Current Payment Environment Puts Home Health Providers Between ‘A Rock And A Hard Place’

The second day of Home Health Care News’ FUTURE event began with an off-the-record breakfast conversation between HHCN+ subscribers.

To kick the day off, I decided to poll the room by asking, “Does anyone in here have a Medicare Advantage success story that they could share with us?”

The idea was to get a personal home care provider to detail its successes with supplemental benefits, or to get a home health provider to share its secret on garnering improved payment rates from an MA plan.

Instead, no one in the room – which was filled with 75 people or so – raised their hand.

It was an awkward, but telling, response from the audience – especially when the questionnaire was the author of a piece in August that suggested the tide was turning for home health providers on the MA front.

In reality, home-based care providers have made strides in their communication and contracts with some payers. It’s a nuanced discussion. A “success story,” however, was still a bridge too far.

Throughout the week – on stage and otherwise – home health providers really honed in on three top-of-mind topics, the first being those MA plan relationships. The others: the Centers for Medicare & Medicaid Services (CMS) proposed payment rule and the state of staffing.

This week’s members-only, exclusive HHCN+ Update highlights the most interesting comments made at FUTURE, and what they mean for the home health industry moving forward.

Not pulling punches

Every home health provider in the country would like higher fee-for-service rates from CMS. But not everyone is willing to fight for it, Healing Hands Healthcare CEO Summer Napier said at FUTURE.

“How many of you in this room had organizations that submitted comments [to CMS regarding the proposed rule]?” Napier said. “Just five of you. Okay, go around the room and punch everybody who didn’t raise their hand in the face.”

She made the comment in jest, but there was an underlying earnestness. She was disappointed in her colleagues who had not submitted comments, especially the small- to mid-sized operators that would be most impacted by another negative rate adjustment in 2024.

After all, the largest providers – which arguably have the least to lose over declining fee-for-service rates – all submitted comments.

“If I could raise a magic wand and change something, it would be that everybody – all of the stakeholders – would understand that we are in the fight of our lives as far as getting our reimbursement back where it needs to be,” Napier said.

The biggest issue with fee-for-service rates declining is not fee-for-service rates, however. It’s what else is out there – a larger slice of the pie dominated by MA, which pays far less for home health services than traditional Medicare.

Amedisys Inc. (Nasdaq: AMED) Chief Strategy Officer Nick Muscato and VitalCaring CEO April Anthony told me that some MA plans had not updated their home health payment rates for as many as five years.

That’s where Anthony directed her grievances.

“It’s frustrating to see where Medicare is going with their rates, and what they’re trying to do with clawbacks,” Anthony said on stage. “But, if one of our managed care partners came to us with those [traditional Medicare] rates, we would be jumping for joy. We’d be saying, ‘This is the greatest contract we could possibly hope for.’”

CMS is paying MA plans. They’ve also unintentionally subsidized those plans in the home health arena, allowing them to offer subpar rates while traditional Medicare keeps providers’ heads above water. Now that the agency has decided to cut rates, though, those providers are beginning to sink.

“I think that this rate environment is probably sticking around until the 2026 timeframe,” Anthony said. “I’ve been in this industry for almost 32 years now. I’ve lived through a lot of different cycles. And I know they do cycle. But I think we may be in a little bit of a down cycle for the next several years. We’re going to have to find ways to manage through that.”

Providers will remain between a rock and a hard place. The options are to: chase higher fee-for-service rates, while the amount of traditional Medicare enrollees declines; or chase the growing MA population and accept lower rates for services.

Either way, adjustments need to be made. Every provider is going to struggle – some a lot, some a little – over the next few years.

Even the large providers like Amedisys – which believed being a standalone company was the best option for its shareholders for years – changed course, listening to acquisition offers for years before finally accepting UnitedHealth Group’s (NYSE: UNH) bid.

If that deal is finalized, they’ll join LHC Group, which decided to accept a bid from UnitedHealth Group’s Optum, too, a year earlier.

Those larger home health companies exiting – and joining a company with the largest MA plan in the country – is a sign of the times.

“It’s always hard for me to fully separate LHC Group from the [home health] industry, because they kind of moved together in tandem,” Keith Myers, the CEO emeritus and chairman of LHC Group, and a senior advisor at Optum, said at FUTURE.

Myers was pointing to the growth and recognition that the home health industry and LHC Group experienced together. But it’s hard not to notice what else LHC Group’s recent exit might mean for the rest of the industry, too.

Greener pastures

In one way or another, everything comes back to staffing. Home health agencies cannot staff every case they’re being referred right now. They have to use their clinical capacity accordingly.

A lot of providers have told me that they’ve begun to prioritize certain patients based on the referral relationship or payer source behind that patient. Ultimately, though, they don’t want to have to pick and choose between patients at all.

Reimbursement is one way to help out with staffing. More reimbursement means higher wages for workers.

But another issue to hurdle is not tangible. It’s a stigma. And that is the feeling that the home setting is where nurses go when they’re near the end of their career – or “being put out to pasture,” when put more harshly.

Home health leaders see an opportunity in flipping that narrative.

“A lot of these nurses are experiencing a brutal environment in hospitals and they don’t want to do that anymore,” Choice Health At Home CEO David Jackson said at FUTURE. “Greener pastures are in home health. I think that’s our job, to consolidate our voices to get that message of recruitment out there.”

LHC Group has even partnered with nursing schools to bolster the home health staffing pipeline. Other home-based care providers have done the same.

Those partnerships increase the amount of home health-ready workers. But the early exposure to home health care also keeps workers away that may be more likely to turnover if they enter the space. It’s a recruitment and retention win.

“What this type of employment offers is oftentimes misunderstood,” Jeff Marsh, the chief growth officer of Compassus, said at FUTURE. “But we’re all competing for the same finite nursing resource. So, the one that becomes that employer of choice is the one that wins.”