind.”
Elara Caring has learned to form its strategy by looking at its own data and being realistic about what it can and can’t afford.
“I think everybody’s going to have to sit back and look at their data and as a starting point say, ‘Which contracts can we avoid taking anymore?’” Powers said. “We’ve looked at some of our (MA) agreements and terminated them because we couldn’t afford to take their business anymore. Some of these organizations are willing to come to the table and work with us because I think they know if they don’t, they’re going to suffer a little bit in some way, shape or form.”
Negotiating aggressively could take many forms for providers.
At times, it’s leaders knowing their company’s worth and advocating for the value of its services.
Other times, it’s about those leaders knowing who they want to work with, and who they don’t.
“One of the things we’re really focused on is making sure we have a direct relationship with the payers that we’re going to partner with,” Powers said. “These conveners that are in the middle are a problem for the industry, in my opinion. Many of them come in and are just doing utilization management and rate negotiations. The services we provide are just too valuable to not have a direct relationship to the payer.”
Pushing for value
It’s up to providers to clearly define their value, too.
But, it’s also up to payers to recognize that value once it’s laid out.
“Providers are struggling to negotiate with these payers because the payment system most MA plans want to negotiate are fee-for-service, per-visit rates that contradict the forward movement to value-based, outcome-based care,” Napier said. “There is so much value in home-based care provided outside of a visit: the care coordination, the information sharing, the 24/7 on-call nurse that eases an anxious mind at 2 a.m. and prevents an unnecessary ER visit. However, when MA plans are stern on pay-per-visit negotiations, the agencies are not getting reimbursed for these valuable services they offer to the MA members.”
At the table, providers need to speak in terms that payers understand and that they see will directly benefit their business, Powers said. At the end of the day, payers need access to the home. Home health providers that are avoiding hospital readmissions, improving STAR ratings and providing longitudinal care is something all payers want a piece of.
“The insurance world is getting much more powerful by the day and the provider world is struggling more and more by the day,” Powers said. “That includes hospitals, skilled nursing facilities and some home care companies. It’s concerning, but at the same time, if that’s the reality, how do we help them? They all want to grow and they all want to make money. As a home care provider, the best way we can help facilitate their growth is to provide a non-facility-based solution that provides great outcomes.”
If it’s time to walk away from a contract or terminate it early, that’s a part of doing business. However, business deals also include compromise.
“You’ve got to make tough decisions sometimes,” Powers said. “But you also have to take the ones that are willing to play this game long term and see the value proposition. It comes down to working with them and building a bridge.”
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