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 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.

The post Medicare Advantage Penetration Expected To Continue In 2025 appeared first on Home Health Care News.

Essentia Health – a regional, nonprofit health system with a substantial home health arm – announced this week that it will no longer serve as an in-network provider for UnitedHealth Group (NYSE: UNH) and Humana Inc. (NYSE: HUM) Medicare Advantage (MA) plans. It is the latest example of home-focused health care providers drawing a line in the sand with certain payers.

Those examples can still be classified as anecdotal, but they are close to forming a trend.

It’s also likely that each move like this will beget similar moves by other providers.

“Like many other health systems, we have been re-evaluating our participation in Medicare Advantage plans that place added strain on our patients by too often denying or delaying their care,” Dr. Cathy Cantor, Essentia’s chief medical officer for population health, said in a statement. “This was not a decision we made lightly. The frequent denials and associated delays negatively impact our ability to provide the timely and appropriate care our patients deserve. This is the right thing to do for the people we are honored to serve.”

Headquartered in Duluth, Essentia Health provides care across Minnesota, Wisconsin and North Dakota. Its network includes about 15,000 employees, 14 hospitals, 78 clinics, six long-term care facilities, six assisted living and independent living facilities, and much more.

It also has a robust home health and hospice business.

The company has informed patients that it will no longer serve as an in-network provider for the above-mentioned MA payers beginning Jan. 1. Open enrollment for MA begins on Oct. 15 and ends on Dec. 7. Essentia specifically called out other plans that patients can join in network prior to the year turning over.

Sanford Health, a health system based in Sioux Falls, South Dakota, announced a similar plan this week.

“This is a difficult decision, but ending our partnership with Humana Medicare Advantage is the right thing to do for our patients,” Martha Leclerc, vice president of corporate contracting for Sanford Health, said in a statement.

These comments mirror remarks made by home health leaders over recent years. The national plans have drawn the most ire from home-based care organizations.

This week’s exclusive, members-only HHCN+ Update ties these topical news items to the MA struggles that home health providers face.

‘Care delayed is care denied’

Humana and UnitedHealth Group’s UnitedHealthcare are the two largest MA administrators in the country. According to KFF, Humana has 16 million MA members, or about 29% of the market, while Humana has 6 million members, or about 18% of the market.

That market share gives the two companies some semblance of leverage with providers, and also makes it hard for providers to walk away from them.

But providers are beginning to take that step, as evidenced by the Essentia Health and Sanford Health decisions this week.

While both those organizations provide home health care, the largest example of walking away thus far in the industry was Enhabit’s (NYSE: EHAB) decision to terminate its contract with UnitedHealthcare last month.

Enhabit CEO Barb Jacobsmeyer further explained that decision last week.

“It’s important to remember that the reason we created are payer innovation strategy, about two years ago, was because at that time we had United as a large payer and then a few regional smaller contracts that had come along with acquisitions over the years,” Jacobsmeyer said during a discussion at the 2024 Wells Fargo Healthcare Conference. “Those combined contracts had us at about a 40% discount to Medicare. Obviously, that’s not sustainable. We started the payer innovation strategy to have more and better contracts.”

Enhabit’s issue with UnitedHealthcare was payment for services being at a 40% discount compared to Medicare fee-for-service payments. Essentia and Sanford mentioned denied and delayed care.

But generally, providers have told me their issues with MA plans are two-pronged – it’s about claim denials and prior authorization hurdles, but also about payment, too.

“The prior authorization process should be based upon the patient’s primary diagnosis and have a standard number of visit authorizations based upon evidence-based medicine,” Intrepid USA CEO John Kunysz told HHCN in 2022. “Care delayed is care denied.”

A few providers terminating contracts won’t make a huge dent in these payers’ pockets.

But those terminations could embolden other providers. And that could turn this into a larger trend.

