On a Tuesday earnings call, Walgreens CEO Tim Wenworth – who took over as the company’s chief leader in October of last year – said the company would be “reorienting” its business to focus on retail pharmacy.

“WBA is reorienting to its legacy strength as a retail pharmacy-led company,” Wentworth said. “This reorientation allows us to leverage our key strategic assets of consumer trust, convenience and relevance. Our position of trust stems from the millions of face-to-face interactions our consumers have with our pharmacy personnel every day, and we will continue to take actions now – and for the long term – to be the first choice for retail pharmacy and health services. Having earned our consumers’ trust – indeed, our reason to exist – we also want to be accessible and convenient, but we need to be appropriately sized.”

Wentworth said that of Walgreens’ over 8,000 stores, around 6,000 are profitable. With that in mind, and in order to be “appropriately sized,” the company is closing a majority of the stores that are not profitable.

That is part of an effort to balance its budget sheet, too. Its reorientation to retail pharmacy follows a strategic review of assets, which took place earlier this year after Wentworth took the helm.

Walgreens has poured over $6 billion into the home- and community-focused primary care provider VillageMD, but has recently reduced the latter’s physical footprint. VillageMD is a part of Walgreens’ U.S. Healthcare segment, which also includes the post-acute care platform CareCentrix.

While health care services and the U.S. Healthcare segment were emphasized as priorities moving forward in 2021 and 2022, Walgreens now appears to be moving away from that – for the most part.

“We believe our reorientation to retail pharmacy has a bright future,” Wentworth said. “We’re engaging in a multi-year program with a long-term goal of an appropriately sized and well positioned fleet of stores, and an industry-leading customer experience in both retail and pharmacy across consumer channels. And we continue to believe that the adjacent strategic businesses in which we’ve invested can incrementally contribute to value creation over the longer term.”

Wentworth also called VillageMD “not a crucial part of the business moving forward.”

Walgreens’ peer, CVS Health (NYSE: CVS), has also experienced financial turbulence of late, after heavily investing in health care services over the last few years. While Walgreens has VillageMD and CareCentrix, CVS Health has Oak Street Health and the home-focused, value-based care platform Signify Health.

Overall, the strategic decision to focus more on health care services after the height of the COVID-19 pandemic has not gone smoothly for either company.

“Many of our actions across this turnaround will take time, but I am confident that we have the right team, the right focus and the right strategy,” Wentworth said.

Overall, Walgreens’ fourth quarter sales increased 6% year over year to $37.5 billion. Fourth quarter operating losses, however, totaled $978 million.

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Michael Martin, VP of network management at tango, has been named a 2024 Future Leader by Home Health Care News.

To become a Future Leader, an individual is nominated by their peers. The candidate must be a high-performing employee who is 40 years old or younger, a passionate worker who knows how to put vision into action, and an advocate for seniors, and the committed professionals who ensure their wellbeing.

Martin sat down with Home Health Care News to discuss how reimbursement structures can positively change the future of home health care.

What drew you to this industry?

My mother has worked for post-acute and home health companies for several decades. I was exposed to that at a very early age.

So when I came of age and was able to come around her office, I got a chance to get additional exposure that way. I always had just an understanding of the health care industry, specifically the post-acute industry, through her. After college, I kind of experimented in sales and a few other industries, but I just fell back on what I knew, which was home health. And so my first job, my first real salary position, was working for a home health company. And my career took off from there.

What’s your biggest lesson learned since starting to work in this industry?

The biggest lesson that I’ve learned is that if you are wanting to transform the way providers service their members, I think you have to take a hard look at how they’re reimbursed.

Sitting on this side, where I oversee a network of providers, it’s really important that the way we reimburse providers shifts behaviors towards outcomes versus anything else. I learned that lesson working for VillageCare, where I oversaw their bundled payment program, and I just watched how that transformed the entire facility. I helped manage that program on their behalf, and at the time, I think they were managing about 11 bundles.

