“Health literacy is a state of knowledge and comfort that allows you to navigate the world and achieve wellbeing,” Danielle Brooks, director of quality health equity at AmeriHealth Caritas, told Home Health Care News. “It is critical to navigating, supporting and advocating for yourself when experiencing a medical or health-related need.”

AmeriHealth Caritas, based in Newtown Square, Pennsylvania, is a national managed care solution provider.

Limited health literacy significantly impacts Medicaid members, with 60% having basic or below-basic literacy, compared to only 24% of those with employer-sponsored coverage, according to the Center for Health Care Strategies. This demographic includes people aged 65 and older, individuals with lower incomes, those with lower education levels, people with limited English proficiency and minorities.

Furthermore, low health literacy rates lead to higher hospital use, higher mortality rates and higher health care costs. Improving rates could prevent one million hospital visits and save over $25 billion annually, according to the Centers for Disease Control and Prevention (CDC). Health literacy is essential in home care because it can affect a patient’s ability to understand and follow their treatment plan.

Oftentimes, patients also don’t realize that home health care or home care are options available to them.

“The complexity of the health care system and health concerns like COVID-19 require strong literacy skills to find, understand, evaluate and use health information to make informed decisions,” Sabrina Kurtz-Rossi, assistant professor at Boston’s Tufts University School of Medicine, told HHCN. “Compelling sources of health information, including inaccurate information on social media and the internet, intensify the need for improved health literacy for all.”

The Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS) have listed improved health literacy as organizational priorities. Specifically, HHS has included it in its Healthy People 2030 initiative.

Organizations and professionals can enhance their health literacy by implementing proven strategies. These include addressing questions in simple, non-medical language and creating and testing written materials for the intended audience, as per the HHS.

It’s important to consider that any patient may face challenges in understanding health information. Adults with limited literacy often feel ashamed of their abilities and may conceal their difficulties. Conducting informal client assessments can help identify individuals with limited literacy skills.

“Organizations should start by asking themselves this question,” Brooks said. “What do we need to do to reach our clients in a way they understand and that speaks to them? Materials and messaging need to be presented in a way that is most easily understood by clients and resonates with them. Employees must learn how to incorporate health literacy into their work every day.”

State contracts often require insurers serving Medicaid enrollees to have materials available in multiple languages, written at a sixth-grade reading level or lower, and have member-facing staff who can speak languages other than English.

“It is important to have data on how your current and potential clients understand and process information,” Brooks said. “This includes not only what languages they speak but also factors like age, education level, gender identity, sexual orientation and family structure. This information provides important insights into their needs. It is about communicating to members in a way that is most easily understood and actionable.”

The CDC recommends asking patients how often they need help reading written material from their doctors or pharmacies and asking them to explain instructions in their own words to show that they understand. Use videos, models and pictures to help clients learn. Listen to concerns without interrupting and consider clients’ cultural and linguistic norms when developing messages. Use certified translators and interpreters to adapt to language preferences.

“There are validated tools for analyzing written health information for reading ease and accessibility,” Kurtz-Rossi said. “These include the Patient Education Materials Assessment Tool, the CDC Clear Communication Index, and the Readability, Understanding and Actionability of Key Information on Informed Consent Forms (RUAKI) Indicator. Readability formulas can tell you the reading grade level at which a material is written but do not assess layout and design, cultural relevance or other features that help make information accessible.”

Active engagement is also vital to improving clients’ health literacy and ensuring they receive the best care. Engaged clients are more likely to follow treatment plans and work with their caregivers to make informed decisions.

Caregivers should encourage questions, ask clients to express concerns, and readily offer information during visits. Open communication helps build relationships between clients and caregivers and may make clients feel more comfortable asking questions about their conditions.

“The ten attributes of literate health care organizations provide a framework for how organizations can ensure clear communication and understanding,” Kurtz-Rossi explained. “Health-literate organizations strive to provide equitable and understandable information and services using evidence-based health literacy interventions, including plain language in written and oral communication and teach back to confirm understanding. Other health literacy tools and resources can help organizations engage leadership, prepare the workforce, create a shame-free environment and use plain language print materials and websites.”

Caregiver literacy is also a concern

It is important to note that caregivers also have a range of health literacy skills.

“Health literacy is a multifaceted concept which reflects not only individual-level skills but also the unnecessary burden placed on clients and caregivers by an overly complex health system,” Rachel O’Conor, assistant professor at the Center for Applied Health Research on Aging at Chicago’s Northwestern University, told HHCN. “Thinking about health literacy as both an individual skill, but also an organizational trait, can be helpful for agencies to consider as they seek to promote health literacy among their caregivers.”

A recent study showed that 44% of caregivers demonstrated adequate knowledge, 36% demonstrated marginal knowledge and 20% had low health literacy skills. In adjusted analyses, caregivers with marginal and low health literacy demonstrated worse overall performance on health tasks and poorer interpretation of health information presented on print documents and recall of spoken communication. As a result, these caregivers demonstrated poor performance on everyday health tasks with which they commonly assist older adults. The application of health literacy best practices to support better training and capacity-building for caregivers was found to be warranted.

Researchers suggested online training modules to promote caregiver communication with health care clinicians. Following health literacy best practices, these modules should be developed using plain language and cultural inclusion.

“To ensure caregivers are equipped to provide a high level of care, agencies should provide skills-based training on how to assist with health-related tasks,” O’Conor said. “The training could incorporate health literacy best practices in order to promote comprehension and application of the information.”

O’Conor said that she has found that the inclusion of both spoken and print information can promote recall, as well as breaking the information into manageable pieces for better comprehension.

“All corresponding information needs to be easy to understand,” she said. “Passing a simple test demonstrating competency may be reasonable to ensure proficiency in these skills. This act of demonstrating proficiency is in essence the application of teach-to-goal procedures, which is a common health literacy best practice to promote comprehension of health information.”

Home-based care agencies that prioritize personal and organizational health literacy can benefit from multiple positive outcomes. Expanded literacy can improve client health outcomes, decrease emergency department visits by ensuring clients seek preventative care, reduce the number of dosing errors, help clients manage chronic conditions and increase satisfaction.

