The year 2020 and beyond will see an explosive growth in home care opportunities for Medicare Advantage (MA) plan payers. The Centers for Medicare and Medicaid Services (CMS) has encouraged health insurance plan medical innovation via several recent rule expansions, and 2020 is the year industry professionals anticipate that new home care supplemental benefits will reach consumers in force to reduce costs, improve health and boost member satisfaction in new and innovative ways.

A Review: Recent Legislation that Changed the Home-Care Landscape

In 2018, Congress passed the Bipartisan Budget Act that reauthorizes Medicare Special Needs Plans (SNPs) and expands testing of Medicare’s Value-Based Insurance Design (VBID) plans to every state by 2020. Expanded benefits in VBID plans means that insurers can pay for services that are not “primarily health-related” as long as the benefits have a reasonable expectation of maintaining or improving the overall health or functioning of the Medicare recipient.  In 2019, CMS reinterpreted the standards for health-related supplemental benefits to include reimbursement for traditionally private-pay services designed to increase health and improve the patient’s life quality in MA plans. This includes coverage of non-skilled, at-home support, a much-desired benefit among seniors.  The announcement also created a new category of supplemental benefits for the chronically ill that allowed MA plans to address social determinants of health (SDOH). Home care is a good fit for SDOH as non-skilled caregivers already support personal care, transportation, socialization, meals and nutrition, and more.

Value-Based Care and Home Care’s Goals Align

Th national shift to value-based care, already well underway, is designed to accomplish three objectives: improve care for individuals, provide better health for populations, and deliver lower costs. Home care is a natural extension of value-based care and can easily help MA plans accomplish the objectives for which value-based care was introduced.  Improve care for individuals and provide better health for populations. A main mission of home care is to reduce preventable health failures.

  • In-home caregivers facilitate better health daily in assisting with fall prevention, readmission prevention, and alerting loved ones / care management teams at the first signs of a health decline.
  • In-home non-medical caregivers also prevent health failures when they transport patients to doctors or pharmacies, prepare nutritious meals, assist their clients with exercise, provide medication reminders, assist with companionship, and more.

Another main mission of home care is to get patients out of high-cost skilled environments like hospitals and isolate them at home from sick patients who may expose them to diseases that further compromise their health.

  • The risk of hospital-acquired infection (HAIs), known as nosocomial infection, is high in hospitals. According to the Centers for Disease Control, HAIs cause about 1.7 million infections and 99,000 associated deaths per year. Patients who acquire surgical infections spend an additional 6.5 days hospitalized and the likelihood of hospital readmission is five times higher after discharge. When patients can recover at home, they decrease their chances of acquiring a hospital-borne infection or other complication.
  • In addition to protecting seniors from sick patients, home care also provides a much less stressful and much more nurturing environment, facilitating faster and more comfortable healing.

Deliver lower costs. Perhaps one of the strongest cases for home care is its ability to lower costs. Home care offers MA plans tremendous value by limiting the time seniors spend in high-cost settings such as hospitals and nursing homes. A 2005 Johns Hopkins trial of hospital-at-home models showed a 32% savings; a 2018 Genworth Cost of Care survey showed a monthly nursing home savings of about $3,200. Home care, versus hospital or nursing care, can be much less expensive and – bonus – is typically the care setting most seniors prefer.

  • Home care lowers costs when home caregivers help reduce or avoid falls, identify and alert loved ones / care management teams regarding SDOH gaps, reduce or avoid hospital readmissions, monitor or preserve health, and prevent escalation of illnesses / diseases by alerting loved ones / care management teams at the first signs of trouble.
  • Home care is critical for those with multiple chronic conditions and mental health concerns. Ninety percent of healthcare cost spend in the US is for people who have chronic medical conditions or mental health conditions, according to the Centers for Disease Control. Managing the chronically ill, including their depression, and reducing hospital readmissions, is critical to controlling costs.
  • Managing social determinants of health also helps reduce spend and improve outcomes. According to a study published by the National Center for Biotechnology Information, U.S. states that allocate more resources to social services than to medical expenditures have substantially improved health outcomes over states that do not. The study determined that social spending outperforms healthcare spending in obesity, asthma, mental health, activity limitations, lung cancer, myocardial infarction, and type 2 diabetes specifically.