And you just saw how a capitated payment model, where you’re taking full risk, changes things. You see discharge, length of stay drop. You see partnerships in the community improve, things like starting the discharge planning process at the point of admission became a familiar sight. And it improved outcomes in a major way.

If you could change one thing with an eye toward the future of home health care, what would it be?

I would change the way providers are reimbursed. If I could, I would orient them all to ideally a full-risk arrangement, and at the very least, an upside arrangement, where they’re getting bonuses based on the value that they’re creating.

In a word, how would you describe the future of home health care?

Bright.

What quality must all Future Leaders possess?

I think it’s multifaceted, but I would say patience and empathy, those are incredibly important. It’s important that we have diverse backgrounds. I think that although the future is bright, we live in a very fragmented environment. And I think that just health care in general is very complicated for the common person. It’s also very dynamic and complicated to health care professionals.

It’s changing all the time, and if you get too lax, you get left behind. Leaders that are at the forefront of this, that are able to keep up, and frankly, pave new paths, have to have the patience to bring everyone else up to speed. And part of that is being empathetic about not only your team, but your clients, your partners in the community – putting yourself in their shoes. That’s vital for any sort of innovation.

To learn more about the Future Leaders program, visit https://futureleaders.agingmedia.com/. 

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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.

Taylor Abo-Hamzy, chief strategy officer at Care2U, has been named a 2024 Future Leader by Home Health Care News.

To become a Future Leader, an individual is nominated by their peers. The candidate must be a high-performing employee who is 40 years old or younger, a passionate worker who knows how to put vision into action, and an advocate for seniors, and the committed professionals who ensure their wellbeing.

Abo-Hamzy sat down with Home Health Care News to talk about the emerging home-based care models that will be driving the health care-to-home trend in the future.

What drew you to this industry?

My journey into the home care industry has been shaped by several pivotal experiences that underscored the need for a more patient-centered approach to health care. As a Physician Assistant (PA-C), I often heard my patients express dissatisfaction with their hospital experiences. These conversations revealed a critical gap in care and motivated me to seek alternatives that prioritize comfort and accessibility.

In my leadership role at a large independent physician association (IPA), I developed and oversaw the quality and risk programs for our value-based care model, gaining valuable insights into the complexities of health care delivery. Recognizing that many patients could greatly benefit from receiving high-acuity, hospital-level care in their homes, I collaborated with BCBS of NY to develop a new clinical pathway, High-Intensity Physician-Led Advanced Care at Home (HIPLAC). HIPLAC allows individuals with home-sensitive acute illnesses, typically requiring hospitalization, to receive physician-led, hospital-level care in the comfort of their homes without ever setting foot in a hospital.

The development of HIPLAC became deeply personal, a pet project of sorts, that fully captivated me. With the project being so personal and impactful, I had to see it through. I ultimately joined Care2U, the leading provider of high-acuity care in the home in New York. By joining Care2U, I’ve been able to see my vision of creating a new clinical pathway from conception to reality.

By offering patients greater freedom of choice in their healthcare options, we’ve simultaneously established more sustainable acute care pathways for an already cost-ridden health care system, a win-win for all.

Ultimately, I believe home care represents the future of health care. It enhances patient satisfaction and fosters a holistic approach to health management, emphasizing the importance of patient preference and quality in care delivery. With home care being the next frontier of health care, I could not be more excited to be part of this movement.

What’s your biggest lesson learned since starting to work in this industry?

Adaptability is paramount. Maintaining a patient-centered approach, staying informed and maintaining flexibility are all essential components that drive impactful outcomes in a world where the health care landscape – especially in home care – is constantly evolving with technological advancements, patient needs and shifts in regulation.

If you could change one thing with an eye toward the future of home care, what would it be?

If I could change one thing, it would be the expansion of reimbursement models to more broadly support high-acuity, physician-led care in the home (including Urgent Care/ED Care in the Home, Observation at Home and Hospital at Home).