“I would just say that my heart was warm the other day when Enhabit walked away from the table with UHC,” Pinnacle Home Care CEO Shane Donaldson told me last month at HHCN’s FUTURE conference. “I think that we’ll look back on that as being a significant event.”

An interesting wrinkle is the fact that both Humana and UnitedHealth Group have recognized the value of home health care through acquisition. Humana owns CenterWell Home Health, while UnitedHealth Group owns LHC Group and is in the process of acquiring Amedisys Inc. (Nasdaq: AMED).

Home-based care leaders within those organizations do believe that their work will ultimately lead to better payment and value recognition from payers over the long term.

Broadly, and for now, home health providers currently don’t see their value being recognized by these large payers.

“We’re all tasked with the same problems,” Vanderbilt Home Care Services President Amy Harrison told me at FUTURE. “Humana has denied hundreds of thousands of dollars of our claims, because they claimed that we billed before we had the plan of care signed and all the orders signed. But we’ve clearly submitted all the medical records to them with proof. They send you in circles. It’s like they’re incentivized to not pay you.”

The post More Home Health Providers Sunset Relationships With Largest Medicare Advantage Payers appeared first on Home Health Care News.

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.”

The post Top Home Health Operators: If You’re Not Really Good At Something, Ditch It appeared first on Home Health Care News.

Even before entering negotiations with MA plans, providers should have a clear understanding of the challenging reimbursement environment they are walking into, according to Fred Bentley, managing director at the research and advisory firm ATI Advisory.

“Reimbursement rates have really leveled off for Medicare Advantage plans, even as medical expenses have really started to grow,” he said during a panel discussion at Home Health Care News’ FUTURE conference last month. “Whereas plans, in the past, were making, in some cases, double-digit margins, they’re going to pat themselves on the back and give high fives if they hit 3% this year.”

In other words, MA plans aren’t in a generous mood, according to Bentley.

When Elara Caring prepares for MA negotiations, the company remembers to enter with a long-term mindset.

“We have to understand that as much as we want to go in there and just be frustrated with the fact that they aren’t bending to our will, and giving us the rates we want, that we’re going to be dealing with this MA plan down the road,” Brent Nash, chief development officer at Elara Caring, said during the discussion. “They’re going to be our partners in the longer-term, so you need to go in with a positive mentality that you can address a pain point of theirs.”

Dallas-based Elara Caring is a home-based care provider with about 200 locations across 18 states. The company serves more than 60,000 patients.

This focus on addressing the MA plans’ pain points has been a key strategy for the company.

“We’re going into the conversations talking about their issues, and the things that we can do to help,” Nash said. “In the environment that [Fred described], where [plans] are completely getting hammered on from an MLR perspective, if you go in there and you just say, ‘I want more money,’ they’re probably going to just laugh you out of the room. You need to say, ‘I want to help you. What’s your pain point? Are you worried about readmission or ED diversion?’”

Nash noted that providers need to sell their ability to mitigate the cost of the MA plans’ pain points, specifically.

Joe Shannon, vice president of business development at HomeCentris Healthcare, emphasized the importance of providers highlighting their differentiators during these negotiations.

“If you’re talking about some of your data and it’s aligned with all of their other current partners, that might not be enough to move the needle,” he said during the discussion.

HomeCentris Healthcare is a 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.

One of HomeCentris Healthcare’s main MA strategies has been focusing on local and regional plans. This has allowed the company to have more face-to-face contact with decision makers.

“We’re looking for partners that aren’t just interested in membership growth and risk adjustment scores, but really folks that are looking at how we’re taking care of the patients all the way through, and really being able to change the trajectory of what’s going on with their members,” Shannon said. “We’ve had some success with local and regional [plans], having a lot of discussions, soup to nuts, about how we’re able to support their members.”

Similarly, Nash emphasized the importance of getting the right people at the table during these negotiations.

“Bringing the actuaries to the table — that’s going to be really important,” he said. “You need someone who’s got an all encompassing view of the MLR, not just the person who’s focusing on home health or [personal care services].”

