Yet another significant cut to home health payments has been proposed by the Centers for Medicare & Medicaid Services (CMS) for 2025. For providers, that means more pushback against cuts is in order, locally and in Washington, D.C. But it also means preparing for a world where Medicare fee-for-service is no longer a reliable backbone.
CMS proposed a permanent prospective adjustment to the CY 2025 home health payment rate of -4.067% back in June. All in all, the agency proposed a 1.7% cut to aggregate home health payments next year.
Providers have experienced cuts in the previous two years, but have also seen CMS back off more severe cuts in the time between the proposed and final payment rules in 2022 and 2023.
“[CMS] thinks, ‘How much can we threaten to reduce the current payment rate, so that when we drop a few breadcrumbs [in the final rule], providers will feel good about picking a little something up?” Pinnacle Home Care CEO Shane Donaldson said on stage at Home Health Care News’ FUTURE conference last month. “History tells us that the final rule will probably be a net neutral event.”
Based in Oldsmar, Florida, Pinnacle Home Care is one of the largest home health providers operating in its home state. The New York-based HCS-Girling recently acquired Pinnacle Home Care, which plans to significantly expand in the coming years.
While providers are hoping that they at least see those breadcrumbs in the final rule, they’re not banking on it.
Instead, they’re working toward becoming sustainable shops in spite of a turbulent payment environment.
“If you’re not really good at something – whether that is collecting your AR, doing your coding, OASIS review – it’s time to look at people who are really good at that, and maybe make some different decisions,” Interim HealthCare President and COO Rexane Domico also said on stage at FUTURE. “What I would really suggest to people at this stage in the game is to think about your efficiency in all of your locations.”
Based in Sunrise, Florida, Interim HealthCare is a home health and home care franchise with more than 330 locations across the U.S.
Efficiency is a broad term, but Domico was specifically referring to outsourcing certain tasks, reducing redundancies and also exploring home health-applicable AI.
AI was a major talking point at FUTURE, and the vast majority of providers were bullish on what new technology could do for the industry in terms of efficiency, especially in light of recent rate cuts.
On top of that, Domico mentioned utilization as an area for providers to keep an eye on.
“I think there’s a lot of times we don’t focus on utilization,” Domico continued. “And I think there’s a tremendous opportunity to focus on there. And that can be part of your increase, if you work it the right way.”
Donaldson added that clinicians should be working at the top of their licenses, which also helps drive efficiency.
“What we’ve got to do is improve our margins, and that means we’ve got to get evaluating clinicians to do as many evaluations and assessments as possible, and we’ve got to get the non-evaluating clinicians doing the majority of the straight visits,” he said.
There are home health providers trying to do more to be a better partner to payers and referral sources. But, sometimes – to Domico’s point – less is more.
In general, providers agreed with the idea that they should focus on their strengths, and find a way to outsource their weaknesses, or at least level up in those areas.
“If [that margin] is not going to be given to you, how are you going to get it?” Domico said. “I think you get it by really being an expert at what you’re really good at, which is delivering care. And if those other things are not working for you, then I think it’s time to look at doing something different.”
Working with other payers
As those fee-for-service rates become less reliable than they’ve been in the past, providers are having to spend far more time thinking about their Medicare Advantage (MA) strategies.
With less growth in traditional Medicare payment, it’s paramount to avoid MA payers that reimburse at a subpar rate. For the most part, providers don’t expect – but do hope for – MA rates on par with traditional Medicare rates.
But 40% lower, for instance, is unsustainable.
“In the state of Florida, we have 850 home care agencies, and so Medicare Advantage plans still consider us to be largely commodities,” Donaldson said. “When they can find an agency next door that’s willing to do a visit for $80, they’re not going to pay us $130. Irrespective, it seems, to how much we can prove that our quality is better than any of our neighbors.”
Pinnacle has had success with one MA plan, however. That plan has agreed to pay the company with some upside opportunity.
That came about when the plan moved from being managed internally to being managed by a third party.
“We had a good relationship with the third party,” Donaldson said. “In negotiating, we said, ‘Look, this really needs to be an episodic relationship, even if it’s at a percentage of Medicare. Give us the opportunity to control our own destiny, give us a pot of money and let us run with it.’”
While some improvements have been made in home health contracts between MA plans and providers of late, Domico still sees providers largely as “price takers” in the relationship.
“I think we are price takers, and I think the negotiations are really very one-sided,” she said.
But she also believes that there’s still plenty of opportunity out there for providers to be paid more fairly, and that starts with regional plan partnerships.
Well Care Health COO Rebecca Higbee, also on stage at FUTURE, said her company has seen most success with those local-level health plans.
“Some of our best partners are those regional partners,” she said. “Those local partners where you can speak to the actual decision makers of the plan.”
Well Care Health provides home health and hospice services across North Carolina and the upper part of South Carolina.
Higbee also emphasized that health plan relationships need to be nurtured on a daily basis.
“It still takes years to make progress,” she said. “We have made progress of late. There’s a handful of payers that are finally seeing the value, while at the same time, there’s also payers that in years past have seen value and are now looking to move backwards. It’s really a mixed bag. I think it’s something we have to be working on daily, and something we have to be thinking about daily.”