Although value-based care is progressing, traditional reimbursement structures still heavily favor facility-based care. Adjusting these models to prioritize and incentivize high-acuity care in the home would empower more patients to access hospital-level care in the comfort of their own homes, ultimately driving down health care costs and improving outcomes.

What do you foresee as being different about the home care industry looking ahead to 2025?

The implementation and cost ramifications of the Home Health Value-Based Purchasing (HHVBP) model will play a crucial role in shaping the industry by incentivizing certified agencies to dedicate more focus on quality outcomes.

This shift presents both challenges and opportunities that will require innovation. I expect home care to become much more integrated with advanced technology including remote patient monitoring, telemedicine, and AI-driven care management systems to strengthen the impact and accessibility of preventive care, while utilizing models like Care2U to help reduce readmissions and escalations.

In a word, how would you describe the future of home care?

Empowering.

What quality must all Future Leaders possess?

Vision.

Future leaders in health care must have the ability to see beyond the present challenges – whether it’s navigating policy changes, evolving payment models like HHVBP, or integrating new technologies – to focus on creating innovative, patient-centered solutions. Visionary leaders are adaptable, capable of fostering collaboration across sectors, and resilient in driving long-term change that empowers both patients and the health care system. Vision is what enables leaders to transform ideas into action and lead the industry toward a more sustainable, accessible future.

To learn more about the Future Leaders program, visit https://futureleaders.agingmedia.com/. 

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Thomas Sowers, vice president of community supports at 24 Hour Home Care, has been named a 2024 Future Leader by Home Health Care News.

To become a Future Leader, an individual is nominated by their peers. The candidate must be a high-performing employee who is 40 years old or younger, a passionate worker who knows how to put vision into action, and an advocate for seniors, and the committed professionals who ensure their wellbeing.

Sowers sat down with Home Health Care News to talk about how home care providers can start acting as “speed boats,” and not cruise ships, as they navigate change.

What drew you to this industry?

I was drawn to the caregiving industry as a result of a personal experience watching my grandfather navigate a chronic illness and ultimately be on the receiving end of care. My aunt (his daughter) was his caregiver and I quickly realized the value and importance of the family caregiver.

That led me to explore the industry and ultimately to 24 Hour Home Care where I have spent the past 10 years in the pursuit to radically improve the caregiving experience for the care recipient, caregiver and the community.

What’s your biggest lesson learned since starting to work in this industry?

One key lesson learned was balancing empathy with resilience. Caregiving requires deep compassion for both the care recipients and the tactical teams that support the delivery of excellent care, but over the years, I’ve realized that resilience is just as important.

Supporting people through tough times, like during the pandemic or in times of unexpected change, means staying compassionate while also helping teams remain strong, adaptable, and able to solve complex problems. This balance has allowed me to create an environment within my teams where we can make a meaningful impact even in the face of challenges.

If you could change one thing with an eye toward the future of home care, what would it be?

Drive laser-focus on the people – whether it’s the care recipient, caregiver or community – by providing simple, intuitive tools that deliver the information and solutions they need, when and how they need them. By making these tools easy to use and accessible, we can make the care delivery process frictionless, allowing families and caregivers to focus on what truly matters: giving and receiving care.

This would create a seamless experience that supports meaningful, person-centered interactions, empowering everyone involved to leverage their skills to make the biggest possible impact.

What do you foresee as being different about the home care industry looking ahead to 2025?

I think sometimes as an overall industry we can operate a bit like a cruise ship, slow to change course.

However, in 2025 and beyond, I think we’ll see some organizations operating more like speed boats. In my opinion, the next few years are going to be pivotal in defining the future state of the industry and that organizations should aim to be as agile as possible to capture the moment.

We need to embrace new tools that can radically redefine the ways in which we conduct and operate our businesses and impact more people.

