Home care providers are facing an increasing challenge of maintaining healthy margins in today's reimbursement situation. Nevertheless, accurate cost reporting, disciplined payer relationships, and operational efficiency have proven to be one of the essential strategies to overcome these challenges.
Home care industry leaders say these strategies are key to navigating the growing financial burden caused by rising labor costs, growing Medicare advantage (MA), and stagnant traditional Medicare reimbursement rates.
Jason Growe, CEO of Livewell Partners, said on Capital + Strategy Event, home healthcare news. “It starts with building a great clinical team that provides excellent quality care and there are several different layers to it.”
Livewell Partners is a home health and hospice provider headquartered in St. Louis. The company operates in St. Louis, Kansas City, Wichita, Kansas, Detroit and Cincinnati.
One of these layers is providing quality care to referral partners so that Livewell can achieve the desired payer mix, Growe explained. The other is the ability to deploy the necessary forms of direct labor and the appropriate timely delivery of the necessary clinicians.
According to Growe, Livewell's payer mix is a combination of 75% traditional Medicare and personal episode contracts and a 25% visit rate. The CEO wants to maintain that balance, but said that the evolution of Medicare advantage (MA) could lead the company to move further into episodes and traditional Medicare.
“We acknowledge that it's not important to all payers, so we focus on how to choose the right payer and move forward those relationships based on quality and mutual evaluation,” he said.
Growe said being an agnostic payer is an ambitious goal, but the reality is that not all payer relationships generate equal profits. According to Growe, a more valuable pursuit considers admission to payers who cannot provide the right fee, balancing admission between traditional Medicare and other contracts.
While MA reimbursement rates have caused confusion among home care providers, some providers have found healthy margins for MA rates.
Joe Shannon, Vice President of Business Development at Homecentris Healthcare, said his organization has been successful in local and local MA plans, particularly with its private personal care services line. In contrast to national planning, local and regional planning allows providers to establish relationships with referrals and payers more easily, allowing organizations to act as their first contact when care is needed.
“The (private obligation personal care service line) is heavy Medicaid, so we're talking about their double-qualified patient population,” he said. “Can you have an impact on that population not only on the skilled home health side, but on the personal care side? We know these people, so we're not just talking about contracted fees because they're local and regional.”
Homecentris Healthcare is a portfolio of companies based in Owings Mills, Maryland, offering a range of home care services, including home health, personal care and therapy services.
Advocate for an appropriate refund
While providers are trying to creatively address reimbursement rates, National Care at Home at Care (Alliance) is working with members of the Centers for Medicare and Medicaid Services (CMS) and Congress. The alliance's aim is to help policymakers see margins and benefits through a more holistic lens, rather than focusing solely on Medicare fees, Scott Levy said he is the top government head.
“We're trying to change that narrative, so we know that our members of healthcare providers deal with all Medicare beneficiaries, whether it's a service fee or a Medicare advantage,” he said. “They also need a refund of service fees to pay for everything on the Medicare Advantage Side, to have it or increase.”
Levy said the Alliance is working with a larger MA plan to understand the various contract elements because “when you saw one MA contract, you saw one.” Levy said that while some MA planning leadership aims to create value and recognize the value of home care, others focus only on post-acute care.
“Congress lacks information on how Medicare advantage interacts with home care,” he said. “They see the advantage of Medicare, and there is normal network validity (assuming there is one). But there is no network validity in home health. We need to make them realize that it doesn't exist.”
According to Levy, advisory bodies like the Medicare Payment Advisory Committee (MEDPAC) do not own as much data as they believe in much of the industry's data, and most of their analysis relies on cost reports. Therefore, if the agent fails to submit an accurate cost report, it could negatively affect the refund rate.
“That's when they switched to (Patient-Driven Grouping Model) (PDGM) and moved from (BLS) data to the set rate cost report,” he said. “I don't want to say that that's the fundamental aspect of that transition of the rules that came out that year and that all the other major changes have happened, but that's what providers use to set the base rate, so it needs to be carefully considered by providers to ensure that they submit and account for all of the cost reports accurately.”
Negotiation Strategy
As for MA, according to Growe, there are ways to negotiate fees that are beneficial to both providers and plans.
“In a way, this is the sales business,” he said. “This is a long-term long-term sales cycle in that we can develop relationships with the right people and have conversations about the services we provide and the quality we provide. Then, over time, we can understand what is important to them.”
Shannon stressed and agreed that maintaining relationships with individuals who are familiar with the business and organization is extremely important. He advised the organization to communicate regularly with these referrals, allowing them to know who to contact when seeking care for their members.
Growe acknowledged that much of Livewell's market is dominated by hospital systems, and many of these systems have their own home healthcare and hospice providers. But that doesn't discourage him from building a relationship with them and letting Livewell know that he wants to be their “second first choice.”
“If we can provide quality care, we can be very responsive when we receive a referral on a Friday afternoon, and if we have a great patient experience and the payer is flexible, we can unlock the door over time, reaching the right person and have a conversation,” he said. “It goes back to building an incredible clinical team that offers great results and experience.”
