In 1999, I attended the “State of the Industry Conference” in Washington, DC, sponsored by Home Health Line. In his address to nearly 900 home health professionals, the keynote speaker, Senator Charles Grassley, made the following unsolicited statement: “I truly believe the home health benefit will remain a part of Medicare.” What struck me about this comment was that at that time, no one in the room was wondering about home health’s continuance as a part of the Medicare benefit at all, nor was there any public speculation that it might be removed from the Medicare benefit package. It seemed a strange thing to say to me, but as I looked around the room, no one seemed to notice.
Certified Home Health – Service Elimination by Design?
Over the years, Senator Grassley’s statement stuck with me. Why did he say this? I suspected then, and I believe now, that whether by accident or intention, he alluded to Congress’s true opposite purpose—to actually eliminate the benefit. Thirteen years later, it appears to be nearing fruition. A sober assessment of the landscape of health care reform leaves little room for doubt that the nearly 50-year run of certified home health services under the Medicare benefit is in serious jeopardy of coming to an end. Just look at the current “State of the Industry”:
- In 2017, provided the Affordable Care Act remains law, new Medicare beneficiaries will pay $100 co-pays for home health care episodes with more than 5 visits. This is consistent with MedPAC recommendations that “beneficiaries without a prior hospitalization account for a rising share of episodes” and that “adding beneficiary cost sharing for home health care could be an additional measure to encourage appropriate use of home health services.” This will almost certainly result in a sizeable reduction in the home health caseload across the country as patients refuse care out of disinterest in paying, for lack of funds, or both. Nearly 15% of the country lives below the poverty line, an increasing percentage of whom are elderly Medicare beneficiaries.
- Medicare reform is focused primarily on fee-for-value health care models, and is inexorably moving away from fee-for-service. Two models currently under development—so-called “Bundled Payments” and Accountable Care Organizations (ACOs)—both pose immediate threats to the survival of certified home health. Bundled payments are likely to put budgeting decisions in the hands of hospital administrators, thus, out of the hands of home health providers. And ACO legislation does not include requirement for certified home health referrals at all. As both of these models mature, certified home health reimbursement and referrals will shrink unless certified providers are able to communicate their prevention-value to health systems and find creative ways to partner with them. For now, “transitional care management” has become the new buzz phrase for hospital-based outreach services that increasingly imitate traditional, certified home care. Will hospitals create their own version of home health care themselves? If so, certified home health providers could find themselves cut out of the mix.
- The current legislative mindset in Congress can be described by one word—gridlock! Republican congressman and senators have dug in to a no-compromise position on spending and/or tax increases, no matter what. Barring a sea change in the makeup of congress this fall, the 2% sequester of Medicare funds across the board could actually take effect this coming January. If this occurs, a significant percentage of certified home health agencies will lose their operating margin altogether. We could see a repeat of the PPS shakeout that saw nearly 1/3rd of all certified home health providers across the country close their doors during the late nineties.
- The administrative-cost burden on certified home care providers, that includes electronic medical record systems, business-method software systems, quality review and compliance efforts, is consuming an ever-increasing chunk of certified home health agencies’ budgets. Home health agencies across the country are already operating below cost for nearly all Medicaid and commercial insurance patients, counting on their Medicare margins to see them through. As regulatory-compliance costs combine with Medicare cuts, certified home health providers could soon have no operating margins from any certified home health pay source at all.
When I practiced as a psychotherapist, I always inferred intention from the consequences of my client’s actions. The words they spoke, their “good intentions,” didn’t always convey the truth. In 1996, the average number of home-health visits per-Medicare-beneficiary (all disciplines, per-certification-period) was 74. Today, most agencies I work with report per-episode visit totals in the high teens/low 20s. Some are already in single digits. Is this what Senator Grassley really meant—the “benefit” remains, while the amount of care actually provided steadily diminishes to zero? I watched the same thing occur with Medicaid’s dental benefit a few years ago in Massachusetts. MA Medicaid beneficiaries (MassHealth) had a dental-services “benefit.” There was just one problem. It was nearly impossible to find a dentist in Massachusetts who actually accepted MassHealth. Payments were simply too low to make it worth their while. The charade came to an end three years ago when the dental benefit was removed from MassHealth altogether.
