As Medicare Advantage (MA) continues to rise rapidly, nonprofit home health companies are being forced to move away from certain care plans and tackle unsustainable reimbursement rates.
Non-profit home care providers are increasingly struggling to absorb the financial losses associated with Medicare Advantage (MA) plans. Unlike large, for-profit organizations with scale and negotiation leverage, many nonprofit organizations lack the resources to negotiate with payers and increase their reimbursement rates. As a result, they reassessed payer relationships, exploring innovative operational strategies that continue to be financially viable while leveraging community support and serving vulnerable groups.
“A small number of payers will refund us with Medicare fees, but some don't cover our costs. There's no more Medicare overload offsetting losses from these plans.” “It's hard to float if the MA plan doesn't cover patient costs.”
Based in Gardner, Massachusetts, Care Central VNA & Hospice Inc. offers a comprehensive range of services, including skilled nursing, rehabilitation therapy, and medical social work.
As of 2024, 32.8 million people were enrolled in the MA plan, accounting for 54% of the eligible Medicare population, according to KFF data.
According to Chaffee, the Care Central patient population consists of approximately 43% Medicare and 57% MA.
Increased penetration of MA is exacerbated by the struggle to negotiate with a health plan.
“All companies that are open to public have the ability and team to focus on negotiating with payers,” Atlanta CEO Dorothy Davis told HHCN, who visited the nurses' health system. “It takes scale to get in the door. Does providers like visiting nurses even pay enough attention to have meaningful conversations with payers?”
Founded in 1948, the Visiting Nurses Health System carries over 15,000 patients each year in 57 counties, providing solutions for at-home health care and aging.
Chaffee noted that as a result of the low interest rate, some home care agencies have ended their contracts with MA plans due to lower reimbursement rates.
“We are in an independent network (VNAS) that is negotiating contracts,” she said. “We have reached the point of ending patient care under a specific plan because (the payer) has not refunded us to properly or effectively cover the costs and are no longer able to maintain the losses we are suffering.”
Similarly, even for-profit institutions like New Day Healthcare have had to leave the payer due to an unfavourable agreement.
“We have left payers and Medicare Advantage Group in certain states, because we are unable to raise fees and pre-authorization conditions for them,” G. Scott Herman, CEO of New Day Healthcare, told HHCN in May.
Based in Texas, New Day Healthcare has approximately 33 locations in Texas, Kansas, Illinois and Missouri. The company offers home care services, including home healthcare, personal care services and hospice. We serve approximately 150,000 patients a year.
Non-profit sustainability
A report by Stoneridge Partners shows that lower payer reimbursement rates are one of the factors contributing to permanent closures in the home hygiene sector and post-acute care sector.
“We've seen more and more nonprofits go out of business and sell,” Davis said.
According to Chaffee, federal support is needed to provide relief to nonprofits.
“The federal government needs to intervene in these insurers state by state and direct them to cover (our) costs per state,” Chaffey said. “They need to pay at least what Medicare is paying for. If they don't do that, we're not sustainable. We don't want to make a big profit. We want to help meet our margins so we can continue our business.”
But Chaffee said that for-profits that only accept Medicare will be forced to question the sustainability of the future.
“In Massachusetts, 60% is the benefit of Medicare. That's not 50/50 anymore,” she said. “If they just take Medicare, then Medicare will eventually disappear, so they are people who have problems. We're taking these plans, developing innovative payment systems, working with accountable care organizations to look at different quality metrics to ensure sustainability.”
In addition to being selective about payer relationships, some organizations have adopted creative ways to balance economic pressures, such as using artificial intelligence (AI) in their documents to streamline processes and increase effectiveness.
Davis said community involvement is also a big part of helping her organization float. Through active conversations with donors and institutional philanthropy investors, she said that the pulse of what these investors are looking for was “What do you need for a visiting nurse?”
“When we look at strategy from a community-based partner perspective, we see the mission. What should we do here?” she said. “Our community-based relationships are important. When we partner with the health system, they often want to bring all patients along. This challenges community relationships as they are more driven by payments and institutional structures designed to limit care than true partnerships.”