“Caregivers have a unique role to play when it comes to tailoring and communicating treatment plans to meet the unique needs of individual clients,” Kurtz-Rossi said. “Doctors are one important point of content, but it takes a health care team – including family members – and each member of the team needs to listen to client concerns and communicate plans and services clearly. Clear communication builds trust. When a client is engaged with and trusts their caregivers, they are more likely to follow recommendations.”

The post Health Literacy Challenges Increase Costs, Client Concerns appeared first on Home Health Care News.

Less than a month before election day, the Democratic and Republican candidates for president are dueling over home-based care plans.

Vice President Kamala Harris announced on “The View” this week a proposal that would allow home care to be administered through traditional Medicare.

On the same day, former President Donald Trump and his campaign released a rebuttal, pointing toward home care-related policy implemented from 2017-2020, plus additional plans for a potential second term.

Harris’ proposal is a more lofty one. It would also – if implemented – create a massive tailwind for home care providers across the country. But, as LeadingAge President and CEO Katie Smith Sloan pointed out after the proposal, “we cannot overstate that without staff, there is no care.”

Trump, meanwhile, pointed to expanded supplemental benefits in Medicare Advantage (MA) as a way for seniors to access more home care-related services. His campaign team also focused on economic points that it believes will make aging in place easier for Americans under his leadership.

In this exclusive, members-only HHCN+ Update, I make the mistake of venturing into the presidential candidates’ plans for home-based care. Specifically, I examine how viable the plans are, and what they could mean for providers, if implemented.

Home-based care takes center stage

Home-based care providers were likely pulling their hair out over the predictable confusion that arose from Harris’ proposal Tuesday.

Home health care is already a robust benefit provided under the Medicare program, and generally includes services delivered to seniors after an acute health event.

Home care is not currently available under traditional Medicare, however, and generally includes non-medical services to help with activities of daily living.

The only place where home care is paid for under Medicare is through MA supplemental benefits, and MA pays for just a sliver of all home care provided currently.

So, yes, Harris’ proposal would be groundbreaking, if implemented. It would completely change the scope of the Medicare program.

As for the companies it would directly impact, pick a notable name in home care.

Currently, home care providers have a large addressable market: seniors with the ability to pay out of pocket for home care services; Medicaid beneficiaries in need of home- and community-based services (HCBS); veterans in need of home care, paid for through Veterans Affairs (VA); and a small portion of MA beneficiaries and long-term care insurance clients.

If home care were paid for by Medicare in the future, that would take the concept of “unlimited demand” to a new level. There are over 30,000 home care agencies in the country, almost all of which would have a new market opportunity if Medicare became another means to pay for home care.

The one potential downfall for providers would be former private-pay home care clients being able to use Medicare to pay for services. Private-pay home care doesn’t come without challenges, but it remains one of the most profitable forms of home-based care business.

Home health providers – which already provide care to Medicare beneficiaries, almost exclusively – would also see a business boon. Many of them already provide home care, and the ability to care for clients through one revenue source in both service lines would be massively beneficial.

After all, home-based care is responsible for one of the only successful Center for Medicare and Medicaid Innovation (CMMI) demonstrations of late. The Home Health Value-Based Purchasing (HHVBP) Model – now implemented nationwide – has already saved Medicare billions, and is likely to save many more billions moving forward.

“We think access to personal care services could at least double from six million customers today. By our estimate, the extra spending would expand the [total addressable market] by ~30% to $110 billion per year,” Macquarie Capital wrote in an analyst note this week. “Since Medicare covers home-based medical services, we expect a wider adoption of the integrated care model following added personal care services coverage. This could also expedite the transition to value-based care. Providers could benefit from aligned incentives, streamlined operations and cost synergies.”

Then comes the question of viability, however.

Harris is not the first person to propose such an idea. Home care stakeholders have suggested it for years, but so have other policymakers.

“When the Affordable Care Act was passed, a component similar to this was included and that ultimately was stripped out,” Tyler Giesting, a director of health care and life sciences at West Monroe, told me this week. “I think we’ve seen it fail in the past for reasons that come down to: can it be economically viable? The challenge would be getting something like this passed, in the way that it has been described so far.”

The Harris campaign has suggested that it would pay for the proposal, in part, by cutting Medicare payments for drugs. It estimated that the proposal would cost around $40 billion per year.

But other estimates suggest that it would cost closer to $400 billion.

Harris sees the proposal as a way to aid the “sandwich generation” – adults that have aging parents to take care of, as well as children. Those responsibilities make it tough to maintain employment.

For Harris, the key would be to convince the right stakeholders of the overall value of home care. It wouldn’t be enough to just prove that more Americans could continue contributing to the economy if they had additional help at home for their older relatives.

Harris’ team would need to instead pitch this as a long-term cost savings project. If more seniors had access to home care, less seniors would be driving up U.S. health care costs in hospitals, emergency rooms and more costly brick-and-mortar facilities.

That is already a battle home care providers face. They are regularly trying to convince payers that more home care equals less overall cost. But a concrete plan, and concrete evidence of those potential savings, would have to be laid out.

“It’s one thing to have this idealistic proposal perspective, and it’s another to actually put it into action with a detailed plan,” Giesting said. “Then, there’s also getting it passed and put into law.”

A detailed plan is key. Even if we accept the idea that more access to home care could ease burden on Americans, while also keeping overall health care costs down, the implementation of the proposal through Medicare would need to be tirelessly thought out.

For instance, New York’s Consumer Directed Personal Assistance Program (CDPAP) – which allows family members to be paid to care for loved ones in need of home care – has been a fiscal disaster for the state.

Self-directed care has potential. It allows unpaid caregivers to be compensated, and for home care recipients to direct their own care. But it’s also hard to oversee.

For what it’s worth, if the proposal did move forward, I think the best way to go about it would be to prioritize care from existing, quality home care agencies. Agencies that train and vet their caregivers, ones that have been providing care professionally for a long time.

Trump proposals

The Trump campaign’s home care proposals are more understated. And, like Harris’ plans, more details would be needed to project true impact – for potential home care beneficiaries and providers.

“President Trump will prioritize home care benefits by shifting resources back to at-home senior care, overturning disincentives that lead to care worker shortages and supporting unpaid family caregivers through tax credits and reduced red tape,” the Trump campaign wrote in a release, in preparation for Harris’ announcement this week.

