‘We Need To Go Where The Patients Are’: How Home Health Agencies Are Adjusting To Medicare Advantage

Medicare Advantage (MA) enrollment has been on a steady climb over the last two decades. As such, home health agencies have started to adjust operations to better fit the payer landscape in the future.

Agencies in states like Michigan, Hawaii and Alabama have already had to do that — and those transitions haven’t been seamless.

Cleamon Moorer Jr., the president and CEO of the Detroit-based American Advantage Home Care, has been molding his company’s strategy around one of the greatest NBA point guards of all time.

“We’re understanding that we need to take a lead position and meet patients where they’re going,” Moorer told Home Health Care News. “It’s like the ‘80s Lakers with Magic Johnson. He threw the ball where Worthy was going to be, not where he was at. We need to go where the patients are going to be.”

American Advantage Home Care provides skilled nursing, rehab and specialty care services. Currently, the company serves seven counties in the Southeast Michigan area and has a census of 200 patients.

Changing of the tides

In 2023, 30.8 million people were listed as enrollees in a Medicare Advantage plan — which made up 51% of the eligible Medicare population — and $454 billion (or 54%) of total federal Medicare spending, according to KFF.

The share of Medicare beneficiaries enrolled in Medicare Advantage varies widely across states and counties, however.

Providers are concerned about MA plans’ reimbursement rates for home health services. Meanwhile, patients have some reason to be concerned over the home health access they’ll have underneath an MA plan.

“One concern that certainly comes up is that one in 10 Medicare Advantage patients say they have trouble accessing needed care,” Jennifer Schiller, executive director at the Research Institute for Home Care (RIHC), told HHCN. “It’s a coverage [issue] — but I think everybody is constantly aware of the fact that Medicare Advantage is not going anywhere.”

The tides have already started to shift in favor of MA. Enrollment in MA has seen gradual increases (8% in both 2021 and 2022) and there is no sign of it slowing down.

“I think you’re going to see some more changes — especially over the next few years with various regulations that may impact who is using home health and who is using Medicare Advantage,” Schiller said.

In order to capitalize on that shift – or survive it – home health providers have had to adjust.

Challenges in MA

Five years ago, American Advantage had about a 40%-50% traditional Medicare base, albeit with a slightly smaller census. Today, 80 to 85% of its patients come from a combination of HMOs and Medicare Advantage — 50% of which are Medicare Advantage Part C plans.

That stark difference has forced Moorer and his staff to make changes.

“Financially, the pay is less,” Moorer said. “As you look at the reimbursement, I think it’s somewhere around 70% to 75% of what traditional Medicare pays per claim. And that’s apples to apples. Same diagnosis codes and same comorbidities. It’s concerning to an extent, because you really have to change your model in view of having so much MA in your portfolio.”

Being a smaller provider helps when making care model changes, but that doesn’t mean it’s a simple process.

Moorer said that his agency has started to focus more on the front end of the care plan.

“Will we be able to provide the quality of care that a patient needs if a patient has to have multiple disciplines on a case?” he said. “Will we be able to support various clinicians on a case at the same time in view of a lower reimbursement? In the past, when you had a majority of Medicare, you could compensate for a lower paying insurance plan or lower claim because you had a surplus of Medicare patients and you were able to afford it. But now, with the lower margins, you got to really hone in on the case and the planning of that care.”

Agencies like American Advantage – who are welcoming MA plans into their portfolio – are struggling with smaller margins.

But someone has to take those patients.

“Regardless of your size, with more patients that are signing up for MA plans, margins and profitability for agencies are going to be affected,” Moorer said. “Candidly speaking, the challenge for a lot of us is that it’s also going to impact patients, because there’s going to be a lot of agencies that won’t accept certain insurance plans or MA plans. If you have agencies that aren’t accepting those plans, other agencies try to fill in the gap, but you’re going to have a labor shortage in trying to meet that increase. Where will the capital come from to support those workers?”

Articulating value

The forward-thinking home health agencies are taking on MA patients, but they’re also finding out what they can do to be of more value to the MA plans.

“If you’re really saying that you’re focused on value-based arrangements, that process is not just going to these payers and saying, ‘Hey, we want more money,’” LTM Group CEO David Kerns told HHCN. “It’s actually bringing more value to them.”

Based in Dayton, Ohio, The LTM Group is a network of home health, hospice and home care agencies across locations in Michigan and Indiana. It offers home health, hospice and personal care services to about 2,000 patients.

The LTM Group usually hovers between 50% and 60% traditional Medicare, but over 90% of its revenue comes from either a risk-sharing or value-based agreement.

“I honestly think that if you’re a home care agency and you’re under four and a half stars, that’s the first place to start,” Kerns said. “Getting your agency quality levels up will give you some room to negotiate with these payers.”

One of the ways The LTM Group has shifted their focus over the last few years is closing the gap, as Kerns described it, in the overall understanding of what value-based care should look like.

In today’s environment, it’s not enough for the C-suite and administrators to know what the value-based goals are. Everyone, from top to bottom, has to be on the same page.

“There’s a big knowledge gap between the people that are managing agencies, the administrators, the clinical managers, the executive staff and the people that are actually delivering the care,” Kerns said. “If you asked a clinician what value-based care is or how we can really show quality and show value to these insurance companies, a lot of them just have no concept of it at all. That’s been a really big initiative for us: really making sure that our clinicians understand what value-based care means.”

One major way Kerns and his team have been able to show value is by making acquisitions of smaller agencies, improving STAR ratings dramatically and coming to the table with those results when faced with MA plan executives.

Another has been making sure employees are working at the top of their license.

“A lot of people get stuck negotiating $10 or $20 more per visit, but on the operation side, they’ll have people not practicing at the top of license,” Kerns said. “If you’re making a big deal about getting that little extra per visit, but then you’re sending physical therapists out for every single visit when you could be at half the costs and still maintain the same quality of having a PTA out there, you’re throwing away $40 or $50 a visit. Meanwhile, you just made a big deal of negotiating $10 more per visit.”

In the end, the central thesis for dealing more with MA plans is the same as going to the home to treat patients in the first place: meeting patients where they are.

“If those patients are headed to the MA world, we’ve got to get into the MA world aggressively,” Moorer said.