There’s a lesson to be learned here, and perhaps a creative adjustment or two to consider. Bottom line: Certified home health agencies must develop alternative pay sources and explore alternative value models that supplement their revenue and offset their dependency on Medicare. “The home health benefit will remain a part of Medicare” indeed, but it will almost certainly not be enough of a part to build a future on.
Home Care’s Hope for Sustainability – Home Care Without Medicare?
Four alternatives hold promise—patient donations and fund raising (for non profits only), private pay services (including aide/homemaker services and care management), Medicaid Waiver services (as alternatives to nursing homes), and providing care to long-term care insurance and worker’s compensation insurance clients. The latter three—private pay funds, Waiver funds and LTCI/Worker’s Comp—are all accessed most efficiently and cost effectively through non-Medicare, private-duty service lines. Yes, many certified providers today have state-Waiver contracts, but they are almost never able to staff long-shift cases, operating as they do from a “short-term, intermittent, medically-necessary” mindset, and a full-time-with-benefits staffing model. Indeed, I have rarely seen a certified agency able to staff all seven, 8-hour home health aide days in a week, whether private-pay or Waiver-subsidized, due primarily to their Medicare-caseload staffing model. PD caseloads are unpredictable. PD staffing is a-la-carte and just-in-time. And since the establishment of PPS, certified providers have lost familiarity with fee-for-service models and long-shift staffing. But that’s where the revenue is now—in long-term, long-shift care at home, not in “short-term, intermittent” bits and pieces, an hour here, an hour there. In long-term home care, visits are good!
The continuum-of-care model that knits certified and PD together holds promise if certified home care providers can stop discharging their patients and start transitioning them to the long-term, PD side. Indeed, it’s time for a bold conclusion: Unless certified home health agencies are able to establish profitable, long-term home care service lines that transition patients from certified to PD services, capitalizing on their competitive advantage over other private-duty companies who are not sistered with certified providers, certified home health will soon have no financial value proposition. Yes, the care itself remains critical—to patients, to the community and to the professionals and para-professionals who provide it. Who can argue the value proposition of the primary care nurse or therapist or counselor or aide? But without a profitable service somewhere in the mix to lead patients to, certified home health won’t work financially. And the window of opportunity to develop the continuum-of-care model is closing fast. Certified home health agencies who have not already developed long-term home care, “sister” companies will soon find themselves unable to devote the resources to “cross the Rubicon” to a blended model of home care. The hour for change has arrived. For certified home health and hospice agencies, developing a private-duty service line (PD) may be the only home care survival strategy left.
Fortunately, developing a PD service line is a natural tandem with certified services. PD revenue can grow fast, and, most important, can become quickly profitable—if done correctly! But the marriage between certified home health and PD is not a mirrored partnership. Given its revenue shortfalls, certified home care must feed PD and help PD become profitable to offset certified losses. But PD must seek to keep its clients from becoming sick enough to need certified home care. Certified home care is treatment. PD is prevention.
This does not mean PD never refers to certified home health. It certainly does and should when appropriate. But think counter intuitively. Nearly all certified patients need some form of ongoing monitoring or care either during or after discharge. Thus, once their healing has been achieved, or even while they are receiving certified services, patients should automatically become PD customers. For PD, the opposite is the case. Nearly all PD customers are at risk of becoming certified patients. But PD’s value proposition is to prevent them from becoming so by increasing hours of care and care oversight (also fee-based “Geriatric Care Management”) to prevent exacerbations of chronic health problems. Thus, whereas certified-services now succeed by transitioning patients to PD, PD success is defined by prevention of need for certified services!
Certified home care’s financial value proposition may soon become that of “loss leader” for sustainable, profitable PD services. The more care a disabled PD client consumes and the longer he or she remains in PD, the better. Contrarily, the less care a certified patient consumes and the faster he or she transitions to higher levels of PD care, the better. To realize the potential of the continuum-of-care model, certified service lines will need to drive more PD services than merely compensates for their losses. Where is the growth if certified services convert only the PD volume that realizes profit (for PD) equal to their (Certified) losses? There is none. Such a “marriage” is a zero-sum game. In such a scenario, the community itself likely benefits from the survival of a certified provider, a significant value to be sure, but the agencies do not grow financially unless PD itself grows its caseload aside from the Certified-PD relationship.