The campaign also evoked MA supplemental benefits. MA supplemental benefits – through the primarily health related pathway and the Special Supplemental Benefits for the Chronically Ill (SSBCI) pathway – were created during Trump’s presidential term.

The benefit that allows for home care services is dubbed In-Home Support Services (IHSS). MA plans have pulled back on offering IHSS in 2024, however.

“The Trump administration provided new Medicare Advantage supplemental benefits that included modifications to help keep seniors safe in their homes, respite care for caregivers, transportation coverage, additional in-home support services and assistance and non-opioid pain management alternatives,” the release continued.

The campaign also pointed out other indirect factors that have led to home care inaccessibility of late, such as inflation, which it believes it can continue to bring down.

Spotlight and policy

Home-based care being in the nationwide spotlight is a good thing for providers and older Americans.

But it’s also worth taking stock of where that spotlight has gotten us before. The Biden-Administration has been laser-focused on home care, but mostly HCBS through Medicaid.

Meanwhile, home health providers have been left behind. Advocates are in the throes of a three-year long fight against continued rate cuts from the Centers for Medicare & Medicaid Services (CMS), as other home-based care proposals are taking shape from both campaigns.

Home health providers are seeing their traditional Medicare payments cut, while also receiving payments from MA plans that often don’t cover the cost of care. All the while, MA penetration continues.

In April of 2023, I wrote about why federal support for home-based care is missing the mark.

While proposals from both campaigns this week contain some good elements, that fact remains true.

As home-based care takes center stage once again, Medicare-certified home health providers are forced to stand behind the curtains, at a time when their margins are evaporating.

“I would also want to remind the Biden, Harris administration that the existing Medicare home health program is under assault currently, and has been since 2020, with billions of dollars in cuts that have diminished access to care, so I think that investment and a stabilization of the existing Medicare home health benefit is something that is also needed,” Partnership for Quality Home Healthcare CEO Joanne Cunningham told HHCN this week. “With this news, I would just offer that recommendation and reminder.”

The post With The Election Nearing, Candidates Battle Over Home-Based Care appeared first on Home Health Care News.

Mental and physical health are vital components of overall wellbeing and can influence each other in many ways. Yet, individuals with mental health conditions may encounter challenges in accessing adequate health care, which can impede their ability to manage their physical health. Home health care providers, however, are increasingly stepping in to bridge this gap.

In-home behavioral health care provides specialized support to promote mental wellness for individuals with a wide range of behavioral or psychiatric disorders. Those who qualify may be experiencing depression, anxiety, agoraphobia, difficulties associated with aging in place, struggles with substance use or problems coping with trauma. Mental health at-home support aims to improve these patients’ access to quality care.

“Untreated mental illness or behavioral health issues can significantly increase the risk of worsening mental conditions, the progression of chronic medical conditions, and the development of heart disease, stroke, dementia and a weakened immune response,” Barbara Andazola, vice president of clinical practice, strategy and programs at Amedisys (Nasdaq: AMED), told Home Health Care News.

Amedisys, headquartered in Baton Rouge, Louisiana, provides home health care, hospice, palliative and high-acuity care in 38 states.

“Most adult patients receiving home health services have a chronic or life-altering illness that can affect their mental wellness, which is crucial for how they think, feel, cope, make health-related decisions and determine how they will participate in their care,” Andazola continued. “Providing person-centered care and achieving quality clinical outcomes is impossible without addressing patients’ mental wellness needs, especially in home health, where clinicians directly observe the impact of mental and physical health on a patient.”

Many home health providers see behavioral health as a natural extension of their mission to help seniors successfully age in place.

At the same time, as value-based care measures become more prominent, making sure seniors are as mentally fit as possible also becomes more important from a business perspective.

“Behavioral health care is a crucial offering for home health providers because it allows for continuity of care across lifespan and settings, especially for individuals with dual diagnoses or developmental disabilities,” Dallas Star, regional director for Bayada Home Health Care, told HHCN. “Home health providers can leverage their expertise in home-based care to deliver specialized behavioral health therapies such as applied behavioral analysis (ABA) in the comfort of the client’s home. This personalized approach can help clients generalize skills and improve the overall quality of life.”

Bayada provides home health, home care and hospice services in 23 states, as well as in Canada, Germany, India, Ireland, New Zealand, South Korea and the U.K.

Psychiatric registered nurses (RNs) usually provide services for this patient population, sometimes with the aid of a licensed clinical social worker.

Those with Medicaid or a limited income may qualify for in-home behavioral health care at no cost. Most providers will work with clients to seek approval and evaluate needs to determine coverage available through insurance providers.

To initiate services, clients must speak with their physician or mental health professional who can provide a referral and work with the home health care provider to develop a personalized care plan. The duration of care depends on individual needs and goals.

Psychiatric nurses conduct an initial assessment and collaborate with the physician to develop an individualized care plan. The nursing services outlined in the care plan typically include evaluating, teaching and administering medications; managing situational crises; conducting self-harm assessments; teaching self-care and promoting mental and physical wellbeing; providing supportive counseling and delivering psychotherapeutic interventions such as education on disease processes, symptom management, safety, coping skills and problem-solving.

If a patient needs additional services or a different level of care, home health clinicians, with the approval of the patient’s physician, will coordinate with local community resources to ensure the patient receives the necessary services to remain safely at home. If this is not feasible, they will arrange to transfer care to an appropriate outpatient or inpatient facility.

“Similar to patients receiving other types of in-home services, those receiving behavioral health care are satisfied with their outcomes and appreciate the ability to receive care in the comfort and safety of their own homes,” Andazola said.

States mobilize crisis intervention teams to further address access to care

The Centers for Medicare & Medicaid Services (CMS) recently approved New Hampshire’s Medicaid State Plan Amendment for community-based mobile crisis intervention teams to provide services for people experiencing a mental health or substance use disorder crisis.

New Hampshire can now connect Medicaid-eligible individuals in crisis to a behavioral health provider 24 hours a day, 365 days a year. This approval marks 20 states and the District of Columbia that have expanded access to community-based mental health and substance use services under a new Medicaid option created by the Biden-Harris American Rescue Plan.