Bentley believes it’s important for providers to remember that oftentimes they aren’t the priority of MA plans.

“Home health is not a top concern for Medicare Advantage plans,” he said. “They’re obsessed with hospitalizations. They’re obsessed with specialty drug costs and a few other things. That means the folks you’re negotiating with have a very narrow purview. The art of this is getting the right folks to the table without upsetting the contracting folks.”

In addition to actuaries, it’s important to get chief medical officers to the table.

“The only time we’ve seen success where home health organizations have been able to move into mutually beneficial, innovative contracts … is when you can find a chief medical officer who actually has purview into the business side of plans, or some something equivalent to a CMO who understands the clinical value of home health care,” Bentley said.

Shannon pointed out that in his company’s dealings with regional or local MA plans, there are less siloes between these various departments.

Once a provider is at the table it’s paramount that they come armed with information.

“It’s really understanding, how are those plans doing on their star ratings — that’s publicly available data,” Bentley said. “How are they doing on enrollment — that’s publicly available data. It’s really understanding those specific pain points.”

Home-based care providers are also in a position to tout their access.

“Access is a huge calling card for home health,” Bentley said. “It’s not just access, it is about taking these complex patients that are clogging up the hospital.”

Ultimately, Bentley advises providers to see the bigger picture.

“It’s being myopic around thinking, ‘Well, I’m just here to negotiate on home health, and it’s not having a bigger picture view of your impact on the Medicare Advantage members’ outcomes experience,’” he said. “It’s really understanding your bigger value prop.”

The post For Home Health Providers, Getting The ‘Right Person’ At The Table Is Crucial In Medicare Advantage Negotiations appeared first on Home Health Care News.

Humana CFO Susan Diamond said the company’s exit from those 13 markets would affect about 560,000 members, or around 10% of its individual MA membership base. Diamond did say, however, that she expects many of those members to join other Humana MA plans.

“The exit itself is positive in the sense that those plans were not contributing,” Diamond said at the conference. “If we do ultimately retain more of those members, that’s incrementally positive because the plan choices left behind are priced in a way that will be positively contributing.”

Diamond first teased this move earlier this year, after the Centers for Medicare & Medicaid Services (CMS) released its final rule for MA plans, which again included a net negative payment adjustment.

“As we think about the decisions for ‘25 bids, we do intend to exit some counties,” Diamond said at the time. “When we thought about the framework of how we make those decisions, a primary input was the profitability of the plan.”

After years of positive payment adjustments – and lower health care utilization costs during the pandemic – MA plans are now facing a harsher economic environment.

That has the chance to contribute to a “leveling off” of MA penetration, which has been steady over the last decade.

Centene Corp. (NYSE: CNC) also announced recently that it is set to pull back on MA in at least six states next year, as did BlueCross BlueShield.

For home health providers and home care providers, a tougher payment environment for MA plans could mean less leeway for higher rates for services.

At the same time, home health providers that believe subpar MA rates are a threat to their businesses could experience some respite in the near term.

The post Medicare Advantage Plans Are Contracting Heading Into 2025 appeared first on Home Health Care News.

Earlier this year, I had the chance to interview CenterWell President Sanjay Shetty on stage and off stage at the Digital Healthcare Innovation Summit in La Jolla, California.

Last month, at Home Health Care News’ FUTURE conference in Nashville, I did the same with Kirk Allen, the president of home solutions at Humana Inc. (NYSE: HUM).

Humana is one of the largest health care companies in the country. As a payer, it is one of the largest, particularly in Medicare Advantage (MA). As a provider, Humana’s CenterWell is also a powerhouse, with home health, pharmacy and primary care segments.

While MA plans and home health organizations are often at odds, Humana and UnitedHealth Group (NYSE: UNH) are in a unique position. They are the two largest MA administrators, and also own two of the largest home health providers in the country, in CenterWell Home Health and LHC Group, respectively.

