Home-based care providers face rising challenges to maintaining healthy margins in today’s reimbursement landscape. Nonetheless, precise cost reporting, disciplined payer relationships and operational efficiencies are proving to be among the strategies essential to surmounting these challenges.

Leaders in the home-based care industry say these strategies are key to navigating the growing financial strain caused by rising labor costs, the expansion of Medicare Advantage (MA) and stagnant traditional Medicare reimbursement rates.

“We have a fine focus as it relates to protecting margins on our operations,” LiveWell Partners CEO Jason Growe said at Home Health Care News’ Capital + Strategy event. “It starts with building a great clinical team that delivers outstanding quality care, and there are a few different layers to that.”

LiveWell Partners is a home health and hospice provider headquartered in St. Louis. The company operates in St. Louis, Kansas City, Wichita, Kansas, Detroit and Cincinnati.

One of those layers is delivering quality care for referral partners so that LiveWell can achieve its desired payer mix, Growe explained. Another is the ability to deploy the necessary form of direct labor and the required clinician at the right time.

LiveWell’s payer mix is a combination of 75% traditional Medicare and private episodic contracts and 25% per-visit rate, according to Growe. The CEO hopes to maintain that balance, but he said the company may shift more toward episodic versus traditional Medicare due to the evolution of Medicare Advantage (MA).

“We acknowledge we aren’t going to be important to every payer, and so we focus on how we select the right payers and advance those relationships based on quality and mutual appreciation,” he said.

Being payer agnostic is an aspirational goal, Growe said, but the reality is that not all payer relationships generate profits equally. The more worthwhile pursuit, according to Growe, is balancing admissions between traditional Medicare and other contracts while thoughtfully pursuing admissions for payers that fail to offer adequate rates.

While MA reimbursement rates have caused turmoil for home-based care providers, some providers have found a healthy margin with MA rates. 

Joe Shannon, vice president of business development at HomeCentris Healthcare, said that his organization has achieved success with local and regional MA plans, especially in its private duty personal care service line. Local and regional plans, as opposed to national plans, allow the provider to establish relationships with referrers and payers more easily, allowing the organization to serve as the first point of contact when care is needed.

“[The private duty personal care service line] is heavy Medicaid, so we’re talking about their dual-eligible patient population,” he said. “How can we impact that population, not just on the skilled home health side but also on the personal care side? Because we know these folks, because they’re local and regional, we’re not just talking about a contracted rate.”

HomeCentris Healthcare is an Owings Mills, Maryland-based portfolio of companies that offer a variety of home-based care services, including home health, personal care, therapy services, and more.

Advocating for adequate reimbursement

While providers seek to creatively cope with reimbursement rates, the National Alliance for Care at Home (the Alliance) is working with the Centers for Medicare & Medicaid Services (CMS) and members of Congress. The Alliance aims to help policymakers view margin and profit through a more holistic lens, rather than focusing only on Medicare fee-for-service, Scott Levy, chief government affairs officer, said.

“We’re trying to change that narrative so they understand that our members who are providers treat all Medicare beneficiaries, regardless of whether it’s a Medicare fee-for-service or Medicare Advantage,” he said. “They need the fee-for-service reimbursement to be at the rate it is or increase to pay for everything on the Medicare Advantage side as well.”

Levy stated that the Alliance is collaborating with larger MA plans to understand various contracting elements because “when you see one MA contract, you’ve seen one.” Some MA plans’ leadership aim to create value and recognize the worth of home care, while others concentrate exclusively on post-acute care, Levy said.

“There’s a lack of information in Congress about how Medicare Advantage interacts with home care,” he said. “They see Medicare Advantage and [assume there is] normal network adequacy. However, there’s no network adequacy for home health. We need to make them understand that it doesn’t exist.”

According to Levy, advisory bodies like the Medicare Payment Advisory Commission (MedPAC) do not possess as much data as many in the industry believe, and most of their analysis relies on cost reports. Thus, if agencies fail to submit accurate cost reports, it can negatively affect reimbursement rates.

“That is when they switched to [the patient-driven groupings model] (PDGM) and moved away from [Bureau of Labor Statistics] (BLS) data to cost reports of setting rates,” he said. “While I don’t want to say it was an underlying aspect of that transition in the rule that came out that year, with all the other massive changes that happened, that has to be looked at closely by providers to ensure they are accurately submitting and accounting for everything in cost reports because that’s what they use to set the base rate.”

Negotiation strategies

When it comes to MA, there are ways to negotiate rates that could be beneficial for both providers and plans, according to Growe.

“In some ways, this is a sales business,” he said. “This is a long-term, long sales cycle in terms of developing a relationship with the right person and being able to have a conversation around the services we’re offering and the quality we are providing. Then, over time, we can educate them and understand what’s important to them.”

Shannon agreed, emphasizing that maintaining relationships with individuals familiar with the business and the organization is crucial. He advised that organizations should communicate regularly with these referrers so that when they seek care for their members, they know whom to contact.

Growe acknowledged that many of LiveWell’s markets are dominated by hospital systems and that many of those systems have their own home health and hospice providers. However, that doesn’t deter him from building relationships with them and letting them know that LiveWell wants to be their “second first choice.”

“If we’re able to deliver quality care, if we’re highly responsive when we get a referral on a Friday afternoon, and we’re okay being payer flexible with a great patient experience, it’s going to unlock doors over time that will allow us to get in front of the right people and have conversations,” he said. “It goes back to building a great clinical team that delivers outstanding outcomes and experiences.”