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The Federation of American Hospitals (FAH) released a statement Thursday regarding recent investigations into Medicare Advantage (MA) plans.
Those investigations included concerns around claim denials, as well as discrepancies between MA plan practices when compared to traditional Medicare.
It is yet another example of health care providers and advocates pushing back. It also shows that home health providers are not alone in their gripes with MA plans.
“Where there is smoke, there is fire – and today’s news is further evidence that insurers are playing games with patient care to juice their own bottom lines,” FAH President and CEO Chip Kahn said in a statement. “How many more examples does Congress need before they do something to hold managed care companies accountable for these outrageous practices that threaten patient care?”
That release coincided with the news that another health system, the Minnesota-based Allina Health, may terminate contracts with certain MA plans. This follows other health systems who have done the same, including Essentia Health and Sanford Health.
Home health providers have been considering the same. But, also, health systems exiting these relationships is likely a positive for home health organizations. If referral partners leave bad relationships with MA plans, home health providers can fulfill their duties to those partners without accepting poor payment from those plans for delivering services.
“With the MA plans, it’s just becoming incredibly difficult,” Jeanne Byl, owner and COO of Interim HealthCare Great Lakes, told me last week. “And quite honestly, we’ve had to walk away.”
This week’s exclusive, members-only HHCN+ Update covers the trend that is health care providers – including home health providers – freeing themselves of burdensome MA plan relationships.
When to walk away
Interim HealthCare Great Lakes is a part of the overall Interim HealthCare brand, which consists of over 330 home care and home health locations across the U.S.
As the name suggests, Interim HealthCare Great Lakes is a franchise group that mostly operates in the Midwest, but it also does business in Florida.
As expressed before during these updates, home health providers have two core issues with MA plans. The plans don’t just pay less for services, they also require far more administrative burden. Claims are denied more, and prior authorizations are a pain.
There is some positive momentum building around prior authorizations. A few forward-thinking health plans have worked to significantly reduce prior authorization requirements for providers and patients.
Still, providers have these issues with the vast majority of payers they work with, and particularly the national plans.
“We’re seeing greater barriers to care put in place by the insurers, and ultimately an increase in denials for care based on some random algorithm that says it isn’t necessary,” Preston Lucas, owner and CFO at Interim HealthCare Great Lakes, told me. “But if you really look at what’s clinically appropriate for that patient, it’s fully supported, and that’s a huge issue.”
The Senate Homeland Security Permanent Subcommittee on Investigations (PSI) released a report earlier this month that showed MA plans deny claims for post-acute care at a far greater rate than traditional Medicare.
The irony of the report is that it suggested MA plans wanted to move more patients home. But, more times than not, they’re unwilling to adequately pay for in-home services.
“Patients are being hung out to dry by MA plans’ delays and denials. It’s past time for legislators and regulators to hold plans accountable and protect patient care,” Kahn said in a separate statement.
Then there’s the issue of payment. MA plans overwhelmingly pay an underwhelming rate for services, and they make up for about 50% of home health providers’ revenue in 2024. At this point, there are more MA beneficiaries than traditional Medicare beneficiaries in the U.S.
“It’s the MA plan just putting us in an algorithm coming back with typically a rate decrease, or saying, ‘Hey, you haven’t negotiated your contract in 10 years, so we can’t market adjust you now to where it should be,’” Lucas said.
Specifically, one payer offered a 3% increase on a rate for home health services that hadn’t been adjusted in a decade. During that time, the cost of labor alone has risen substantially, by far more than 3%.
Lucas corroborated other provider testimonies to HHCN, which suggest that most MA rates don’t even cover the cost of delivering care.
“They’re only going to give you a 3% increase in your rates, which is unfortunate,” Lucas said. “Because we’re able to show decreased hospital rates, decreased re-hospitalization rates and other successes in the services we’re providing.”
Lucas and Byl have had some success working with regional payers, but little to none with larger, national payers.
That mostly comes down to getting the right person at the negotiating table. Often, lead executives at health plans may even be home health-friendly, but the rate negotiators that work with home health providers are incentivized to keep rates down.
“We’ve been working with various MA plans on contracts and updated rates, and we’re finding it extremely difficult to, number one, even get a seat at the table with the right people to explain our impact on these plans and patients,” Lucas said.
MA plans want to move toward value-based care, but so do home health providers. They’re already judged on value by the Centers for Medicare & Medicaid Services (CMS) under the Home Health Value-Based Purchasing (HHVBP) Model.
Instead of realizing mutually beneficial relationships, however, most providers are hitting a wall when trying to enter into value-based partnerships with payers.
“I prefer to have our quality recognized and reimbursed through a quality-based relationship, or value-based relationship with the Medicare Advantage payer,” Compassus CEO Mike Asselta recently told me. “Whether or not we will walk away from an undesirable rate, it really comes down to how undesirable that rate is. We may participate in that network at relatively unattractive rates because it’s a good service to our hospital partner. … But some reimbursements are not sustainable, and we will walk away from those, or not enter into them in the first place.”
Providers are within their right to walk away, but what that leaves behind is patients in need of home health care. Broadly, MA reimbursement for home health care – combined with rate cuts in traditional Medicare – force providers to care for fewer patients in need of services.
“We’re not alone in this right now,” Byl said. “And I think a lot of home health agencies are trying to get this word out.”
Companies featured in this article:
Compassus, Interim Healthcare, Interim HealthCare Great Lakes