From policymakers to physicians, hospitals, health systems and beyond
by Tracey Moorhead
January 17, 2018

The home-based care industry is undergoing a significant transition driven by health care delivery reform efforts and budgetary constraints at all levels.

As with upheaval in any industry, there will be winners and losers, and there may be more than one path forward toward success. A critical element of success will be creating an updated perspective on the value of home-based care in modern health care delivery models. The industry can and must advance a new narrative to highlight our value.

The reality is that health care delivery models increasingly emphasize the quality and value benefits of driving care outside of institutional settings and back into the home and community. Payers, providers and consumers all seek to provide care in less-expensive, patient preferred, high-quality settings.

A majority of seniors prefer to be cared for in their homes. Further, new health care delivery and payment models incentivize physicians to develop preventive, proactive and longitudinal relationships with patients that extend beyond the office walls and seek to prevent hospitalizations and exacerbation of chronic conditions.

Hospitals, too, face new challenges to prevent repeat hospitalizations. Hospital payment guidelines and quality measures require post-acute services that extend into the community, into the home, and require the provision of services necessary to ensure patients and caregivers are knowledgeable, empowered and activated to continue recovery outside the acute-care setting. The scope of populations served through these models will only continue to grow via expanded access to health care coverage through personal coverage requirements and Medicaid expansion initiatives.

Homecare providers, including traditional home health agencies, are the backbone of community-based care. These providers can play a central role in new health care delivery models that emphasize community-based support across the continuum of care. Home health episodes for post-acute services have been demonstrated to be less expensive and to have quality outcomes on par with or better than more expensive in-patient settings such as skilled nursing facilities for certain patient populations.

Home health plays an important role in health promotion and management. The Medicare Payment Advisory Committee (MedPAC) in 2017 noted that 60 percent of Medicare home health episodes were not preceded by an acute episode or hospitalization. This means agencies are increasingly supporting chronic care management and health promotion and prevention programs in efforts to prevent exacerbation of conditions that may lead to emergency department visits or hospitalizations.

Why then, is homecare not recognized, engaged and reimbursed as a central component of high quality, lower cost, patient-centered health care models?

First, federal policymakers hold home-based care in low esteem due to advisory agency perspectives that advance a false notion of excessive financial margins and fraudulent billing activity. In a March 2017 report, MedPAC estimated that the Medicare margin of free-standing home health agencies exceeded 10 percent in 2014. The U.S. Department of Health and Human Services Office of the Inspector General in 2016 cited a 42 percent “improper payment rate” in the Medicare fee-for-service home health benefit, equaling $7.7 billion.

Second, as physicians, hospitals and health systems have aligned and adjusted in new care delivery and payment models, they have increasingly sought to build “in-house” homecare capabilities that operate outside the traditional, episode-based homecare delivery model. This “reinvention of the wheel” has increasingly cut out of the payment model traditional home health agencies. Further, where agencies have successfully fought for a seat at the local provider table, they are frequently offered payment rates far below their costs of care.

Finally, innovative disrupters, such as emergency medical personnel and on-demand caregiver apps, have fragmented markets, while traditional home health agencies have been slow to partner or similarly innovate.

What Needs to Change?

Homecare leaders across the country, at both the agency and national organization levels, have opportunities to change the perspective on our industry. We must change the narrative to highlight value, quality and integrity. We must further engage partners to advance and support this new narrative. Finally, the industry must advance a direct-to-consumer campaign to encourage consumers to request home health services from their physicians.

Operationally, homecare leaders can implement new business models and develop new partnerships among payers and provider partners. Many agencies across the country have already begun this transition. Agency leaders can examine current business practices and performance indicators, and align these metrics with the needs of provider and payer organizations within their communities. This alignment can support the development and launch of new programs and operations outside the traditional 60-day episodic model.

Key indicators for consideration include quality outcomes metrics reported by local hospitals and payer organizations. Identifying where an agency can help these potential partners improve quality scores and outcomes allows for informed and productive proposals for partnership and appropriate reimbursement.

Leaders can also engage in efforts to champion their own quality and service outcomes locally and nationally. State and national homecare associations offer important resources, support and opportunities for communication and policy efforts to change the perspective of our industry. These efforts include state and federal advocacy on policy initiatives, as well as support for community-level engagement with prospective payers and partners.

At the national level, home-based care representatives must highlight the innovative and high-quality care provided through new models and case studies. New champions, including health system and hospital executives engaged in successful partnerships with homecare providers, must serve as advocates to advance the perspective of quality, value and integrity. Finally, the industry should develop and support a national value initiative aimed at educating consumers on the availability of homecare in their communities. The initiative should be agnostic as to provider type and simply raise awareness of the opportunity to receive care and services in the home. Similar initiatives have been launched by the food and consumer product industries to great success.

In conclusion, the home-based care industry must continue to achieve and demonstrate success in new care delivery and payment models. These models require innovative partnerships with payers and providers who require home-based care leaders to provide high quality and lower cost care. Most important, the industry must change the narrative to focus on quality, value and integrity to reposition and reinforce home health as a critical and central component of health care delivery.