There is no question that two major issues dominated discussions in the homecare industry in 2019: the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) competitive bidding program for home medical equipment (HME) providers and the Patient-Driven Groupings Model (PDGM) for home health agencies (HHAs). Both are still in “to be determined” status, as bidders await word in fall and as home health providers begin to live the reality of PDGM this month.
Both also have brought a fair bit of hand-wringing. If HomeCare was a supermarket tabloid, it would have been easy to fill 2019’s pages with doom-and-gloom headlines about companies shutting down and industry-wide collapse.
And yet, we’ve heard a lot of cautious optimism—hope, even—from across the board. Yes, learning a new payment and billing system is hard, small agencies may struggle with cashflow in the coming months and some large companies will be looking to buy up smaller businesses. Yes, the bid system will likely have glitches, some participants will underbid and government-set prices won’t keep up with a fast-changing market or align with other policies like trade restrictions (read more about what tariffs might mean for the HME industry here).
But there has been an enormous amount of education provided by industry leaders to ensure everyone is on board. Companies have evolved from the pen-and-paper (and fax machine) days of yore and their software, in many cases, will help update processes that would once have required hiring a whole new employee. And advocates have bonded together to make sure that some of the most dangerous proposals have been stopped or delayed.
Overall, there’s a lot that’s exciting to come in the year ahead. Technological innovations will improve the way care is provided, how seniors can age safely at home and how companies keep up with coding, billing and documentation. A growing explosion of data collection and analysis could help the industry better understand itself—and also prove to Congress and others that care at home is the answer to so many questions about skyrocketing health care costs and a silver tsunami. And the people who make up this industry—the people who care deeply about customers and caregiving—are ready to adapt and evolve.
Read on to see what some of the leaders in the industry have to say about what was important 2019 and what’s coming up next.
What was the most important thing that happened in the homecare industry in 2019?
The most important thing for the HME industry in 2019 has been Medicare’s implementation of the revised Medicare DMEPOS competitive bidding program. We are all anxious to see if the bid program improvements (such as “clearing price” pricing and surety bonds) will result in better and more sustainable bid prices. Of course we will have to wait until the latter part of 2020 to find out. With the significant amount of industry education, we are hopeful that bidders understood the new lead item pricing method, and how it will impact the prices of all the non-lead items in the product category. — Cara Bachenheimer, Shareholder, Brown & Fortunato
The most important gain by the homecare industry was how the industry came together under a few key organizations to show the value of homecare. The industry was able to push back the start of Review Choice Demonstration (RCD) in Texas and was successful in having the PDGM behavioral adjustment cut from 8.02% to 4.36%. The continued advocacy by the home health industry to show the value provided is impressive. — Mike Dordick, VP, Netsmart Post-Acute Strategy and President, McBee
Preparing for the PDGM payment model change and evaluating the role of homecare providers in delivering the right amount of care at the right time, while meeting the required changes. Homecare providers across the board have focused this year on how to organize and structure their care delivery to meet the Jan. 1 change, and we will see how it impacts outcomes as it takes hold in 2020. — David Baiada, CEO, BAYADA Home Health Care
What was most overlooked in 2019?
The ongoing effort to get Medicare to reconsider and revise its coverage of power seat elevation technology for complex rehab power wheelchairs. The request is asking that they determine a power seat elevation system, when placed on a complex rehab technology (CRT) power wheelchair, is considered DME. Consumer support on this issue is strong and is largely being led by the Independence Through Enhancement of Medicare and Medicaid Coalition, a consortium of over 70 consumer organizations. The increased awareness and prevalence of the power seat elevation technology in the community, coupled by the fact that Medicare is the only payer who will not consider it for coverage, has really helped position the issue well. In our Centers for Medicare & Medicaid (CMS) meetings we have highlighted how the life-enhancing capabilities of the technology allows people with disabilities to participate more fully and independently in their activities of daily living, which oftentimes provides a cost savings to the payer/health system through a reduction in the need for a caregiver or other support services. That makes this a win-win for CMS and, most importantly, the consumers who need this technology to be active and independent. — Seth Johnson, VP Government Affairs, Pride Mobility Products Corp.
Adapt Health’s initial public offering was a huge success. For a company to go from inception to the third largest DME in six years is a significant achievement. I think we will see great results from them in 2020. — Bradley M. Smith, ATP, CMAA, Managing Director/Partner, Vertess
What should everyone be watching for in 2020?
