Home Health Provider Leaders Reject ‘Sky Is Falling’ Narrative Post-Proposed Rule

After another poor proposed payment rule from the Centers for Medicare & Medicaid Services (CMS), home health leaders are trying to focus on the positive parts of the business they’ve chosen to be be a part of.

Virtually none of those leaders believe anything positive is coming from the proposed payment rule itself, or from the final rule – which set to come out around Halloween – for that matter. But there’s a recognition now that solely focusing on CMS’ rate setting is not a winning strategy long term.

“We need to have long-term investments in our people strategies, in our managed care relationships and in having sound, compliant and efficient operations,” Well Care Health CEO Zac Long said during a panel at the National Association for Home Care & Hospice’s (NAHC) Financial Management Conference Monday. “I think we’ve got to continue to invest in the long term. We can view this proposed rule as a sky-is-falling scenario. I view it as just another reason, and a reinforcing reason, why we need to go the direction we’re going.”

The Wilmington, North Carolina-based Well Care Health cares for over 21,000 patients across 69 counties. It offers home health, home care, hospice and pediatric care services.

Frontpoint Health CEO Brent Korte struck a similar tone, again publicly arguing that many home health providers need to fundamentally change their business models, whether CMS goes back on proposed rate cuts or not.

Based in Dallas, Frontpoint is a home health and hospice company that specifically tailors its business model to take on Medicare Advantage (MA) patients, which are quickly becoming the dominant group among Medicare beneficiaries.

“A one-point decrease in Medicare feels catastrophic,” Korte said. “But what’s bigger than that is the fact that right in front of our faces, we are [seeing] that those patients are going to become a minority. As an industry, for us to assume that we can keep competing and saying, ‘We need 85% to 90% of our patients from Medicare,’ that doesn’t seem like sound strategy.”

Korte acknowledged that the MA rates Frontpoint receives for its delivery of home health services are still not great. But, because Frontpoint was structured to take on MA patients – and not primarily Medicare fee-for-service patients – its able to enjoy a “healthy gross profit margin.”

For home health providers large and small, a pivot to MA patients is a tall task. Even with cuts, Medicare fee-for-service rates are still generally far higher than what MA plans are paying across the country.

A full pivot to a model like Frontpoint’s may not be possible. But it is possible to acknowledge that Medicare fee for service won’t represent the sturdy base to stand on for providers anymore.

It’s also possible for providers to become more selective. To take on more traditional Medicare patients, but also to take on more MA patients from plans that are willing to pay acceptable rates for services.

“We’re going to see providers have to be more and more selective with the referrals that they accept,” Long said. “Access to care is going to be impacted by that, … and that’s already a real issue today. So, I do also think we’ve got to have a real strategy as an industry to work through that.”

Access-to-care issues are bad for the patients, a tough reality for providers to grapple with. But a reduction in home health care access also theoretically will increase post-acute care spend for those MA plans, which could lead to better rates.

That’s something that one of the largest home health providers in the country, Enhabit Inc. (NYSE: EHAB), has had to navigate. But Enhabit CEO Barb Jacobsmeyer recently said that reduced access to home health services has forced MA plans to take negotiations “more seriously.”

In Korte’s opinion, the payment cuts’ effect on home health providers will be a symptom of the problem, but not the underlying problem itself.

“That shadow behind this is the proposed rule,” Korte said. “But the problem, in my mind, is what we all have been woefully prepared for. In spite of the fact that there’s more home health patients than in any time in history right now, we are competing for this scarce resource – [the traditional Medicare patient]. And our business models are not meant to allow us to accept Medicare Advantage.”

The value is still there

Part of what enables provider leaders to keep a glass-half-full mindset is the focus on the home in health care right now.

UnitedHealth Group (NYSE: UNH) is not just one of the largest health care companies in the country, but one of the largest companies period. It acquired LHC Group last year, and is in the process of trying to acquire another home health company in Amedisys (Nasdaq: AMED). Clearly, it sees value in home health services moving forward.

For what it’s worth, NAHC President William A. Dombi also told Home Health Care News that UnitedHealth Group and Optum have already joined in on home health advocacy efforts.

“I would say I think that the last three years have certainly weighed raised awareness of what we do and the value of the care that we provide,” Jennifer Sheets, the former CEO of Interim HealthCare, said on the panel. “But progress comes with challenges, and we certainly have been in the midst of several challenges of late.”

One of the ways to get through rate challenges is value-based care, a concept most home health providers have increased focus on over the last couple of years.

At CenterWell Home Health – which is a part of Humana Inc. (NYSE: HUM) – it’s the “no. 1 priority,” according to its president, Susan Benoit.

“We are just like every other home health company in this room, we’re feeling the effects of the decline of traditional Medicare,” Benoit said. “We have been challenged to move to value-based care very quickly. … Our goal is, by 2025, to have 40% of Humana members that [receive] home health to do so under a value-based care model.”

Treating patients under value-based care models is a potential way to sidestep rate cuts. On CenterWell’s end, it is developing a value-based clinical model that will treat home health patients differently than in the past.

“How do we use automation, and how do we use more data analytics?” Benoit continued. “And how do we identify those high risk patients to keep them out of the hospital?”

Though Humana is also has one of the largest MA plans under its belt, Benoit suggested that does not absolve CenterWell from all MA-related home health problems.

But she – and others on the panel – do see a way for MA plans and home health providers to have more harmonious relationships moving forward, with the patient in mind.

“I think at the end of the day, there’s so much gravity, so much commonality and interest between [MA plans and providers],” Long said. “There’s alignment between those two groups and ways that we can help each other. I can’t help but be long-term optimistic about that broader direction.”