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Diving into value-based arrangements with payers always sounds good, in theory, for home health providers.
But it is easier said than done. Providers have to commit to value-based care, but even before that, they need to do their homework to be successful over the long haul.
Moving away from fee-for-service and moving toward risk through value-based arrangements takes a tremendous amount of research, operational awareness and financial investment.
It also requires legwork before, during and after negotiations with payers.
“In my experience, what happens so often is that providers get brought into these conversations without doing their homework first,” Fred Bentley, managing director at ATI Advisory, told Home Health Care News. “All of a sudden, they’re at the table and they think, ‘Let’s wing it.’ Or they will let the payer dictate the conversation, and the provider is just in reaction mode.”
What providers can do
Before sitting down at the table with payers, providers should clearly understand their goals. It may seem like a no-brainer, Bentley said, but it’s often an overlooked aspect of the process.
“It sounds so obvious, but ask yourself, ‘As a home health provider, what are we trying to achieve here?’” Bentley said. “There are different objectives. It can split into two paths: are you looking to grow your core business and are you using value-based care as a tool to be a more preferred critical partner in the eyes of the payer? And, it’s not mutually exclusive, but on the flip side, do you see real revenue upside?”
It’s quantitative versus qualitative, Nick Seabrook, managing principal at SimiTree, told HHCN.
“What do you want to get out of this?” Seabrook said. “You can get into it from a dollar and cents standpoint — prioritizing revenue. Or you can get into it with almost a marketing approach and say, ‘We have this relationship with a certain payer because we’re succeeding in this,’ and that could open the door to other referral sources.”
Also in order: a brutally honest look at what a provider’s value proposition is.
One of the challenges home health faces in particular, Bentley said, is that they are late to the game.
“They’re not out of the picture, but it’s not uncommon for payers to say, ‘We empower the primary care doctors and shift the risk to them — what can home health bring to the table?’” Bentley said. “That’s when you find your value prop — providers should have a painfully honest discussion about what they could bring to a Humana, for instance. What is it that you bring to the table, and how do you convince them that you’re ready for this?”
Payers have to be able to trust that a provider can live up to its promises, too.
A provider needs to prove it can manage the finances behind a total cost-of-care arrangement and clarify its internal strategic goals. That’s Phase One.
Phase Two is finding out how it can help payers win.
“The first two questions I would ask as a provider are, ‘Would you be open to some kind of value-based arrangement?’ and ‘What matters most to you?’” Seabrook said. “Any kind of insurance company that’s going to be in some kind of a risk-sharing, value-based arrangement is ultimately looking to cut costs. They’re looking at overall patient spend and where can they best do that while maintaining quality care for the patients.”
Other questions providers should ask payers, Seabrook said, should be centered around specific patient characteristics that matter more to one payer than others.
If there’s a certain population above a specific age, with a certain disease type, that may be a way into these relationships.
Lastly, providers should know how exactly they’ll be getting paid if a deal gets done.
“What I think is the No. 1 question when it comes to these relationships is, ‘How does the payment work?” Seabrook said. “That’s probably the biggest question a lot of these agencies have because they may not even know where to start when it comes to how you actually get paid for this. What kind of reimbursement structure would the payer be open to? Is it a risk-share model? A full-risk structure? Is it a metric-based system where if you hit a metric you get paid based on certain milestones? Those are questions I’d ask.”
The right strategy
When thinking about the discussions at the negotiation table with payers and health systems, Frontpoint Health CEO Brent Korte goes back to the two “S’s”: scale and STARS.
“If you come to a health system with those two, then you can generally help solve their problems,” Korte told HHCN. “You have to find a way to make their difficult jobs easier.”
Based in Dallas, Frontpoint is a home health and hospice company that specifically tailors its business model to take on Medicare Advantage (MA) patients.
Frontpoint’s strategy in value-based arrangements is saying yes to things when others say no.
“We believe that value to our referral sources is providing scale — the ability to take a lot of patients — and STARS, which is obviously high-quality care,” Korte said. “But it’s also access, meaning we say yes when others say no, and that is deeply meaningful to someone that’s trying to discharge 50 patients in a day. Especially when, statistically, 26 of those 50 patients are Medicare Advantage.”
Knute Nelson Home Care and Hospice, on the other hand, is still in the early stages of its value-based care journey. For now, it’s focused on finding the right payer partner.
“We’re researching into it,” Rebekah Mattocks, director of quality and education at Knute Nelson Home Care and Hospice, told HHCN. “With value-based purchasing coming up, we’re looking into getting in some of those relationships with some of those payers. We’re trying to find the right partner and make sure we get that set up in a smart way.”
Knute Nelson provides home health, senior housing and assisted living, among other services, in 43 counties in Minnesota and North Dakota.
For a provider dipping their toes into these waters, things can be complicated, but they can be simplified, too.
“How does the payer define value?” Korte said. “And how do you solve for that?”