Mobile crisis intervention teams provides screening and evaluation; stabilization and de-escalation; and coordination with and referrals to health, social and other services, as needed. This helps states better integrate behavioral health services into their Medicaid programs.

Providing fast, appropriate care to someone in crisis may reduce the need for costly inpatient services, and this new option will help states expand access to behavioral health professionals as the initial contact for someone in crisis. New Hampshire can now receive Medicaid funding for mobile crisis response crisis planning, directly connecting people to specialized services, referring ongoing supports, and follow-up check-ins for individuals experiencing a mental health or substance use disorder crisis.

Though home health providers often have behavioral health capabilities – and sometimes even specific service lines for that care – there are still barriers to implementation.

“There is a clear need for ongoing behavioral health services as a standard offering for home health patients,” Andazola said. “However, the shortage of psychiatric-trained RNs and the specific experience requirements set by Medicare for reimbursement limit the expansion of these services. The Medicare home health benefit excludes occupational therapy (OT) as a qualifying clinician discipline. Despite OTs being highly skilled and capable of addressing functional limitations often experienced by behavioral health patients due to mental illness or cognitive deficits, they can only provide these services if the patient’s condition also requires skilled nursing physical or speech therapy. Until CMS addresses these and other requirements, expanding behavioral health services for home health patients will remain limited.”

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Kalon Mitchell sold his company to the post-acute technology organization WellSky in 2018. He then worked for WellSky for five more years, learning the ins and outs of the home health industry in the meantime.

After leaving WellSky, and with some more time on his hands, Mitchell decided to start “Project Sword”, which leverages cost reporting data to analyze the financial position of home health providers at large.

The data shows not an industry enjoying close to 20% margins, but instead one that is in a deeply precarious position moving forward.

The Centers for Medicare & Medicaid Services (CMS) has proposed cuts to home health payments three years in a row. Though its last two final payment rules have not been as harsh as its proposals, they have still come with permanent cuts to payments.

Providers have multiple gripes with these cuts. The first is over the payment methodology that CMS applies, which most providers and advocates strongly disagree with. The second is the rising costs that home health agencies have recently faced. While CMS is cutting home health payment in traditional Medicare, the cost of providing services has skyrocketed – namely due to the cost of labor.

But the final gripe is the one that has turned into a “generational battle” for providers, and that is MA penetration and payment.

Over 50% of Medicare beneficiaries are now under an MA plan, and those plans generally pay far less for home health care than traditional Medicare.

Providers have regularly told Home Health Care News that MA payment for home health services doesn’t cover the cost of delivering care. But providers tend to be mission driven, and also have referral relationships to uphold. Therefore, they continue to take on MA patients, which sinks their overall margins.

Essentially, traditional Medicare subsidizes MA plans in home health care. It’s true that if providers only took traditional Medicare, they would likely enjoy healthy margins. On the other end, though, if they only took MA, they’d likely have inoperable businesses.

While providers have shared these MA payment horror stories anecdotally, it’s been hard to get a good overall picture of what the average home health provider’s margin looks like of late – as both MA penetration and traditional Medicare rate cuts continue unabated.

The whole picture

Whereas traditional Medicare subsidizes MA in home health care, the opposite dynamic exists for hospitals.

MedPAC has repeatedly said that it can only consider Medicare payments when analyzing the home health industry.

“The Commission’s review indicates that FFS Medicare’s payments for home health care are substantially in excess of costs,” MedPAC wrote in its March report. “Home health care can be a high-value benefit when it is appropriately and efficiently delivered, but these excess payments diminish that value.”

At the same time, MedPAC includes all-payer data for hospitals in its reports. For instance, it acknowledged that aggregate hospital margins on traditional Medicare had fallen to -11.6% in 2022, while aggregate “all-payer” margins were at about 2.6%.

But in home health care, the other side of the payment picture is not acknowledged.

“In the MedPAC report, they say one of the supposed foundations of what they’re supposed to do is look at all-payer margins,” Mitchell told HHCN. “And in the chapter on home health, there is no mention of all-payer margins.”

What Mitchell found while working on Project Sword was that MA payments were erasing the healthy margins that could potentially come with a revenue mix dominated by traditional Medicare.

Project Sword and MedPAC’s analyses spit out similar data for Medicare margins, lending credence to Mitchell’s all-payer margin calculations.

When it came to the all-payer outlook, Mitchell found that home health margins sunk below the break-even point.

While 59% of home health agency revenue still comes from traditional Medicare, those beneficiaries now account for only 45% patient censuses.

Cost reporting generally lags, which is why much of the data Mitchell used is from 2022.

But since that point, it’s likely that the situation has exacerbated. MA penetration has continued, while CMS has gone through with another payment cut in traditional Medicare.

“We can see a deteriorating industry, and yet the narrative from CMS and MedPAC is that there’s no better industry to be in than home health care,” Mitchell said. “They have the highest profit margins, and that’s what Congress sees when they look at their report. That’s what they hear when they talk to CMS and MedPAC. But when they talk to agencies and advocates, they hear the opposite.”

Mitchell has been cleaning and trimming the data as much as possible to ensure that his project can turn into a meaningful tool for the industry.

Providers have also told him – and HHCN – that the numbers are on par with what they’re seeing internally.

“We want to take care of everybody, but the reality is that the payments we get from fee-for-service Medicare Advantage don’t typically cover our costs,” Michael Johnson, the chief researcher of home care innovation at Bayada Home Health Care, recently told HHCN. “So, we’ve got to make sure we have the right and best mix. That isn’t any different [than in years past], but we have to take even more clarity and focus on that approach now.”

Bayada has been around for nearly 50 years. It also has hundreds of locations, both in the U.S. and abroad.

While the current payment dynamics are tough, the company has the means to survive. It has the means to find a better payer mix, to become more efficient operationally.

Bayada and other larger home health providers also have a chance to get a better deal with MA plans. That could mean a better per-visit rate or some sort of value-based arrangement.

For smaller providers, that’s not the case.

“We have been very selective on what payers that we work with because of this,” LTM Group CEO David Kerns told Home Health Care News. “But I think especially smaller agencies, they may not have a payer innovation team, for instance. We’re not a huge agency, but we do have some scale. For smaller agencies, it’s hard to get payers to even credential your contract, let alone negotiate a value-based arrangement with you.”

