By Robert Holly | January 18, 2021
“Nobody knows what the future holds” has been one of the biggest lessons learned during the COVID-19 emergency.
But even as the home health industry plays its part in responding to new infection spikes across parts of the country, it has never been more important to stay ahead of the curve. To remain competitive in coming months and beyond, agencies must identify the key trends that will help or hurt their businesses.
Yes, the coronavirus will continue to shape home-based care in 2021, especially when it comes to technology adoption, policy and outside investment. The Patient-Driven Groupings Model (PDGM) will likewise come back into the spotlight.
Each January, Home Health Care News tries to predict some of the top trends for the coming 12 months. That task may never be more complicated than it is right now.
Investment in home-based care will reach new heights.
This prediction probably goes without saying, but investment in home health care will reach new heights in 2021, with interest driven by private and public payers alike.
Prior to 2020, home health operators spent years trying to explain the value of their services to private payers and Medicare Advantage (MA) plans. Despite those outreach efforts, most providers have still struggled with non-competitive rates and strict limits around utilization.
But to keep high-risk populations healthy, payers had to increasingly turn to home health care during the COVID-19 emergency, giving providers an improved bargaining position. In one success story, for example, LHC Group Inc. (Nasdaq: LHCG) was able to grow its non-Medicare episodic admissions by about 35% in 2020, with the majority of those admissions coming at a Medicare-equivalent rate.
“Last year, we had been more engaged with our payers than ever before,” LHC Group President Joshua Proffitt noted at a recent investor conference.
In a November survey of 76 health plan executives from CareCentrix and KRC Research, 97% of respondents said they believed more care at home is better for both their organizations and their members. A similarly high percentage said they believed treating members at home is more cost effective than facility-based care.
As more private payers invest in home health care, “total cost of care” will become the most important metric for providers to track.
From a public perspective, federal and state-level policymakers will also aggressively search for new ways to invest in home- and community-based care. That could simply mean allocating more money for home health agencies as part of the annual payment update, but it could also mean updating post-acute care policies to shift more patients away from skilled nursing facilities (SNFs).
“The tragic devastation wrought by the coronavirus on nursing home residents exposes America’s over-reliance on institutional long-term care facilities,” CMS Administrator Seema Verma said in a September announcement. “Residential care will always be an essential part of the care continuum, but our goal must always be to give residents options that help keep our loved ones in their own homes and communities for as long as possible.”
Along with payers, private equity groups will maintain their laser-sharp focus on home health investments in 2021.
There will be a turf war over the home.
More money flowing into home-based care and a brighter spotlight will naturally breed more competition. As a result, traditional home health agencies will need to find their footing in a new, more crowded ecosystem.
The hospital-at-home model is a good example of this idea.
In response to acute care capacity challenges, the U.S. Centers for Medicare & Medicaid Services (CMS) launched a new hospital-at-home waiver in late 2020, granting hospitals “unprecedented” flexibility to care for patients in the home setting.
As of Jan. 13, there were at least 80 hospital participants in the initiative.
To work, hospital-at-home programs require hands-on care and other services, including remote patient monitoring. In many ways, the concept adds to what home health agencies already do, especially those with a history of caring for high-acuity populations.
The same could be said for emerging SNF-at-home programs.
Moving forward, home health operators will need to make sure they’re not being overshadowed by specialized hospital-at-home or SNF-at-home models. Cindy Krafft, owner and founder of Kornetti & Krafft Health Care Solutions, said it best during a recent HHCN webinar.
“I’m not a fan of ‘hospital at home’ or ‘SNF at home’ as a designation or evolution,” Krafft said. “I think home care is home care, and it doesn’t need to be ‘another setting came to your house.’ We’re already there. As we look at what other models can do for managing different types of patients, I think we’ve already shown what we can do.”
It’s not just hospital-at-home and SNF-at-home models. Seemingly countless home-focused health care startups are popping up, too, with in-home urgent care models particularly gaining lots of attention.
Home health operators have fought long and hard to “own the home.” In 2021, they’ll need to fight for that ownership.
Patient-acuity levels will continue rising, forcing agencies to become more specialized.
There is a common misconception that home health agencies only treat younger patients in relatively stable, good condition. That hasn’t been true for a long time.
First of all, individuals who utilize home health services are older than the broader universe of Medicare patients. Roughly one out of every four home health patients is over the age of 85, while just 10.9% of the overall Medicare population is over that age, according to the 2020 Home Health Chartbook.
At the same time, nearly half of all home health users suffer from five or more chronic conditions, such as asthma, arthritis, diabetes or heart disease. Just 22.4% of all Medicare beneficiaries suffer from that many chronic conditions all at once.
Home health users are additionally more likely to live alone and have two or more functional limitations.
These and other statistics reflect the high-acuity profile of most home health patients. In the wake of the COVID-19 pandemic and hospitals rushing individuals back home to preserve capacity, that profile is only growing more acute — and that’s a boon for providers.