When chatting with Shetty in February, he felt as though CenterWell could leverage that position on behalf of the entire home health industry.

“I think, hopefully, that proof point will help,” he told me. “We’re still probably in the early days, … but it’s been exciting because, again, we have a laboratory of actual patients, and actual opportunity to engage in the process. The fundamental thing is, how do we open up the opportunity for the home health agencies to pivot into a model that relies on value and results?”

Allen and I picked up that conversation where Shetty and I left off.

Humana’s goals within the home, and how they could affect the home health industry at large, are the topic of this week’s exclusive, members-only HHCN+ Update.

Proving the value

Some home health providers are queasy over large payers acquiring other top providers. But the best-case scenario for them would be for CenterWell Home Health, LHC Group and Amedisys Inc. (Nasdaq: AMED) to shine within Humana and UnitedHealth Group.

If they do, it could open the door for other home health providers to negotiate on higher ground with MA plans.

After all, those payers will always need more home health services than their own providers can supply.

Allen has been with Humana for seven years. He officially became the president of home solutions at the company in January.

As Shetty said, CenterWell Home Health is still early on in its quest to prove out home health care’s worth in a value-based context.

“My inclination is … I feel very, very confident that well performed home care – with an eye toward outcomes – will drive outsized results when it comes to quality, but also access and outcomes,” Shetty said. “I feel very confident because these are highly skilled staff in the home, who are really looking at the whole person and engaging with them in a different way than you ever could in the clinic.”

Allen explained that Humana has a near-term goal of treating 80,000 home health patients under a value-based model.

That model, while proprietary, could be a blueprint for future agreements between health plans and home health providers.

“Humana is in a unique position because of the investments that it has made, to measure and prove out the impact,” Allen told me. “And to do it in a way that represents home health, MA and physician practices. I do think that can have an impact on the industry, and that’s why we are so excited about this value-based model and the fact that we have committed to cover these 80,000 members.”

The 80,000 number, Allen believes, is a sufficient size and sample to prove the model out. If all goes well, the goal is to treat far more patients under the value-based model in the future.

“I do think that this can have an impact on payments in the industry at large,” Allen said.

How the model works

The value-based model is still Medicare-certified home health care. So, for instance, OASIS is still collected, and all the guardrails that other providers follow based on Centers for Medicare and Medicaid Services (CMS) direction will be followed by CenterWell Home Health.

But the freedom – and promise, ideally – comes elsewhere. Under the model, a Low-Utilization Payment Adjustment (LUPA) is not a concern, for instance.

“In our value-based construct between CenterWell Home Health, onehome and our primary care organization (PCO), there’s [an ability] to really focus on the patient and their needs at the center,” Allen said. “The PCO owns those patients, from a physician standpoint. We are the home health provider for those patients, so there’s not lots of different people involved. The first thing that occurs as a result of that is they know directly who to come to for home care, and we know directly who to go to for orders, right?”

On the PCO’s end, there’s physician “champions” that coordinate directly with home health care on the clinical side. That way, if the patient needs something, it’s delivered right away.

“The main thing is that both entities are completely responsible,” Allen said. “And it becomes about what the patient needs. And that’s what you deliver. You don’t have a sales function that you are running around. It’s more coordination of care and delivery of care than selling for care.”

The value-based model got up and running last November, and early indications are that hospitalizations are being reduced, according to Allen. More data will be available by year end, in all likelihood.

Humana has been focused on home-based care for more than a decade. Its test of value-based home health care may be one of its biggest initiatives yet, so much so that the company has publicly touted it on earnings calls in the past.

If everything goes accordingly, the new model will represent a major tailwind for Humana, CenterWell and specifically CenterWell Home Health.

CenterWell Home Health could then – as a payer-agnostic organization – turn around to other MA plans and show the true value of their services as well.

“We stay focused on providing value,” Allen said. “The thing that we’re most excited about is the proving out of our value-based model and the care that we deliver underneath.”

