The nature of home health provider-Medicare Advantage (MA) plan relationships has slowly begun to change, as some organizations have found ways to successfully work together and derive value from these collaborations more effectively.
One factor that is changing the nature of payer and provider relationships is that there’s no denying that MA enrollment is on the rise.
In fact, MA has more than 28 million beneficiaries, or 45% of the Medicare population. This is expected to jump up to over 52% of total Medicare enrollment by 2030, according to data from the research and advocacy organization Better Medicare Alliance.
“Medicare Advantage plans are increasingly popular … we’re seeing an extension of depth and breadth in the secondary markets that didn’t exist before,” Daniel Schwartz, chief strategy officer at Elara Caring, said recently at Home Health Care News’ Capital + Strategy conference. “With that amount of size, it changes the way we as providers have to think about and interact with both our referral partners and our payer partners.”
The Dallas-based Elara Caring is a home-based care company that currently has roughly 200 locations across 16 states, where its 35,000 workers take care of around 60,000 patients daily.
Aside from MA popularity, Schwartz pointed out that there’s been an overall shift in mindset on both sides.
“A couple of years ago the conversation was, we had a battle to be fought with an enemy to attack,” he said. “Let’s continue providing episodic care, because that’s good. What we’re noticing is that there’s a recognition that when home care is properly and effectively deployed, it adds value to their members. That was not a prevalent mindset a couple of years ago. On the provider side, we’ve become smarter, more humble and open-minded about rethinking the way we’re delivering care.”
This is an acknowledgment that the traditional home health model doesn’t work for MA plans, and that providing care at a loss isn’t a sustainable model for home health agencies, according to Schwartz.
As provider and payer, Humana Inc. (NYSE: HUM) is privy to both sides of the equation.
“I think there’s a little bit of a greater understanding on both sides of the table, if we’re thinking about this as a negotiation between the two,” Joy Cameron, associate vice president of public policy at Humana, said during the panel discussion. “I always harken back to Jerry Maguire, ‘Help me, help you.’ We have to think about ways to collaborate together, so it’s less of a vendor commodity kind of situation, which I think puts everybody back on their heels.”
Humana is an organization made up of a traditional insurance side – which includes TRICARE, MA and Medicaid – and the CenterWell side, which includes home-based care, pharmacy and primary care services.
Providers going after MA business
At Frontpoint Health, the goal is to go after MA business, almost exclusively. The company didn’t want to primarily rely on just fee-for-service Medicare.
“We’ve built a go-to market strategy around that payer, because we’re deep believers that this is one of the biggest structural trends in our lifetimes within health care, and that we can’t fight against it,” Matt Komenda, founder and managing partner at Tacoma Holdings, said during the panel.
Komenda serves on the board of directors at Frontpoint, a home-based care company with three locations. These locations include: One Point Health, a home health agency in Dallas with a 2,200-patient census; Dignity Hospice, also based in Dallas; and Highland Hospice, which is located in Houston.
Tacoma Holdings, a health care services-focused private equity firm, is one of Frontpoint’s financial backers.
Komenda noted that Frontpoint also serves patients covered by traditional Medicare, because it tries to “say yes” to everyone.
“We think of ourselves as a company that says yes to everybody, and we’ll take all patients from all payers, because that’s how we develop really important strategic relationships with our health system partners and with our payer partners,” he said. “That’s how we can go to [plans] and talk about more innovative reimbursement constructs, but only if we can demonstrate an ability to say yes to a lot of those patients.”
While payers and providers are starting to have a better sense of how to work together, there are still barriers that stand in the way of smooth sailing.
“Honestly, there’s a lot of capacity [issues],” Cameron said. “If you’re going to work hard and get into a value-based relationship, let’s make sure you have the capacity to take these patients and that every time one gets referred to you, it’s not getting pushed off. How can we improve that relationship? How much can we automate when it comes to prior authorization and things like that? We’ve done a lot to really improve the way that that works on our end, especially with our known providers.”
Cameron noted that in some cases, the lack of adequate technology can also be a pain point that makes these relationships more difficult.
Schwartz believes that the biggest roadblock is the model of these relationships in general.
The underlying model that exists between MA and providers, he said, is that the latter delivers care on a per-visit fee basis, and then subsidizes their losses through the company’s Medicare fee-for-service business.
“That is not a way to scale, … there’s not a lot of risk, not a lot of value involved,” Schwartz said.
One of the solutions he suggested was to rethink the care delivery model.
“The delivery of in-home visits exclusively, on a per-unit basis, isn’t as effective as the ability to combine that with remote care, be that RPM, be that virtual visits,” Schwartz said. “There are different ways to think about that approach.”
Schwartz also emphasized the importance of restructuring the way that care is compensated.
“There has to be shared risk, so we have to deliver,” he said. “We have to be able to create a model that has a sustainable EBITDA. This isn’t about anything more than just having sustainability and scalability. Nobody is purposefully trying to avoid it, but it’s complicated.”
On the payer side, Cameron noted the importance of providers having data.
“Come to the table with data and we will sit down and hash it out,” she said. “Just so there’s a better understanding of what you can tell me, so that we can more holistically care for the patient.”
Ultimately, it’s important for payers and providers to remember that they have the same objective.
“We all have the same goal, which is keeping patients and members out of the hospital, out of more expensive acute settings, helping them to live healthier and happier, longer lives,” Komenda said. “The only way we can really do that is through coordinated care.”
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