As a result, fewer home health providers exist today than five years ago.

In total, there were 11,353 active home health agencies in 2022, 11,474 in 2021, 11,565 in 2020, and 11,569 in 2019, according to the Research Institute for Home Care (RIHC).

Last month, one of the oldest home-based care providers in the country – VNA Of Greater Philadelphia – closed its doors amid “unsustainable financial losses.”

A home health leader recently told Home Health Care News that one of its MA contracts hadn’t been updated for a decade. When it approached the payer about a rate adjustment, the plan offered a $3 increase.

The Preserving Access to Home Health Act of 2023 included a provision that would have forced MedPAC to consider all-payer margins in home health care, but that did not make it through.

So, with MA reimbursement that sometimes only covers a portion of the cost of care, and CMS reducing traditional Medicare rates, providers are left to their own devices to survive.

A closer look at the data

Mitchell is aware that there are errors in the data used for Project Sword. But those errors aren’t necessarily ones that would change the overall story that the data is telling.

“There are errors in the data. And I don’t know how many people, as I’ve worked on this project, have said, ‘You can’t use that data. It’s full of errors,’” Mitchell said. “My reply to that is, MedPAC and CMS are using it, and they’re providing a very limited perspective on what they’re doing.”

Mitchell has also shown his work as much as possible, and has included spreadsheets and his methodologies on his website.

But another area where there are definitely errors are the cost reports themselves. And that, too, could be hurting home health providers.

“I’ve never heard of a single agency that is making sure that every single one of their expenses is on these cost reports,” Kerns said. “They don’t have every little thing on there that should be on there. You need to recognize a lot of those expenses, and really work closely with whoever is doing your cost reports to make sure those are accurate.”

If anything, that would mean that margins are worse off than they’re portrayed in the reports.

“This has been haunting us for years,” Robert Markette, an attorney with the law firm Hall, Render, Killian, Heath & Lyman, previously told HHCN. “The numbers are all over the place. The baseline problem is that we don’t report it accurately because we don’t take cost reporting seriously. We give CMS the ammunition they need to make their argument that we’re being paid too much. When in fact, I think we’re severely underpaid.”

As for Mitchell, he plans to get the data in front of as many stakeholders as possible in the near-term future.

The final payment rule is generally released in late October or early November, but CMS also plans to continue cutting payments in the coming years.

The post ‘A Deteriorating Industry’: What Home Health Provider Margins Actually Look Like appeared first on Home Health Care News.

Broadly, MA plans are rated on a scale from one to five, and CMS has lowered those ratings for both UnitedHealthcare and Humana, in certain cases. For UnitedHealthcare, its call center rating was reduced by a point. Humana’s ratings also went down overall, sinking the majority of their plans below four stars.

Both companies are appealing the ratings, in one form or another. UnitedHealth Group has filed a lawsuit against CMS. Humana earlier this year also challenged CMS on its Risk Adjustment Data Validation (RADV) rule, which helps dictate how MA plans are paid.

UnitedHealthcare is claiming that its call center rating was downgraded based on an “arbitrary and capricious assessment.”

As the star ratings currently stand, they are likely to affect the financial performance of both companies. Humana’s stock, for instance, is down over 20% this week.

The financial standing of MA plans could affect home-based care providers in a number of ways. A worse off rate environment could mean more low rates for home health services. Providers hope, however, that plans will use home health care as a way to lower costs elsewhere.

Home care providers that help MA plans provide supplemental benefits to members could also be squeezed out, with less room to offer benefits in the first place.

At the same time, the troubles of Humana and UnitedHealth Group are relevant due to their direct involvement in home health care. 

Humana owns CenterWell Home Health, one of the largest home health providers in the country. UnitedHealth Group owns LHC Group, another one of the largest home health providers in the country. UnitedHealth Group is also in the process of acquiring the home health giant Amedisys (Nasdaq: AMED).

The post UnitedHealthcare, Humana Object To Star Rating Downgrades In Medicare Advantage appeared first on Home Health Care News.

The report found that patients receiving care through the program differed demographically from those at traditional inpatient facilities. Generally, hospital-at-home (HaH) patients were more likely to be white, live in urban areas, and less likely to receive Medicaid or low-income subsidies. These differences may be due to the criteria established by participating hospitals to identify suitable patients for this type of care.

Patients receiving care at home generally experienced fewer catheter-associated urinary tract infections. Mortality rates were also lower. Those with less complex respiratory and infectious conditions had lower 30-day readmission rates than those in traditional inpatient settings. However, readmission rates for patients with more complex respiratory infections were higher for those receiving care at home.

The study found that patients receiving care at home through the initiative resulted in lower Medicare spending during the 30-day post-discharge period. Furthermore, even though at-home patients received the same services as those in traditional hospital settings, they used fewer of the same services. This suggests that hospitals experience lower costs over time when providing care to patients in their homes.

The study also revealed that at-home patients required care slightly longer than those in traditional settings, but the difference was negligible (less than a day).

Feedback collected from patients, caregivers and family members about at-home care was overwhelmingly positive. Patients reported feeling more relaxed, less anxious and less depressed at home, which seemed to facilitate their recovery. Caregivers and family members believed better health outcomes were one of the main benefits of receiving care in a familiar and comfortable environment.

“People who have been in a brick-and-mortar hospital and also cared for in their home report that they sleep better in their beds and that it is less noisy and confusing,” Nancy Foster, vice president for quality and patient safety at the American Hospital Association (AHA), recently told Home Health Care News. “For older folks who sometimes get confused when they’re away from home, this is a way for them not to experience those challenging effects of being hospitalized but still receive hospital-level care.”

Lessons learned

While the feedback received was primarily positive, it also revealed some limitations and opportunities.

One concern was the potential need for additional care, especially for patients with limited mobility. While approved hospitals are expected to provide all nursing care, including help with daily activities, CMS received feedback that, at times, family members took time off to be with their loved ones or hired extra nursing aides.

Another common concern was the program’s effective implementation. Specifically, there was potential for confusion among clinicians and hospital staff regarding the services provided and among patients about what services are covered by Medicare.

Overall, feedback from patients and caregivers aligned with existing evidence on HaH programs; they generally viewed the care provided as safe, effective and a positive experience.