“Where I see the most acceleration going forward is in higher-acuity home care,” Susan Diamond, home care business president at Humana Inc. (NYSE: HUM), told HHCN in December. “Physicians are starting to embrace the delivery of hospital-level and skilled nursing care in the home. In the past, physicians were more inclined to refer a patient to a facility setting.”
To keep up with rising acuity, home health agencies will need to become even more specialized, with dedicated programs addressing respiratory health, wound care, heart health and more.
Fortunately, PDGM gave many operators a head start.
Policymakers will take a sledgehammer to the traditional home health benefit.
The home health benefit under Medicare has been as rigid as a slab of concrete. But health care thought leaders are starting to chip away at that block in recognition of home health providers’ versatile capabilities.
At one time, home health care was a service people received after leaving the hospital or another institutional care setting. Today, home health agencies regularly help their patients stay out of the hospital or a SNF in the first place.
According to the most recent data on Medicare discharge patterns, roughly one-third of home health episodes are preceded by an institutional stay. That means two-thirds of all home health episodes — the vast majority — come from the community.
Home health care isn’t just becoming more “pre-acute.” As previously noted, it’s also becoming “more acute” — and an important cog in the hospital-at-home and SNF-at-home machines.
In 2020, the Medicare Payment Advisory Commission (MedPAC) started to reimagine the home health benefit to reflect this wider spectrum.
“I think one of the interesting challenges of home health is that it seems to be evolving into multiple types of care,” MedPAC commissioner Amol Navathe, co-director of the Healthcare Transformation Institute at the University of Pennsylvania’s School of Medicine, said at a December 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.”
With more attention on in-home care than ever before, policymakers will look to take a sledge hammer to the existing rigid home health benefit.
It may not happen in 2021, but soon the home health benefit will look very, very different.
The age of telehealth will finally begin.
“I don’t think that the telehealth toothpaste is going back into the tube.”
“Telehealth visits are powerful tools that can help keep our patients and our employees safe.”
“We need Congress to amend Medicare law to directly authorize fair payment for the delivery of telehealth services under the home health benefit.”
These are just a few of the quotes HHCN gathered in 2020 touting the value of telehealth and virtual visits.
Despite the tragedy and devastation brought on by the coronavirus, the public health emergency accelerated the pace of home health innovation by a decade. To preserve personal protective equipment (PPE) and minimize exposure risks, operators across the industry have turned to telehealth with resounding success.
LHC Group, for example, went from about 176,000 telehealth and virtual visits in the first quarter of 2020 to more than 261,000 in Q2. The Los Angeles-based American Homecare Health Services used telehealth to help grow its patient census by about 10% while operating in one of the biggest COVID-19 hotspots in the country.
For the most part, this home health shift has been financed out of agencies’ own pockets. As things still stand as of January 2021, Congress has not yet given CMS the green light to directly reimburse for in-home virtual care.
But that may soon happen.
In October, U.S. Senators Susan Collins (R-Maine) and Ben Cardin (D-Md.) introduced the Home Health Emergency Access to Telehealth (HEAT) Act, a bipartisan bill to provide Medicare reimbursement for audio and video telehealth services furnished by home health agencies during the COVID-19 pandemic and future public health emergencies. A companion bill was also introduced in the House.
While neither piece of legislation has made it out of committee, this kind of common-sense issue is the perfect bridge for a deeply divided government. In light of the recent Washington, D.C., turmoil, lawmakers will want to quickly show American voters that they can still work together — and there’s no better, nonpartisan way to do that than by passing the HEAT Act.
Once that happens, it will be arguably the most important domino to fall in ushering in a new age of telehealth.
That ‘historic’ M&A activity we predicted for 2020? It’s still coming.
Two years ago, home health M&A experts believed the implementation of PDGM and changes to Requests for Anticipated Payment (RAPs) would lead to a “historic” number of transactions. Smaller agencies wouldn’t be able to survive all the cash-flow disruptions coming at one time, they speculated.
Well, that wave of deals never really materialized. New operational flexibilities, government stimulus money and other COVID-19 lifelines created a “sugar high” for some of the operators that may have otherwise sought to exit the market.
Now, 2021 will be the year that 2020 was supposed to be, Amedisys Inc. (Nasdaq: AMED) CEO Paul Kusserow told HHCN in December.
“The disruption from the implementation of PDGM and impact from the reduction (and in 2021 the full elimination) of the RAP was largely mitigated by Cares Act funds that helped to support the broader health care space,” Kusserow said. “Once the Public Health Emergency is over and there is no more Cares Act or additional government support, the impact that we thought we would see in 2020 will play out in 2021 – fewer players with more market share.
There have already been signs of that playing out as the industry has stabilized from COVID-19’s impact.
Overall, the fourth quarter of 2020 saw at least 17 deals for home health assets, data from M&A advisory firm Mertz Taggart shows. That’s the most home health deals in a single quarter since Q3 of 2018.