Everyone will be watching the presidential election. It will be a massive disruption to business. More importantly it will create a lot of uncertainty in the market, which will be perceived as risk. Ultimately, this risk (real or perceived) will cause more consolidation of providers in an effort to create stable companies.— Bradley M. Smith, ATP, CMAA, & Managing Director/Partner, Vertess
It will be very interesting to see what happens with the number and size of home health agencies that exist over the next 12 to 18 months. I would expect that we see an overall reduction of 30% of the agencies, but not all will occur in 2020. Everyone will be watching how the industry—specifically agencies—can pivot and who can take advantage of PDGM and use it to grow. We will also be watching how the RCD rolls out, especially in Texas and Florida, as they have significant volume. How they implement it will assist CMS in deciding how fast this will roll out to the entire country. — Mike Dordick, VP, Netsmart Post-Acute Strategy and President, McBee
The internet, the economy, the continuous talk about health insurance and a more informed consumer is about to take center stage in 2020. With an abundance of information and conversation about health care, the consumer will continue to be enlightened about their options, costs, and, hopefully, ways to improve their own health. We need to play our role in every discussion regarding all of these issues. Homecare is about cost saving. Homecare is about continuously developing new products and services. And homecare is about options. Even the consumer is seeking new ways to access products. As online shopping increases, we must focus on the key value we bring our customers when they meet with us in our stores and facilities. We measure, we fit and we analyze needs and solutions—and we must continue to educate our patients, referral sources and legislatures about what we offer. We must never negate the importance of our direct contact with our patients. The internet will never allow one to appropriately measure a wheelchair, readjust a cane or help a customer decide how to make their home accessible for a physically challenged resident. — Louis Feuer, President, Dynamic Seminars & Consulting
Consolidation. The last major change in home health payments was the introduction of the Prospective Payment System in the year 2000. That year the number of agencies dropped from 10,917 to 7,528, a 31% reduction. Agencies will have a difficult time adjusting to PDGM in addition to the already time-consuming regulation requirements that must be adhered to. Larger agencies may want to take advantage of what will likely be a buyer’s market and smaller agencies may want to carefully reconsider their exit strategy to avoid being forced out altogether. — Trevor Lighten, CEO, The Lighten Group
2020 will be a transformative year for the home care industry. As 10,000 baby boomers turn 65 every day until 2029, the industry is ripe for innovation and accelerated growth. Below I’ve outlined four primary transformations I believe the industry is going to see in the year ahead.
- Generational shift in decision-makers: In 2020, millennials and Generation Z will become the primary health care decision-makers for baby boomers. These generations think more like consumers—they want an experience that is personalized, transparent and delivers great outcomes. In order to compete, homecare organizations will need to develop strategies to effectively reach and engage these generations.
- Health care will incorporate “wellness care”: As new models like value-based care and “personalized” medicine take center stage in health care, homecare clients and families are going to demand a more whole-health experience. This means homecare organizations will need to go beyond simply treating an individual’s condition and focus on enriching the mind, body and spirit of every client. There’s so much potential when you treat every single client as an individual with unique needs, dreams and desires. When focusing on a whole-person and individualized approach, homecare organizations can look for ways to empower the person at home to live an enriched life.
- 2020 will be the “Year of the Caregiver”: As a former intensive care unit nurse, I understand how rewarding, yet physically and mentally challenging it can be caring for a patient. This is an industry with a severe workforce shortage—by 2025, the United States will need to hire 2.5 million new health care workers. As an industry, we need to find better ways to care for our caregivers, whether that be through growth opportunities, additional trainings or just listening to their needs. We know that caregivers value flexibility and they have a calling to help others. They want to work for a stable company that gives them a sense of job security and they want to spend less time on paperwork and utilize technology. It’s mission critical to address the dire caregiver shortage and this starts by best supporting our invaluable caregivers.
- Technology will unlock new opportunities for homecare: Agencies need to be focused on investing in and enhancing technology capabilities to break down barriers across the full continuum of care. In 2020, expect an increased usage of digital applications that help manage caregiver schedules and improve the overall patient experience. Technology will also play a big role in staffing and how we recruit and retain the best candidates.
— Jennifer Sheets, President and CEO of Caring Brands International and Interim HealthCare Inc.
The big news we’re looking for in 2020 is what the new Medicare fee schedule will be. The latest round of competitive bidding will be tied up with a bow next year, and all the data seem to indicate we’ll get a significant bump in payment rates. — Josh Turner, Reimbursement Specialist, McAbee Medical Inc.