Some question the ethics of such a model, i.e. – certified home care providers building a second business from their certified caseloads. But if you think about it, this approach may in fact be more ethically sound than the current practice of discharging patients from service simply because they are medically stable (for the time being) or because insurers won’t pay. People who are chronically ill and disabled need ongoing monitoring and access to care. But giving them a list of PD providers and saying “see you next time” is less-than-effective discharge planning. There’s way more to it than that.
Those of us who were around during those heady, Pre-PPS, fee-for-service days remember how much easier it was to meet people’s needs when home care professionals were trusted to determine care needs and request MD orders to meet them. We remember having long-term relationships with our patients that we know were successful in preventing illness and injury. We also know they were valuable to families, especially to adult children who found themselves juggling jobs, child-rearing and eldercare responsibilities. We were in the home more—lots more—than we are today. As such, the adult children didn’t have to be. Has anyone measured the cost of our not being there, requiring that adult children leave their jobs to care for their parents? Was a liberal home care benefit that regularly provided the kind of care Medicare no longer subsidizes such a bad thing?
The “reasonable and necessary” home health aide and medical-management services we once ordered out of mostly common-sense assessments can be offered to our patients once again. We can make the recommendation out of sound judgment, and the patients make the choice. We say, “Medicare will no longer pay for the RN or PT or MSW or aide to come out and see you, but, in our opinion, you need a nurse regularly monitoring you and an aide helping you, and it will cost $X.” Patients and their families then either take our advice or they don’t. Is it unreasonable to suggest to our patients and their families that they need us when they are clearly at risk? Is it unreasonable or unethical for us to suggest that we know best how to take good care of them at home? Do we not do our patients a greater disservice by failing to offer to meet their chronic-care needs, regardless of cost or government or commercial insurance limitations?
Meeting the needs of certified-patients-turned-PD-clients requires PD diversification. Merely selling PD “hours” isn’t enough. There are too many potential long-term home care consumers who cannot pay; despite the exponential growth in PD we have seen in the last few years. The day of the $25-an-hour PD home health aide will change as well. Other models, including employment agency staffing, family caregiver coaching, technology-assisted primary care at home, wellness services, financial-planning services, home modification and accessibility-product sales become part of the PD landscape. Indeed, “private duty” itself matures to a fuller, “lifecare” model.
So, the time has come. All certified home health agencies must now ask themselves a question: As certified services are steadily diminished, who will walk through our patients’ front doors? Will it be long-term home care providers, combined with certified service providers, who also deploy professional home care nurses and therapists, trained in the rigorous protocols of home care, or will it be lay providers who do not speak the language of certified home care protocols or skilled-care oversight? And as not-for-profit’s struggle to sustain their financial health, often even more so than their proprietary counterparts, who will care for the poor? From where I sit, the profits from PD services, combined with donations from “grateful patients,” combined with State Waiver programs are the only hope for home care for those who lack the means to pay. Regressive social policies seem to be returning us to the days prior to the creation of Medicare and Medicaid. But aside from the moral imperative, can this society financially afford to allow so many poor, disabled people to go without home care? Don’t look now, but poverty itself is a leading indicator of higher risk for hospitalization. Home care inequity will impact every citizen in the form of longer ER wait times and scarce hospital-bed availability. For non-profits, the certified-to-PD continuum holds great promise to compensate for many of the ill effects of current economic and political realities, but only if not-for-profit providers can master the art of retail sales and actually make a profit. And this they cannot do without moving beyond the certified delivery model. If certified home health care is a baseball game, then PD is football, and the games are played differently. Certified providers who startup PD services need to recognize when they are trying to make PD into a baseball game.
There is great opportunity ahead for those home care providers who will seize it. The great benefit to communities could be a new home health platform that is (finally!) sustainable. Imagine allowing nurses, therapists, aides and social workers to provide good care in adequate measure, through diverse technologies and service lines, without fear of insurance disintermiediaries or government cuts. Witness the unprecedented growth of the PD sector in the last few years. The affordability argument is over. The funds are there for most—not all—but most consumers, and will be for a long time to come. Will PD profits go to shareholders or community health? Can certified home health leaders adapt and change their model, their governance and their culture in time? These questions remain to be answered. But one thing is for sure: Someone will walk through the door.