The home health industry is in a “dynamic state” and evolving into “multiple types of care,” according to the Medicare Payment Advisory Commission (MedPAC).
As a result, health care policymakers should start thinking about how to redesign the traditional home health benefit to make it more nimble, perhaps by breaking it up into pre-acute and post-acute categories.
“Like all the other sectors, [home health agencies] are not only in a dynamic state given COVID-19, but also given consolidation and a change in the role of home health in the orbit of the care continuum,” commissioner Karen DeSalvo, the chief health officer at Google Health, said Friday. “It’s going to be an interesting few years, as we continue to understand whether home health is one sector, or if it’s evolving into one … where there’s multiple pieces.”
DeSalvo’s comments came during MedPAC’s December 2020 public meeting, held virtually this year due to the COVID-19 pandemic. In addition to the changing nature of home health care, MedPAC’s 17 commissioners also discussed the Patient-Driven Groupings Model (PDGM), agency margins, future payment recommendations and more.
MedPAC was established by the Balanced Budget Act of 1997 with the purpose of advising Congress on Medicare issues. The commission publicly meets numerous times each year to discuss Medicare issues and policy questions.
The idea that home health care has turned into something more than a post-acute service is not new. Industry leaders have been pointing that out for years.
“We don’t like to use the word post-acute anymore,” LHC Group Inc. (Nasdaq: LHCG) Chairman and CEO Keith Myers told Home Health Care News in 2016. “We say regularly now that we’re not post-acute. We’re ‘non-acute.’”
MedPAC’s own data supports that claim. In 2018, about two-thirds of home health episodes were not preceded by a hospitalization or post-acute care stay, according to its latest data book, released in July.
Yet it’s not just the pre- or post-acute dichotomy that is catching MedPAC’s attention in regard to a benefit redesign.
During Friday’s meeting, the commission also discussed how home health agencies are playing vital roles in hospital-at-home models and in efforts to divert patients away from skilled nursing facilities (SNFs).
“I think one of the interesting challenges of home health is that it seems to be evolving into multiple types of care,” commissioner Amol Navathe, co-director of the Healthcare Transformation Institute at the University of Pennsylvania’s School of Medicine, said at the meeting. “We’ve heard already that there are developments in hospital-at-home, how many of the [alternative payment models] models like bundled payments are starting to shift patients from SNF to home health, which perhaps means that the acuity of patients in the home health care setting is also evolving, to some extent.”
Moving forward, MedPAC should take a deep dive into home health nuances to see if it makes sense to revisit the benefit.
‘A lifesaver for our system’
Commissioner Susan Thompson — interim president and CEO of UnityPoint Health, an integrated delivery system serving Iowa and parts of IIllinois — has witnessed the evolution of home health care firsthand.
UnityPoint has been developing a SNF-at-home program since the middle of 2019, before the coronavirus turned into an international crisis. Now, it’s also one of the seven or so hospital systems to have secured a hospital-at-home waiver under the new Centers for Medicare & Medicaid Services (CMS) program.
The ability to deliver hospital-level care in the home has been a game changer over the past few months, Thompson noted.
“Hospital-at-home has been literally a lifesaver in our system, as we have used this program to decant patients who have low-intensity, chronic illness with exacerbation of symptoms, moving them to the home with monitoring equipment to make beds for patients that are in our emergency room,” she said. “It’s not surprising, folks like to be at home.”
Mount Sinai Health System, Massachusetts General, Mercy Hospital and the Huntsman Cancer Institute are among some of the other organizations to have received a hospital-at-home waiver.
Many health care leaders expect that list to grow in days to come.
“I anticipate we’re going to have a demand for this kind of a service going forward,” Thompson said.
Home health Medicare margins
Apart from home health care’s larger transformation, MedPAC also highlighted several key statistics about the industry.
In 2019, home health fee-for-service Medicare expenditures totaled $17.8 billion, distributed across over 11,300 agencies. As the landscape stands, beneficiaries currently maintain strong access to home health services, with 86% living in a ZIP code served by five or more agencies, according to MedPAC.
As has been the case in the past, MedPAC also pointed to the seemingly high margins in home health care.
In 2019, the Medicare marginal profit for all home health agencies was 18%, according to the commission. The all-payer margin for agencies, however, was just 5.9%.
“This type of the trend by type of provider is similar to what we have found in previous years,” MedPAC analyst Evan Christman said. “The for-profit agencies have higher margins than nonprofits, and urban agencies having higher profits than rurals.”
Meanwhile, the median Medicare margin for “efficient providers” — or those that meet certain cost and quality criteria — was 23.4% in 2019. There was a total of 532 efficient home health agencies last year — about 14% of the industry overall.
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MedPAC: 'Dynamic' Home Health Industry Is Evolving into 'Multiple Types of Care' - Home Health Care News
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