Is there a question you’re looking for answers to in 2020? Or something keeping you up at night?
Some commercial payers are canceling contracts with their provider panels and moving to a sole source contract with a single provider. This is a threat to our industry that I don’t believe will go away at the end of 2019. Providers need to be very in tune with the payers and their contracts and be sure to keep communication open so they can be ready to combat this threat.
Another issue is commercial payers’ and managed care Medicaid contractors’ reimbursement fee schedules and payment processing issues that cause cash flow problems. We at ECS North have seen numerous situations where these payers are underpaying, not paying claims at all according to the plan’s coverage criteria and just delaying processing due to inefficiencies on their part. This is a constant battle with projects for provider representatives and trying to work your way up the chain of hierarchy. Being part of your state and national associations as well as working with member service organizations can help with discussions with payers. These groups have payer relations staff who advocate for our industry and there is power in numbers. As an industry we need to unite and work together to battle these issues so that we can look to our future positively without fear. — Sarah Hanna, CEO, ECS North
How can we better educate people on the relief and support homecare and hospice provides? There are two things that I’ve consistently heard over the course of my career: “I wish I had known about this service sooner” and “This service supports family caregivers just as much as the patient.” We must close the knowledge gap. The reality is that home is where people want to be. I am on a mission to ensure more people know that there is a great care option out there for them where they can receive meaningful care in the comfort of their own home. — Jennifer Sheets, President and CEO of Caring Brands International and Interim HealthCare Inc.
The home health caregiver shortage is something the entire industry needs to effectively address in 2020 and beyond. Being able to attract, recruit and retain caregiver talent, especially as the demand for home-based care services increases, is crucial to the success of not just the homecare industry, but health care at large. Advocating for better reimbursement—and finding ways to accelerate the development of a caregiver workforce through partnerships—is something we as an industry need to truly join together and focus on. — David Baiada, CEO, BAYADA Home Health Care
In 2020, we’ll continue to see the industry struggle with caregiver workforce recruiting and retention. Our industry will continue to be challenged by the ability to retain caregivers when we need to compete with higher-paying and more flexible work options. There will be continued pressure to pay more and to provide work that matters, including taking a deeper look into added benefits and career-pathing. Another possible solution is to look at recruiting older caregivers such as retirees. We also have to look at stratifying caregiver roles- we can expand the workforce by hiring caregivers that are specialized in one area, such as providing transportation, preparing meals, or providing personal care. We also need to make caregiving more of a career to reduce the transient nature of the workforce. — Tom Bollum, Executive Director, Live Well at Home by Eskaton, Sacramento, Calif.
Something that should keep agencies up at night is cash flow. The final rule cut requests for anticipated payment (RAPs) to 20% in 2020 and eliminates them altogether in 2021. The PDGM payment model only pays a RAP on the first 30-day payment period, which means that agencies will go from 50% of a full 60-day episode to 20% of a 30-day period. In dollars, that means RAPs will decrease from about $1,600 in 2019 to $280 in 2020. That will make for a difficult adjustment during the first quarter and financial controllers must make sure plenty of cash in in reserve to avoid the ultimate agency culture destroyer—a missed payroll. — Trevor Lighten, CEO, The Lighten Group
What keyword are you holding up for 2020? Why?
Innovation! The next five years promise innovation like we have never seen before. Choosing what innovations are incorporated into your business will likely be a factor in growth rate. — Jim Greatorex, Vice President, VGM Live at Home
Interoperability.The push toward value-based post-acute care requires technology that enables patient data to flow between every care setting. — John Olajide, Founder and CEO, Axxess
What else should people be thinking about?
We’ve been hearing a lot about Medicare Advantage (MA), and there are still a lot of questions about coverage with a lot of unknowns. I have heard that some homecare providers are already seeing the value in the small number of MA plans they are working with now. Incorporating more technology in our homecare so that we can show data to physicians and hospitals on how we’re helping to reduce hospital readmissions by helping patients with post-acute recovery is going to be huge. — Molly Koenig, CEO, Bridgewater Senior Home Care, Strongsville, Ohio
One thing that is good news is what the overall market looks like. When we look at the over 65 market, we are seeing that 67% retirees have disposable income and that they will spend it on health care if they need it. It is imperative on the industry to incorporate cash pay options and upgrades into their portfolio as this is what today’s retiree is looking for. — Jim Greatorex, Vice President, VGM Live at Home