In a word, how would you describe the future of home care?

Dynamic.

What quality must all Future Leaders possess?

Grit.

Grit is a critical trait because it fosters perseverance and resilience in navigating challenges. As industries evolve, leaders with grit will embrace change, drive innovation and inspire their teams to stay committed to a dynamic vision of the future. This determination not only helps them overcome obstacles but also cultivates a positive culture that encourages creativity and adaptability. In a rapidly changing world, grit is essential for leading effectively and shaping success.

To learn more about the Future Leaders program, visit https://futureleaders.agingmedia.com/. 

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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.

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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).

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The biggest retailers were zealous in their pursuit of home-based health care initiatives. But there’s little evidence to suggest that pursuit has been successful, at least thus far.

This week, CVS Health (NYSE: CVS) announced that it was laying off 2,900 workers. Simultaneously, reports surfaced of Glenview Capital – a significant shareholder in the company – emerging as an activist investor.

Reuters then reported that CVS Health is exploring a potential breakup of its business. CVS Health has multiple segments, including retail, pharmacy, insurance through Aetna and health care services.

Health care services is where the company took a stab at home-based health care for the first time. In addition to acquiring the community- and senior-focused primary care provider Oak Street Health for over $10 billion last year, it also acquired the home-focused value-based care platform Signify Health for $8 billion.

“CVS’ management team and Board of Directors are continually exploring ways to create shareholder value,” a CVS spokesperson told Reuters. “We remain focused on driving performance and delivering high quality healthcare products and services enabled by our unmatched scale and integrated model.”

For payers, investors and retailers alike, home-based care looked like a worthwhile frontier to explore during the pandemic. For retailers like CVS Health and Walgreens Boots Alliance (Nasdaq: WBA) specifically, their success administering the COVID-19 vaccine to Americans gave them hope that community-based health care would be a somewhat smooth path forward.

That has not been the case, for Walgreens, CVS Health, or a slew of others.

In this week’s exclusive, members-only HHCN+ Update, I revisit the plight of retailers delving into home-based care, and consider who will be the beneficiaries of health care moving to the home.

Support in the home

The overarching idea is simple. The United States has an aging population, and more seniors than ever want to receive their health care in the home.

Plus, home-based health care tends to be cheaper than facility-based care. Traditional personal care services enable seniors to age in place and prevent further health problems related to activities of daily living struggles. Home health care ensures smooth transitions home from the hospital, keeping patients out of more costly brick-and-mortar settings.

Other home-based care is becoming popular too. Home-based care for younger Americans. Skilled nursing facility care in the home (SNF at Home). Hospital-at-home care. Primary care at home. Oncology care at home. Kidney care at home. In-home health assessments and evaluations.

Broadly, these types of care are more consumer-focused, a departure from the care that forced Americans to uproot their lives for a day, week or even months to receive the health care they needed.

For the sake of designation, I refer to Medicare-certified home health care and personal care services – through Medicaid, private pay or the VA – as “traditional” home-based care services.

As more non-traditional at-home care has proliferated, there was some sense of concern from traditional providers that more cash-strapped entities could disrupt two long standing industries.

That still could be the case, as home health and home care providers tend to be – on average – behind the curve on technology and future-facing business practices.

But in the last quarter of 2024, that disruption doesn’t seem any closer than it did in 2019.

Walmart (NYSE: WMT), which wanted to “support people aging in their homes,” has largely ditched its health care services plan. Amazon launched Amazon Care – which had an at-home care component – and then did away with it shortly thereafter. Best Buy (NYSE: BBY) is still mostly smooth sailing, but it intended from the start to be a technology partner more than anything.

Then there’s CVS Health and Walgreens, which both made massive bets – strategically and monetarily – on health care services.

Both began to shrink their retail footprints, hoping to become more health care providers than corner stores.