The post How CenterWell Can Prove Home Health Care’s Worth Within Humana appeared first on Home Health Care News.

The study sought to examine the connection between self-reported physically and mentally unhealthy days and health care costs among an MA population. One of the driving forces behind the study was Papa, a company that has a number of wide-ranging partnerships with MA plans.

“As a vendor, or a supplemental benefit, we’re in this tough position where we want to prove our value,” Kelsey McNamara, senior director of research at Papa, told Home Health Care News. “Our clients are asking us, how are you reducing medical costs? It’s rare that we have direct access to health care claims data, so we work hard with our partners to do studies and do claims-based analyses.”

Founded in 2017, Miami-based Papa is an in-home companionship platform that connects Papa Pals with older adults. Aside from companionship, Papa Pals provide seniors general assistance, including transportation services, light housekeeping and similar task-based help.

McNamara is one of the study’s authors.

The study looked at a regional Ohio-based MA plan that has partnered Papa to give its members access to companion care services. The MA plan has roughly 23,000 members.

These members were asked to report on their physical and mental health using the Center for Disease Control and Prevention’s (CDC)healthy days measure.

Overall, the study found that each additional unhealthy day a member reported was associated with an increase in 30-day medical costs – $60 for physically unhealthy days, and $34 for mentally unhealthy days.

“What that means is, if we can improve health-related quality of life and reduce the number of unhealthy days that people report, we can have confidence that we’re not only providing value to the members by improving their health related quality of life, but that we’re also providing value to our clients and health plans, that this is likely translating to a reduction in medical costs for our partners as well,” McNamara said.

This finding, of course, also is of note for traditional home care providers that interact with MA plans’ members.

McNamara noted that those eligible for the Medicare Low Income Subsidy were more likely to use companionship care.

“It just goes to show that people who are low income are roughly twice as likely to engage with a service like Papa, and it’s because they need it,” she said. “That was just a nice finding that helps make that even more clear.”

McNamara also pointed out that the study emphasized the need for industry alignment around measurement tools.

“In an ideal world, we would all be using similar tools, we’d all be using the CDC healthy days measure, so we can compare across our interventions and be able to clearly see the value that we’re all providing,” she said. “Right now, everybody uses a different approach, a different tool. Getting better alignment and using something like the CDC healthy days measure would be a real win for the entire industry.”

Ultimately, McNamara believes that it’s more important than ever for companies to prove their value to their MA plan partners.

“We’re in this period where health care utilization is going up,” she said. “Health plans have less money to spend. There are higher cost trends. SDOH industry companies, we really need to provide and show value. Members rely on us. We need to evaluate our outcomes and prove that we’re helping the people who have historically been left behind. We always say, ‘We can only improve what we measure.’ And we risk limiting our collective impact if we’re not all holding ourselves accountable.”

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Top home health leaders maintain that they’re operating in a space filled with “tons of opportunity.”

Payment uncertainty and other contemporary operating dynamics can muddy the waters, but there’s a way through those challenges, those leaders believe.

“I’m going to sound delusional,” Pinnacle Home Care CEO Shane Donaldson told me on stage last week at Home Health Care News’ FUTURE conference. “But I think [the home health industry] is in a great place for the future.”

At the conference, many of the same talking points were hit: Medicare Advantage (MA), fee-for-service rate cuts and staffing.

But providers are on the brink of their third straight year of rate cuts, and are about a decade into significant MA penetration in most cases. The staffing situation ebbs and flows, and providers are used to that, too.

As I talked to home health leaders in one-on-ones and on stage last week, I filled a whole page of notes related to what providers were bullish on.

Donaldson is bullish on the entire industry. Other leaders, too, are bullish – and offered specifics on where they feel like they can score some ‘wins’ in the near-term future to keep their patients happy and their margins healthy.