Home Care Challenges Faced by Medicare Advantage Plan Administrators

Today, Medicare Advantage plans cover only about 34% of Medicare beneficiaries. To reap the full rewards of home care, MA plans must offer home care supplemental benefits and show seniors that MA plans with these benefits will save them much more money than traditional Medicare plans. Today, MA plan savings are modest. One Kaiser Foundation study found that those who went from original Medicare to MA in 2016 saved only $1,200 less per year.  As plans fully integrate and utilize the benefits available from home care and other medical innovations, MA plans should be able to demonstrate that their plans provide much more robust and attractive savings versus original Medicare, and thereby increase plan adoption and grow savings.  Collaborating now with nationwide home care providers like CareLinx can help ensure that all MA plan members benefit from home care.

Technology challenges will require innovation

A reliance on sophisticated data and technology is another one of the challenges faced by MA plan administrators and home care providers alike. The ability to gather, process, and analyze data from inside the home will be complex as the home environment may be new frontier for both parties.  Some home care providers like CareLinx already have sophisticated mobile applications, population health dashboards and APIs that are HIPAA compliant, Soc2 certified, and HITRUST certified; however, these technologies are the exception rather than the norm for most home care agencies and will need to be developed.

Home care provider networks: potential matching issues

Home care implementation may also be challenging for MA plans as the caregiver networks of various home care agencies may or may not match up with the coverage areas of various MA plans, particularly if the MA plan’s coverage area is multi-state or national. Most home-care agencies tend to be local.  Advertising home-care benefits may also prove challenging to MA plans in the beginning of home care implementation as there are many possible home-care combinations to test for marketplace attractiveness and ROI accountability: home care for beneficiaries at high risk for a fall, chronically ill patients, all MA beneficiaries, transition care patients, etc. Each marketing initiative will take time and patience to develop, deploy, track and measure.

Changes to MA plans won’t come overnight, but experts predict greatly increasing growth in home care offerings

CMS has given much flexibility to MA plans in how and what kinds of home care supplemental benefits they offer; however, it will take time to work out which benefits to offer and how those services can be provided. According to Home Healthcare News, 12 health insurance parent organizations and 160 MA plans now provide enrollees with expanded supplemental benefits, covering more than 778,000 MA enrollees.  Areas of focus in home care offerings include improving the management of chronic medical conditions including mental health challenges, transition care management, and social determinants of health. Whichever home care benefits MA plans offer and deploy, they can feel confident in home care’s ability to decrease medical spend, better manage care and greatly improve member satisfaction.

Recommendations for Medicare Advantage Plan Administrators

What lies ahead for MA plans? The dynamic shift in home care supplemental benefits and managing care in the low-cost environment of the home comes with some challenges. Here are a few recommendations for MA plan administrators.

  • Work to expand MA plan employees’ understanding of the critical need for home care with increased training utilizing statistics and case studies. Training should include aggressive outreach to physicians and other medical providers about the importance of home care to quality outcomes. Stories of how home-care practitioners enrich the lives of plan beneficiaries help to express the benefits of home care. According to one expert, many MA plans never “speak up” about the benefits they offer. Consider partnering with home-care agencies and networks who can educate MA providers about how to improve medical outcomes with home care.
  • Mirror MA home-care partners geographically to MA marketing and plan integration by zip code, county and state. As plans enrollment increases in new regions, administrators must ensure they have ample home-care staff to live up to the promises made in their marketing initiatives.
  • Acknowledge that providing robust home care may bring more liability. According to Home Health Care News, statistics on liability in the home-care sector are few; however, the industry as a whole faces increasing frequency and severity of losses. Developing strong contractual wording with clear indemnity agreements will help to prevent or at least reduce litigation. Here are several liability scenarios facing home-care providers.
  • Home care professionals use their own vehicles to run errands and at times, transport their charges. This can expose the home-care agency to increased risk. A robust fleet safety program can help to reduce the liabilities associated with vehicle use by home-care providers.
  • Caregivers are at risk for falls in the home or injury from auto accidents. Workers compensation for all providers is important.
  • General liability risks may be on the rise as home-care providers often must help seniors cook and assist in other tasks, which can create general liability exposures.
  • While home-care providers do not provide medical care, professional liability exposures exist. Because caregivers may provide input about furniture placement or make other professional recommendations, all home-care providers should have professional liability coverage in place.

Closing thoughts

Since many MA plans are anticipated to implement home care supplemental benefits in 2020, insurers will likely benchmark real savings in 2021, when a year’s worth of data becomes available to highlight the real impact of adding home care. For today, we know that home care is reducing costs for many MA providers and that those savings will only increase greatly in the years ahead.  Consider which provider is well poised to serve Medicare Advantage plans in this new regulatory environment. Healthcare plans must have access to a wide network of providers as they roll out value-based care in all states. Does the plan’s home-care service provider offer a nationwide network of providers who can service existing MA participants and offer services as MA plans expand into new territories?  

September 17, 2019
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