Walgreens invested over $6 billion in VillageMD, another home- and community-focused primary care provider. It also acquired CareCentrix, a post-acute technology company. An affiliate of the company was also a significant backer of BrightSpring Health Services (Nasdaq: BTSG), one of the largest home-based care providers in the country.

But then, earlier this year, CEO Tim Wentworth announced that the company would be undergoing a “strategic review of its assets.”

“We are now meaningfully looking at the entire portfolio of assets that we have to ensure that everything we have is going to drive the growth that we aspire to deliver,” he said at the time.

The company shuttered 160 VillageMD locations after aggressively expanding in years prior.

The investment firm KKR also acquired Walgreens’ remaining shares in BrightSpring.

Both CVS and Walgreens have had multiple leaders look over their health care divisions over a short period of time.

While CVS owns Oak Street Health and Signify Health – a similar portfolio to Walgreens’ backing of VillageMD and CareCentrix – it also purchased Aetna for $70 billion back in 2018.

Aetna’s leader was also recently ousted by CVS Health.

While Glenview Capital – the rumored activist investor – said it was not pushing for a breakup of the company, other news outlets reported that CVS’ board has already discussed that option.

Not long ago, CVS Health was considered a potential buyer for some of the remaining standalone home health companies. It had an obvious interest in home-based care, and also owned Aetna. Humana Inc. (NYSE: HUM) and UnitedHealth Group (NYSE: UNH), two of Aetna’s top competitors, own home health assets of their own.

“I think, over time, we’ll look at what other assets [we need],” CVS Health CEO Karen Lynch said in 2023. “As you think longer-term, around the corner, there might be additional opportunities in the home.”

Now that idea appears to be off the table.

Walgreens and CVS Health both wanted to become health care services players, and they are. Thus far, though, they’ve stumbled. They are not yet successful players, nor successful home-based care players.

What it all means

Legacy home-based care providers love the industries they’re in, and they know there’s plenty of future opportunity.

But they also know all the challenges that come along with reaching that opportunity: staffing woes; the delicate intimacy of providing care in the home; turbulent payment environments; and the barriers to growth and scale.

There are over 10,000 home health agencies in the U.S., while there are more than 30,000 home care agencies, according to best estimates.

Consolidation has been projected for more than a decade, but has never come in a significant way.

Payers like Humana and UnitedHealth Group own two of the largest home health companies in the country in CenterWell Home Health and LHC Group. But that still only grants them access to a small slice of the home health pie.

For instance, after UnitedHealth Group acquired LHC Group, it then agreed to purchase Amedisys Inc. (Nasdaq: AMED), another one of the top home health providers. But even with both agencies under its belt, the company will likely have less than 10% of market share in the industry.

There is more startup activity in home health care and home care than ever. A couple of those businesses may have a shot at disrupting.

But, for now, the large health care companies taking a shot at home-based care have failed to make waves.

That could be because of their size, or because of the complexities that come with delivering good home-based care.

Either way, for now, most of the opportunity that lies ahead still remains for the taking. And the legacy operators have as good of a chance as anyone to capitalize.

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Specifically, Edison Home Health Care of New York and Preferred Home Healthcare of New York allegedly failed to pay full wages and benefits to over 25,000 workers, according to the New York State Attorney General’s office.

The two agencies and their former operators will pay $7.5 million out to the over 25,000 workers. They will also pay $9.75 million back to Medicaid. It represents the largest wage parity settlement ever secured by the Office of the Attorney General and the Eastern District of New York.

Help at Home acquired both Edison Home Health Care and Preferred Home Healthcare in 2022, but a spokesperson for the company told Home Health Care News that the violations occurred prior to the acquisition.

“Home health aides provide crucial care to our most vulnerable neighbors and loved ones, and they deserve to be paid for their hard work,” James said in a statement. “Edison and Preferred cheated employees out of years of pay and cheated New York taxpayers by defrauding Medicaid for their own benefit. This is a tremendous victory for our ongoing efforts to protect hardworking New Yorkers’ rightfully earned wages.”