Those notes, quotes and other takeaways from last week’s FUTURE conference in Nashville, Tennessee, are the topic of this week’s exclusive, members-only HHCN+ Update.

Tons of opportunity

Pinnacle Home Care is one of the largest home health providers in the state of Florida. The New York-based HCS-Girling recently acquired Pinnacle, as both companies look to accelerate their growth goals.

At some point, Donaldson said that he believes HCS-Girling – along with Pinnacle – will have a home-based care footprint all along the East Coast.

Donaldson believes that home health providers will have the ability to optimize operations so much over the next few years that CMS will have to again consider large cuts to payment. He said it would be a “good problem to have.”

“I have a belief that in the not-too-distant future, if we take advantage of the current technologies, when we submit our cost reports, the problem we will have is that our margins are too high,” Donaldson said. “With artificial intelligence, robotic process automation, predictive analytics – all of these things that we have at our fingertips now are going to make life so much easier.”

Donaldson was essentially suggesting that margins will improve so much because of newly available technology that the Centers for Medicare & Medicaid Services (CMS) will again feel the need to chop rates.

Even if that sounds “delusional” – as Donaldson warned it would – many providers feel the same about certain technology advancements.

Take the aforementioned issues plaguing home health care. Scheduling is the leading cause of turnover in the industry, and there’s now AI solutions to address that. That improves retention, and, in turn, staffing. The same goes for AI that helps reduce clinicians’ documentation time.

Predictive analytics can help better manage patients with chronic conditions, which will help in the Home Health Value-Based Purchasing (HHVBP) and in value-based arrangements with other payers.

Those are just a few examples. And, of course, it won’t just be that easy.

But nearly every vendor was enthusiastic about these new offerings at the conference. This time, their enthusiasm was matched by providers.

By driving down operating costs, providers will also be better able to take on MA members that come with a lower – or currently non-existent – margin. Compassus CEO Mike Asselta suggested on stage that providers needed to go through some “maturation” before realizing all of the opportunity that lies ahead of them.

That mostly had to do with presenting value to payers, however.

In that arena, providers are already figuring out ways to better deal with payers, even if a better way is walking away from agreements entirely.

“I would suggest that providers really look at their [payer] strategy,” Interim HealthCare COO Rexanne Domico also said on stage. “What are the regional opportunities? What are other national opportunities? Where can you find that upside that’s not necessarily wholly dependent upon the big managed care providers? There’s some opportunity that’s still out there.”

Almost every provider still agrees that working with health plans in home health care is not easy.

But, anecdotally, providers told me that they’ve had a much better go at it when working with regionally focused plans.

“Some of our best partners are those regional partners,” Well Care Health COO Rebecca Higbee said on stage. “Those local partners where you can speak to the actual decision makers of the plan.”

Oftentimes, within national health plans, the decision makers on home health rates are siloed from the head decision makers. The rate setters are most interested in keeping costs down, while the head decision makers may see more home health access as a better long-term strategy.

That disconnect leads to snags in negotiations between national MA plans and home health providers.

“It’s really difficult when you’re speaking with large payers,” Higbee continued. “You’re not going to change their mind about the directives that they’ve been given. You’re not going to change their mind about the plan that they have laid out for the next quarter. But you can speak to the medical director of a local plan and really get their buy-in, in terms of the quality and the return for them.”

Domico also said that she believes there’s room for providers to get “more creative” in how they approach different payers, specifically around the presentation of home health care’s value.

A slew of leaders told me that they were encouraged by Enhabit’s (NYSE: EHAB) termination of its contract with UnitedHealthcare earlier this month.

Providers want to work with big payers, but they also need better rates – at least for now.

“I would just say that my heart was warm the other day when Enhabit walked away from the table with UHC,” Donaldson said. “I think that we’ll look back on that as being a significant event.”

The post ‘Opportunity Is Still Out There’: AI, Regional Payers And The Other Factors Exciting Home Health Leaders appeared first on Home Health Care News.