“Clinicians, doctors and nurses who have been involved in the HaH program are enthusiastic about it,” Foster said. “It allows them to have a deeper relationship with their patients, to see more of what their home life is like, and to be able to advise them on how to recover well and then how to stay well from whatever condition brought them into the hospital, even if that hospital was their home.”

The waivers and flexibilities associated with the AHCAH initiative expire Dec. 31, and its future remains unclear.

“By the end of the year, Congress will need to act to extend the Medicare waiver,” Foster said. “We’ve heard considerations of a bill that would extend it for five years, but we don’t know whether that will be passed.”

Foster added that if the bill is not passed, no fee-for-service Medicare or Medicaid patient could be cared for at home.

“Congress is concerned that we can demonstrate high-quality care being delivered, that we are not putting a tremendous burden on family members or other loved ones in the home, and they have expressed concern about whether this would be equitable,” Foster said. “However, we see a dominance of people with more limited means benefiting enormously from the hospital-at-home program.”

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The agency issued an informational bulletin last month reminding states of federal renewal requirements and available flexibilities to ensure continued coverage for individuals eligible for HCBS through Medicaid. This bulletin continues CMS’ efforts to minimize coverage gaps, particularly during and after the public health emergency unwinding process, and to ensure eligible individuals retain or are re-enrolled in Medicaid.

For home care providers, a renewed government effort to clean up HCBS protocols – like in the Medicaid Access Rule – helps keep patients on census and enables better care geared toward value.

Following the end of the COVID-19 public health emergency in 2023, states restarted regular eligibility renewals for those enrolled in Medicaid and Children’s Health Insurance Program (CHIP) coverage, a process often called “Medicaid unwinding.” This included renewals for individuals who needed assistance with daily living activities.

As states restarted renewals, many individuals faced challenges renewing their coverage because of administrative barriers. States experienced unprecedented renewals, resulting in backlogs in some areas, according to CMS. Many states also experienced system and compliance issues, which the agency directed them to address.

Throughout unwinding, CMS has strongly urged states to adopt federal strategies that make it easier for eligible individuals to renew Medicaid. On Aug. 19, CMS issued guidance outlining strategies states can adopt to help eligible individuals receiving HCBS retain their coverage.

These strategies are designed to simplify eligibility and enrollment processes, maximize the use of available and accurate information, and reduce the burden on individuals and state Medicaid agencies, allowing eligible individuals receiving HCBS to maintain their coverage, independence and engagement in community life.

In accordance with the guidelines, states are required to regularly review Medicaid eligibility, in line with federal regulations, to ensure continued access to HCBS for those who are still eligible. Some of the current flexibilities that help maintain coverage and access to HCBS include collaborating with local agencies to improve “no wrong door” systems for assisting individuals in maintaining Medicaid enrollment. States can also choose to exclude some or all countable income or resources when renewing coverage for individuals receiving HCBS for a specific period of time.

No wrong door means consumers can enter any service with the expectation that if it is not appropriate for them, they will receive assistance in accessing the most relevant services.

“During the COVID-19 pandemic, the Families First Coronavirus Response Act mandated that states maintain continuous enrollment in Medicaid for people,” Home Assist Health President and CEO Sara Wilson told Home Health Care News. “However, this continuous eligibility requirement ended with the public health emergency, leading to various challenges for states transitioning out of it. These challenges included staffing shortages, training needs, outdated operating systems and communication issues. As a result, procedural errors occurred, leading to wrongful termination of participants and creating gaps in care. These gaps can pose increased financial and health risks for the individuals affected.”

Phoenix-based Home Assist Health is a nonprofit home care provider.

“HCBS enables individuals to age and recover in the comfort of their homes,” Wilson said. “Continuity in these programs is crucial in upholding this right, guaranteeing access to care, and safeguarding the health and well-being of participants.”

During the renewal process, eligibility must first be confirmed using the state’s asset verification system without requiring additional information from the individual (ex parte). Ex parte renewals are one of the most vital tools for states to keep eligible people covered and prevent terminations due to red tape, as demonstrated by CMS data last year.

“Ensuring people have access to comprehensive, high-quality health coverage is a top priority for the Biden-Harris Administration,” a CMS spokesperson told HHCN. “That is why we have urged states to take up every tool CMS made available to help eligible people renew coverage and to protect them from becoming disenrolled due to red tape as states conducted Medicaid and CHIP renewals following the end of the Medicaid continuous enrollment condition in 2023, a process often called ‘Medicaid unwinding.’

As the unwinding process demonstrated, states’ choices have real consequences for eligible people’ ability to maintain coverage during Medicaid and CHIP renewals. While states must follow federal Medicaid and CHIP requirements, they have broad flexibility within these requirements when administering their programs. States can take steps to help eligible people, including people who receive HCBS, stay covered. These steps include improving ex parte rates, taking up CMS’ strategies that make renewals easier to navigate (including strategies outlined in our recent guidance), and addressing other barriers to coverage.”

CMS issued guidance to help states adopt strategies to improve ex parte rates. With these efforts, Medicaid and CHIP ex parte rates doubled nationwide from about 25% in April 2023 to 50% of renewals due in May 2024.

The agency also recently finalized a rule that builds on critical lessons learned during Medicaid unwinding by streamlining and simplifying how people enroll in and renew Medicaid and CHIP from now on. These improvements will reportedly help millions of eligible people with HCBS enroll in and maintain Medicaid coverage moving forward.

For example, for those eligible for Medicaid based on disability, the rule prohibits states from requiring in-person interviews, requires states to provide a reasonable period for applicants to return information and documentation, and requires states to accept renewals in multiple ways, such as online, by phone, mail or in person.

Regarding compliance with renewal requirements, the guidance issued on Sept. 20 details steps that all states must take to ensure their compliance with federal renewal requirements for Medicaid and CHIP and avoid further action by CMS.

States must assess their compliance with federal requirements, submit the results to CMS, and submit a plan to resolve any issues. Building on insights from the unwinding period, this action will help ensure state compliance with key federal renewal requirements, safeguarding individuals’ ability to renew their health coverage and strengthening the integrity of the Medicaid program, according to CMS.