The New York Wage Parity Act, which was established in 2012, “was created to ensure home health aides receive fair compensation and benefits for their hard work,” a press release on the settlement read.

The investigation found that the two agencies failed to pay workers the full benefits they were owed under the Wage Parity Act, instead using those funds to purchase medical “stop loss” insurance, “which is a type of insurance that acts as a safety net for employers that are paying for their employees’ medical claims.”

What’s more, “individuals and entities” related to the two agencies received millions of dollars in dividend payments from that insurance, which “effectively served as a means of siphoning away funds intended for employees.”

“Edison and Preferred then continued to seek and receive payments from Medicaid for care performed by home health aides, while falsely representing that they were in compliance with the Wage Parity Act,” the release read.

As part of the settlement, Edison Home Health Care and Preferred Home Healthcare will revise company policies and procedures. They will also “regularly report staff wages and policy implementations” to the attorney general’s office for three years.

If the agencies fall out of compliance, the attorney general has the authority to bring further civil action against them.

Of the $9.75 million that will be paid out to Medicaid, $5.85 million will go to New York state. The other $3.9 million will go to the federal government.

“Home health aides work long hours at difficult, often thankless tasks to ensure that the vulnerable individuals who they provide services to are properly cared for,” Peace said in a statement. “These aides deserve the hard-earned benefits guaranteed to them under the law and my office will ensure that they are accurately compensated.”

In acquiring Edison Home Health Care and Preferred Home Healthcare, Help at Home made an entrance into New York for the first time.

The acquisitions added 10,500 new clients and 12,000 new employees to the company’s portfolio.

“As the leading provider of high-quality, Medicaid home- and community-based services, Help at Home has a 50-year history providing high quality, in-home personal care services in the communities we serve,” Help at Home told Home Health Care News in a statement. “The matter outlined in the agreements took place prior to the 2022 acquisition of Preferred Home Care of NY and Edison Home Health Care. We approached these matters with the utmost seriousness, implementing new rigorous protocols and benefit compliance processes, ensuring the companies met and continue to meet Help at Home’s best-in-class standards. We remain committed to our deep-rooted ‘caring for the caregiver’ culture and providing person-centered care that enables our clients to live as independently as possible in their own homes.”

Based in Chicago, Help at Home provides home- and community-based services (HCBS) to over 70,000 clients monthly across 11 states and more than 200 locations.

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CVS Health leaders reportedly met with Glenview Capital – the rumored activist investor – on Monday to discuss ways to “improve operations,” according to The Wall Street Journal.

Year over year, CVS stock is down close to 10%. Year to date, however, the retail giant’s stock is down over 20%.

The company also announced Monday that it would be laying off 2,900 workers, with most of those being corporate positions.

In the wake of COVID-19, CVS Health began to switch its business strategy, as did its peer, Walgreens Boots Alliance (Nasdaq: WBA).

Both companies decided to dive further into health care services, partly because of the success they had as vaccine administrators during the pandemic. CVS Health acquired the primary care provider Oak Street Health last year, as well as the home-focused value-based care platform Signify Health. In total, those acquisitions cost CVS $18 billion.

Those businesses help make up CVS Health’s health care services arm, which is dubbed CVS Healthspire.

On its most recent earnings call, CVS President and CEO Karen Lynch reaffirmed commitment to that segment moving forward.

“We are committed to delivering value every day to our clients and our members,” Lynch said. “In our health care delivery business, we are driving meaningful progress connecting patients to health services across all of our channels, primary and acute care, health services in the home, and clinical programs.”

CVS Health also owns Aetna, one of the largest insurers in the country. Aetna President Brian Kane was removed from his post last month, after less than a year on the job.

As of Monday, it wasn’t clear what Glenview Capital would be urging CVS Health to do moving forward. The company is a New York-based hedge fund.

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