{"id":28498,"date":"2024-07-18T15:13:04","date_gmt":"2024-07-18T20:13:04","guid":{"rendered":"https:\/\/homehealthcarenews.com\/?p=28498"},"modified":"2024-07-18T15:13:06","modified_gmt":"2024-07-18T20:13:06","slug":"what-leveling-off-medicare-advantage-penetration-would-mean-for-home-health-providers","status":"publish","type":"post","link":"https:\/\/homehealthcarenews.com\/2024\/07\/what-leveling-off-medicare-advantage-penetration-would-mean-for-home-health-providers\/","title":{"rendered":"What \u2018Leveling Off\u2019 Medicare Advantage Penetration Would Mean For Home Health Providers"},"content":{"rendered":"\n
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This article is a part of your HHCN+ Membership<\/h2>\n<\/div><\/div>\n\n\n\n

The Centers for Medicare & Medicaid Services (CMS) isn\u2019t letting up on cuts to home health payments, but its recent rulemaking in Medicare Advantage (MA) may end up benefiting home health providers indirectly. <\/p>\n\n\n\n

As MA plans become more scrutinized by regulators and lawmakers \u2013 and payment updates come with more meager increases \u2013 MA penetration is likely to plateau, or at least slow down in its rate of increase. <\/p>\n\n\n\n

CMS finalized a 3.7%, or $16 billion, increase to payments for MA plans in 2025, in an update that will likely end up being a cut to \u201ccore\u201d rates by 0.16%, according to the investment banking company Stephens<\/a>. <\/p>\n\n\n\n

That will be the second cut to core rates in a row for MA plans, a change in direction from the positive payment rulemaking they had previously been experiencing. <\/p>\n\n\n\n

As a result, some of the largest MA plans have pulled back from expanding, and some have even exited markets. BCBS of Kansas City announced that it would be exiting the MA market in Kansas City by the end of 2024, for instance. Humana Inc. (NYSE: HUM) leaders said the company would exit certain markets in MA in 2025 and instead \u201cprioritize profitability.\u201d<\/a><\/p>\n\n\n\n

Last year was the first year in which there were more MA beneficiaries than traditional Medicare beneficiaries, according to Kaiser Family Foundation<\/a>. Just a decade prior, in 2013, only 29% of Medicare beneficiaries were underneath an MA plan. <\/p>\n\n\n\n

Such trends resulted in the belief that MA penetration would continue unabated over the next decade. MA plans took over 50% of market share much quicker than most believed, so the theory held that penetration would continue at the same rapid pace moving forward. <\/p>\n\n\n\n

Anecdotal signs suggest that may not be the case, however. In addition to the MA plans that have announced their departure from certain markets, home health providers have also suggested that MA share has been plateauing in their own markets, as far as they can tell. <\/p>\n\n\n\n

\u201cAnecdotally, we’re sort of seeing the limits of managed care penetration,\u201d The Pennant Group President and COO John Gochnour recently told me. \u201cI think we are seeing \u2013 and will see \u2013 some leveling off.\u201d<\/p>\n\n\n\n

MA\u2019s headwinds, and how they will affect home health providers, is the topic of this week\u2019s exclusive, members-only HHCN+ Update. <\/p>\n\n\n\n

MA penetration <\/strong><\/h3>\n\n\n\n

When it comes to factors that affect home health providers state by state, there are few that display more variability than Medicare Advantage penetration. <\/p>\n\n\n\n

\u201cThat is probably the largest variability we see at a state level, of maybe any data point we have \u2013 MA penetration rates,\u201d Research Institute for Home Care Executive Director Jennifer Schiller told me. <\/p>\n\n\n\n

For instance, some states are far above a 50% penetration rate, and some states still have a penetration rate from 20% to 30%. <\/p>\n\n\n\n

But that wouldn\u2019t be a reason why some providers are seeing a slowed increase in penetration right now. Schiller explained that, no matter what penetration rates are currently in each state, they all follow a similar trend line. <\/p>\n\n\n\n

\u201cDespite where they start \u2013 with some states being much lower in terms of penetration \u2013 if you were to look at the year-over-year data, it has the same trajectory line,\u201d Schiller said. \u201cThere\u2019s a different starting and ending point, but the same curve from one point to the other.\u201d<\/p>\n\n\n\n

That makes the comments from The Pennant Group Inc. (Nasdaq: PNTG) and similar comments from Addus HomeCare Corp. (Nasdaq: ADUS) more interesting. <\/p>\n\n\n\n

Earlier this year, on Addus\u2019 first-quarter earnings call, CEO Dirk Allison said that he and his leadership team believe MA penetration is leveling off in the company\u2019s markets. <\/p>\n\n\n\n

\u201cWe continue to be affected by the movement of Medicare beneficiaries from Medicare fee-for-service to Medicare Advantage, but we feel we may be seeing a leveling off of this shift in the markets we currently serve,\u201d Allison said. \u201cWe are continuing to work with our Medicare Advantage payers to obtain higher rates.\u201d<\/p>\n\n\n\n

It\u2019s of note, too, that Pennant and Addus do not have similar footprints. Like Pennant, Addus has a presence up the West Coast. But it also has a very large footprint in the Midwest and the Rust Belt. <\/p>\n\n\n\n

Because payment rates have only been unsatisfactory \u2013 from the MA plan perspective \u2013 for two years in a row, there could be lagging indicators, too.<\/p>\n\n\n\n