“HCBS is crucial for long-term care services, allowing participants to choose home-based care while promoting individual choice and control,” Wilson said. “Home care providers should work with their state Medicaid authorities to support this transition process for members.”

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The Centers for Medicare & Medicaid Services (CMS) has created a less rosy payment environment for MA plans over recent years, and that has forced some plans to exit certain markets.

But early projections suggest that, while MA penetration may slow in coming years, it has not yet tapered off in a significant way.

UnitedHealth Group (NYSE: UNH) and Humana Inc. (NYSE: HUM) are the two largest MA administrators, and also own two of the largest home health agencies in LHC Group and CenterWell Home Health, respectively. UnitedHealth Group is also nearing a deal to acquire Amedisys (Nasdaq: AMED), another one of the largest home health providers.

Other home health providers have seen their bottom lines impacted by MA penetration over the years. Broadly, MA plans generally pay below traditional Medicare for home health services, oftentimes by a large margin.

“CMS projects total MA enrollment will grow to 35.7 million lives in 2025 (vs. ~34.3 million lives as of September 2024) with MA penetration of Medicare expected to rise to 51%,” an analyst note the investment firm Stephens read. “This implies expected low- to-mid single digit MA market growth relative to current enrollment. Importantly, the MA market should still likely grow as fast (or faster) than the overall Medicare market even as products and footprints are adjusted to reflect ongoing MA margin pressures.”

Humana, Centene’s (NYSE: CNC) WellCare, Aetna and BlueCross BlueShield have all announced that they will exit certain markets in 2025 in light of the MA rate environment.

On Friday, though, CMS announced that key parts of the MA program will “remain stable” in the upcoming year.

“CMS announced that average premiums, benefits and plan choices for Medicare Advantage (MA) and the Medicare Part D prescription drug program will remain stable in 2025,” the agency wrote in a press release Friday. “Average premiums are projected to decline in both the MA and Part D programs from 2024 to 2025. Enhancements adopted in the 2025 MA and Part D Final Rule, as well as payment policy updates in the 2025 MA and Part D Rate Announcement, support this stability and increase enrollee protections and access to care for people with Medicare.”

CMS also said that supplemental benefits will remain stable, but particularly called out dental, hearing and vision benefits.

“Benefit options will remain stable, including MA supplemental benefit offerings such as hearing, dental, and vision,” CMS continued. “The amount of rebate dollars, which can be used for supplemental benefits, will remain stable, with a slight increase, from 2024 to 2025. Enrollment in MA is projected to be 35.7 million in 2025, an increase from 2024, with MA enrollment representing approximately 51% of all people enrolled in Medicare.”

For context, only 31% of Medicare beneficiaries were enrolled in MA a decade ago, according to KFF.
A slew of health systems and home health providers have also recently severed ties with certain MA plans. In most cases, those decisions were made over lack of payment, too much administrative burden, or both.

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CMS proposed a permanent prospective adjustment to the CY 2025 home health payment rate of -4.067% back in June. All in all, the agency proposed a 1.7% cut to aggregate home health payments next year.

Providers have experienced cuts in the previous two years, but have also seen CMS back off more severe cuts in the time between the proposed and final payment rules in 2022 and 2023.

“[CMS] thinks, ‘How much can we threaten to reduce the current payment rate, so that when we drop a few breadcrumbs [in the final rule], providers will feel good about picking a little something up?” Pinnacle Home Care CEO Shane Donaldson said on stage at Home Health Care News’ FUTURE conference last month. “History tells us that the final rule will probably be a net neutral event.”

Based in Oldsmar, Florida, Pinnacle Home Care is one of the largest home health providers operating in its home state. The New York-based HCS-Girling recently acquired Pinnacle Home Care, which plans to significantly expand in the coming years.

While providers are hoping that they at least see those breadcrumbs in the final rule, they’re not banking on it.

Instead, they’re working toward becoming sustainable shops in spite of a turbulent payment environment.

“If you’re not really good at something – whether that is collecting your AR, doing your coding, OASIS review – it’s time to look at people who are really good at that, and maybe make some different decisions,” Interim HealthCare President and COO Rexanne Domico also said on stage at FUTURE. “What I would really suggest to people at this stage in the game is to think about your efficiency in all of your locations.”

Based in Sunrise, Florida, Interim HealthCare is a home health and home care franchise with more than 330 locations across the U.S.

Efficiency is a broad term, but Domico was specifically referring to outsourcing certain tasks, reducing redundancies and also exploring home health-applicable AI.

AI was a major talking point at FUTURE, and the vast majority of providers were bullish on what new technology could do for the industry in terms of efficiency, especially in light of recent rate cuts.

On top of that, Domico mentioned utilization as an area for providers to keep an eye on.

“I think there’s a lot of times we don’t focus on utilization,” Domico continued. “And I think there’s a tremendous opportunity to focus on there. And that can be part of your increase, if you work it the right way.”

Donaldson added that clinicians should be working at the top of their licenses, which also helps drive efficiency.

“What we’ve got to do is improve our margins, and that means we’ve got to get evaluating clinicians to do as many evaluations and assessments as possible, and we’ve got to get the non-evaluating clinicians doing the majority of the straight visits,” he said.

There are home health providers trying to do more to be a better partner to payers and referral sources. But, sometimes – to Domico’s point – less is more.

In general, providers agreed with the idea that they should focus on their strengths, and find a way to outsource their weaknesses, or at least level up in those areas.

“If [that margin] is not going to be given to you, how are you going to get it?” Domico said. “I think you get it by really being an expert at what you’re really good at, which is delivering care. And if those other things are not working for you, then I think it’s time to look at doing something different.”

Working with other payers

As those fee-for-service rates become less reliable than they’ve been in the past, providers are having to spend far more time thinking about their Medicare Advantage (MA) strategies.

With less growth in traditional Medicare payment, it’s paramount to avoid MA payers that reimburse at a subpar rate. For the most part, providers don’t expect – but do hope for – MA rates on par with traditional Medicare rates.

But 40% lower, for instance, is unsustainable.

“In the state of Florida, we have 850 home care agencies, and so Medicare Advantage plans still consider us to be largely commodities,” Donaldson said. “When they can find an agency next door that’s willing to do a visit for $80, they’re not going to pay us $130. Irrespective, it seems, to how much we can prove that our quality is better than any of our neighbors.”

