Adding Medicaid to your mix

Home Healthcare began years ago with a group of nurses in New England who cared for patients who were unable to go to their doctor or hospital. Later known as the Visiting Nurse Association of New England, this grassroots organization evolved into a model of care delivered in the home, which was nursing specific and clinical in orientation. Soon a national organization, the Visiting Nurses Associations of America (VNAA), emerged. Home health has continued to grow as a sub-sector but still represents only a fraction of all healthcare reimbursement. But when optimized by the technological capabilities of today’s tablets, smartphones and their supporting software, this care model just may be the panacea for affordably delivering quality, compassionate care.

Medicaid managed care

The continuing pressure to reduce the cost of healthcare nationwide has been the catalyst for change in the delivery of services. State programs have been similarly affected and many are struggling to find ways to reduce their respective budgets while caring for the number of people who require long-term services and support. For many states, the solution appears to be Medicaid managed care plans. More and more providers are preparing for the transition either by way of the movement of the dual-eligible (Medicare- and Medicaid-eligible) population into managed care or the enrollment of selected state-based Medicaid programs into managed care.

Home Healthcare Benefits

According to research data from the Centers for Medicare & Medicaid Services (CMS), “Spending growth for freestanding home health care agencies accelerated in 2014, increasing 4.8 percent to $83.2 billion following growth of 3.3 percent in 2013. The faster growth in 2014 was attributable to increased spending by the two largest payers of home health, Medicare, with growth of 3.3 percent, and Medicaid, with growth of 3.5 percent. Combined, both payers of home healthcare represented 77 percent of total home health spending.” During the same period, CMS reports that “Spending for hospital care increased 4.1 percent to $971.8 billion in 2014 compared to 3.5 percent growth in 2013.”

So, although home healthcare remains a fraction of hospital reimbursement, service delivery in the home is increasing at a faster rate than hospital care. Home healthcare, as a percentage of overall dollars spent, is expected to increase as waiver programs are expanded.

Today technology is allowing more to be done in the home environment than ever before. Through advanced administrative scheduling and mobility-enabled software applications, what started out as a way to be compliant with regulatory requirements has resulted in the production of a more cost effective way to deliver quality healthcare to the patient. By enabling the home to serve as the point of care in more cases than ever before, technology is addressing the government need to save money by reducing reimbursement without sacrificing the Affordable Care Act’s objective to deliver value and quality care. In short, home healthcare is emerging as one of the most promising areas in our evolving healthcare system.

Impact on Providers: The devil in the details

The requirements of the transition to Medicaid managed care will place such a complex administrative burden on most providers that automating the process will be a necessity for survival.

To date, the majority of reimbursement comes from Medicare as the payer. Because Medicare is a national program with a standard submission process, it is not only familiar to most providers, but it’s straight forward and relatively simple to administer. Medicaid, on the other hand, is very complex.  It changes state by state and sometimes program by program within the same state. Historically many agencies were almost exclusively Medicare providers, with 90 percent or more of their revenue being earned through the federal program.

However, as reimbursement continues to decline year-over-year, these organizations can’t bring in enough reimbursement to operate. To survive, some home care providers are making strategic decisions to diversify their revenue streams and provide a spectrum of services that are funded by different payers (Medicare, Medicaid, commercial insurance, etc.). They may also bring in private-pay service lines for in-home care paid directly by the patient or patient’s family. These are usually non-clinical assistance activities for the patient (grooming, bathing, support around the house).

Medicaid programs also provide more than the post-acute care that is typical of the Medicare benefit, for a broader spectrum of beneficiaries. The goal, whether stated or assumed, is to ensure that the “client” in the community does not become a patient in the hospital. There is therefore a notable increase in paraprofessional referrals by programs that are designed to maintain the client in their home, providing personal care services.

Organizations who provide such services require high volumes as margins are lower, and in some cases organizations are positioning their entire business toward these models of care. The most proactive providers bring in multiple service lines in pairs, which means the patients qualify for both Medicare and Medicaid. For example, Medicaid will reimburse them for five hours of nursing care per week, and Medicare will reimburse another five hours per week allowing the organization to be paid for a total of 10 hours per week of nursing care provided to that patient.

So while diversification will become a strategic necessity, if providers going into a transition process are not very clear on the authorization process for changing care for existing patients, there is a high risk of losing reimbursement. Furthermore, the authorization process for a health plan is likely to be equally as complicated as for state-based Medicaid and each health plan will have its own authorization process (meaning there will be multiple authorization processes for a provider to know, understand and comply with). Health plans will not be forgiving of errors and will likely deny payment. Knowing the specifics of the authorization process during the transition will be very important for providers who accept new patients and for those patients who may require a change in care during the transition.

Given the complexity and administrative burden of coordinating care under these conditions, these organizations will be forced to streamline operations and manage the process flawlessly to ensure they are paid for every hour their employees work. In order to survive, huge efficiencies must come into play that can only be delivered by an automated software system designed to accommodate all requirements of the myriad of care reimbursement options.

Looking Ahead

As the population ages and healthcare costs continue to rise, the increased delivery of tech-enabled patient care in the home is emerging as the most promising solution.

This may be bad news for providers that are unable or unwilling to adapt to the new technological requirements of their field. But leading agencies are already leveraging technology to operate much more efficiently and effectively in the home.

The good news is that there is a huge opportunity for agencies to make more revenue by capitalizing on the diversification of services and revenue. For organizations that embrace the technology, the reward is not merely survival but increased business efficiency, greater quality of care, and improved clinical outcomes.

Chris Junker is CEO of Procura, a technology company specializing in software for home and community care documentation, with U.S. headquarters in Schaumburg, Ill.

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