If home health providers are noticing signs of a penetration stall now, and MA plans are announcing market departures here and there, it may take a couple of years for real data to prove out that reduced penetration rate. <\/p>\n\n\n\n

What this means for home health care <\/strong><\/h3>\n\n\n\n

It\u2019d be hard to find a home health provider that\u2019s fond of MA penetration. MA plans pay less than traditional Medicare does for home health services. <\/p>\n\n\n\n

\u201cIt\u2019s frustrating to see where Medicare is going with their rates, and what they\u2019re trying to do with clawbacks,\u201d VitalCaring CEO April Anthony said last year<\/a>. \u201cBut, if one of our managed care partners came to us with those [traditional Medicare] rates, we would be jumping for joy. We\u2019d be saying, \u2018This is the greatest contract we could possibly hope for.\u2019\u201d<\/p>\n\n\n\n

Given the more cumbersome back-office requirements MA payment requires, and the lower rates, it takes providers time to adjust. They need to adjust systems and drive efficiencies to make taking on MA patients viable. <\/p>\n\n\n\n

Enhabit Inc. (NYSE: EHAB), for instance, has been in the process of adjusting its revenue mix for the last two years to adjust to shifting market trends. After it spun off of Encompass Health (NYSE: EHC), its revenue mix was dominated by traditional Medicare \u2013 at close to 80%. Now, it\u2019s gotten that number down to closer to 60% \u2013 in order to be a better referral partner \u2013 but not without speed bumps. <\/p>\n\n\n\n

Since it began on that initiative via its payer innovation team, it has financially underperformed. It underwent a strategic review, and now is in a battle with an activist investor \u2013 AREX Capital Management \u2013 which has been dissatisfied with its strategic course<\/a>. <\/p>\n\n\n\n

And that\u2019s for a large, at-scale provider with a nationwide presence. Consider, then, what such an undertaking may do to a less resource-rich provider. <\/p>\n\n\n\n

So, if penetration does wane, home health providers would likely welcome that. But it doesn\u2019t mean that providers should stop fighting for higher rates from MA plans, or stop planning for a future dominated by MA plans. <\/p>\n\n\n\n

\u201cOur focus is on the things that we can control,\u201d Gochnour said. \u201cThe things that we can control are delivering great care, being the solution for the community that we serve and for the referral sources who help patients get care. Then, we worry about whether we have the best contracted rates that are possible out there, so that we can take volume, in whatever form it comes. If we control the things that we can control, we feel confident we can be successful. Even in an environment where there\u2019s dislocation or change.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The Centers for Medicare & Medicaid Services (CMS) isn\u2019t letting up on cuts to home health payments, but its recent rulemaking in Medicare Advantage (MA) may end up benefiting home health providers indirectly. As MA plans become more scrutinized by regulators and lawmakers \u2013 and payment updates come with more meager increases \u2013 MA penetration […]<\/p>\n","protected":false},"author":145,"featured_media":28499,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ub_ctt_via":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[982,19314,559,3482],"tags":[199,19554,7336],"amn_content_type":[3512],"amn_word_count":[3506],"class_list":["post-28498","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-hhcn-plus","category-home-health-care","category-medicare-advantage","tag-addus-homecare-corp","tag-research-institute-for-home-care","tag-the-pennant-group","amn_content_type-featured","amn_word_count-701_to_1200"],"acf":[],"featured_image_src":"https:\/\/homehealthcarenews.com\/wp-content\/uploads\/sites\/2\/2024\/07\/ship-1518522_1280.jpg","author_info":{"display_name":"Andrew Donlan","author_link":"https:\/\/homehealthcarenews.com\/author\/adonlan\/"},"parsely":{"version":"1.1.0","meta":{"@context":"https:\/\/schema.org","@type":"NewsArticle","headline":"What \u2018Leveling Off\u2019 Medicare Advantage Penetration Would Mean For Home Health Providers","url":"http:\/\/homehealthcarenews.com\/2024\/07\/what-leveling-off-medicare-advantage-penetration-would-mean-for-home-health-providers\/","mainEntityOfPage":{"@type":"WebPage","@id":"http:\/\/homehealthcarenews.com\/2024\/07\/what-leveling-off-medicare-advantage-penetration-would-mean-for-home-health-providers\/"},"thumbnailUrl":"https:\/\/homehealthcarenews.com\/wp-content\/uploads\/sites\/2\/2024\/07\/ship-1518522_1280-150x150.jpg","image":{"@type":"ImageObject","url":"https:\/\/homehealthcarenews.com\/wp-content\/uploads\/sites\/2\/2024\/07\/ship-1518522_1280.jpg"},"articleSection":"Featured","author":[{"@type":"Person","name":"Andrew Donlan"}],"creator":["Andrew Donlan"],"publisher":{"@type":"Organization","name":"Home Health Care News","logo":"http:\/\/agingmedia.com\/hhcn\/wp-content\/uploads\/sites\/2\/2018\/12\/cropped-HHCN_Logo_Flat_2.png"},"keywords":["addus homecare corp.","research institute for home care","the pennant group","medicare advantage","featured","hhcn+","home health care","701-1200 words"],"dateCreated":"2024-07-18T20:13:04Z","datePublished":"2024-07-18T20:13:04Z","dateModified":"2024-07-18T20:13:06Z"},"rendered":"