Pinnacle has had success with one MA plan, however. That plan has agreed to pay the company with some upside opportunity.

That came about when the plan moved from being managed internally to being managed by a third party.

“We had a good relationship with the third party,” Donaldson said. “In negotiating, we said, ‘Look, this really needs to be an episodic relationship, even if it’s at a percentage of Medicare. Give us the opportunity to control our own destiny, give us a pot of money and let us run with it.’”

While some improvements have been made in home health contracts between MA plans and providers of late, Domico still sees providers largely as “price takers” in the relationship.

“I think we are price takers, and I think the negotiations are really very one-sided,” she said.

But she also believes that there’s still plenty of opportunity out there for providers to be paid more fairly, and that starts with regional plan partnerships.

Well Care Health COO Rebecca Higbee, also on stage at FUTURE, said her company has seen most success with those local-level health plans.

“Some of our best partners are those regional partners,” she said. “Those local partners where you can speak to the actual decision makers of the plan.”

Well Care Health provides home health and hospice services across North Carolina and the upper part of South Carolina.

Higbee also emphasized that health plan relationships need to be nurtured on a daily basis.

“It still takes years to make progress,” she said. “We have made progress of late. There’s a handful of payers that are finally seeing the value, while at the same time, there’s also payers that in years past have seen value and are now looking to move backwards. It’s really a mixed bag. I think it’s something we have to be working on daily, and something we have to be thinking about daily.”

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The home health sector offers an attractive investment opportunity, but also comes with challenges. It is poised to benefit from an aging population and the shift toward value-based care, however, it is also influenced by factors such as rising interest rates, reimbursement difficulties and staffing shortages, all of which have affected the M&A market.

“I have observed several cycles in M&A volume and valuations,” Cory Mertz, managing partner at Mertz Taggart, told Home Health Care News. “Volume is still lower compared to the past few years, for various reasons, such as buyers’ limited access and higher cost of debt. Valuations are still historically strong, not reaching the peak levels of 2021, but stronger than any period prior. This is influenced by robust multiples of public companies and demand from private equity.”

Fort Myers, Florida-based Mertz Taggart is a health care M&A advisory firm focused on home health, home care, hospice and behavioral health.

With a valuation of $152.9 billion in 2024 and a projected growth of $253.4 billion by 2030, home health care presents significant growth potential, as indicated by research from Grand View Research.

“Private equity firms that understand health care services appreciate home health because it has the potential to save the health care system money,” Mertz said. “As the aging population grows and technology continues to advance, enabling elderly individuals to stay at home instead of in facilities, home health is seen as a key part of the solution.”

The COVID-19 pandemic raised expectations and led to an influx of capital. This resulted in a prolonged period of low interest rates, which persisted through 2022 and early 2023, significantly affecting valuations. As interest rates rose, the transactional value and number of transactions decreased.

“If companies have to borrow at higher costs, they may not want to take on the debt obligations that they were willing to incur earlier,” Les Levinson, co-chair at Robinson+Cole, told HHCN.

Robinson+Cole is a New York City-based law firm, serving eight states and the District of Columbia.

“If we do see a rate cut that portends to a softening in the interest rate environment, I think we’re going to see a strong pickup in the M&A market,” Levinson said. “If interest rates continue to improve, there’s a likelihood that we’ll start to see a cycle where capital is being returned to investors, allowing them to consider other transactions.”

Aside from interest rates, investors are also concerned about the uncertain regulatory environment.

In the final rule for 2024, the Centers for Medicare & Medicaid Services (CMS) increased reimbursement for home health agencies by 0.8%, which amounts to approximately $140 million more than in 2023. This increase was better than the originally proposed 2.2% cut, but still faced opposition due to concerns about inflation.

“Every year, the proposed new rule for home care comes out and creates uncertainty in the marketplace,” Levinson said. “And that is potentially a valuation ding.”

In addition to CMS reimbursement rates, some states have aggressively regulated transactions. California, Oregon and Indiana are three states that have been active in regulating transactions that they think may not be helpful in their states.

Staffing concerns impact values

In addition to rates, regulation and inflation, staffing shortages continue to plague the industry, causing even more uncertainty.

Levinson said that staffing shortages in the home health care sector affect valuations and raise questions about a company’s ability to grow.

When assessing a home health care agency, it’s essential to consider its capacity to attract and keep employees in a competitive labor market. Elevated labor costs affect profit margins by raising expenses and constraining the company’s ability to care for patients, limiting its growth potential.

“It’s the ability to staff cases and continue staffing those cases,” Levinson said. “[Companies are] competing with other providers in the marketplace, in some cases for the same workers, so that has driven up wages beyond the market norm in some areas.”

EBITDA and technological efficiencies make for unique situations

A company’s valuation is typically based on a multiple of earnings before interest, taxes and amortization (EBITDA). EBITDA removes the company’s cost of selling a product or service and shows how much money is made after deducting all expenses except taxes, interest or amortization. This indicates the quality of the profit that a company makes after expenses.

However, Levinson said valuation is not always strictly based on EBITDA because of adjustments that make companies unique.

“Investors often consider the components of the EBITDA number,” Levinson explained. “Factors such as staffing levels, borrowing costs, market rates and overall market conditions are frequently discussed. They evaluate whether there is an oversupply of providers in the market and if there is competition for staff. All of these factors contribute to dynamic valuations.”

When considering a company’s EBITDA, technology is becoming increasingly important.

Technology is playing a more significant role in M&A than ever before, especially in improving efficiency, according to Levinson. While staffing impacts home health care because it is a person-to-person industry, technology can help address some of the concerns caused by staffing shortages regarding growth and the ability to provide services to clients.

“Technology can be helpful, as some cases can be treated with a phone call or an intervention over Zoom,” Levinson said. “If that’s the case, then perhaps it means a worker doesn’t have to go to a home or spend more time there and can go to another patient in need of care.”

He explained that if caregivers spend less time on paperwork that can be done with AI, it creates efficiencies and allows for more time with patients.

“I believe that technology will continue to improve efficiency and reduce costs while addressing staffing shortages we’ve experienced over the past few years,” he said.

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