"Patients have always had a preference for 'aging in place;' being cared for in the comfort and familiarity of their homes and communities. But for providers, bringing consistent, high-quality care to a patient’s home—and getting paid for it—has presented challenges. Recent changes at the Centers for Medicare & Medicaid Services (CMS), however, are making these solutions even more practical. Changes to reimbursement guidelines have shifted how skilled home care is valued and has breathed new life into unskilled home care and telehealth services." So begins an excellent article penned by Barry Freeman and Michael Weber and published in FierceHealthcare. The article, and the health care industry developments described therein, are welcome, because if the industry does not react to health care policy changes with acceptance, investment, an implementation, there can be no tangible change for consumers.
The market incentives for investment to accommodate the desires of consumers wanting to Age in Place are undeniable; with 10,000 Baby Boomers turning 65 each day in the U.S., the market for home services is growing rapidly. The home care industry has exploded over the past decade, thanks in part to private equity interest and to older adults’ overwhelming preference to age in place. The good news is that the market opportunities and changes in health care policy are combining to attract new investment to specifically expand home care options and availability, benefiting both patients and investors.
CMS policies through the Patient-Driven Groupings Model (PDGM) going into effect in 2020 represent a major reform to the existing payment paradigm for the industry. Skilled home health agencies are traditionally compensated in a way that penalizes providers for providing required services to patients with complex needs, while rewarding agencies that use higher volumes of therapy services for patients with less complex or simple needs. According to the authors, the new payment model envisaged by CMS will be based on each patients’ clinical condition, functional level and individual care needs, rather than the therapeutic intensity of the care provided.
The authors conclude that these changes are affecting how investors view the skilled home health market and paving the way for reform. Evidence demonstrating the interplay between social determinants of health and health outcomes is "shedding new light on the non-medical home care sector." Regulators, payers, providers and employers are "rethinking the role that social programs, like personal assistance services, such as non-medical home care delivered by an attendant or aide, play in cost containment, outcomes-based care, and patient satisfaction."
Readers of this blog are aware that CMS rolled out a disruptive and monumental change, last April, that permits private Medicare insurers to cover non-medical in-home care as a supplemental benefit for Medicare Advantage plans. For the first-time, aging Americans are able to purchase a Medicare Advantage policy that will cover bringing a home health aide to their home to help support their daily living; from getting dressed, to bathing, tidying up, cooking and combating senior loneliness, home health care can empower seniors, their families, and caregivers to provide home care This policy change "created a new paradigm for the non-medical in-home care industry—expanding the addressable market by the more than 20 million seniors enrolled in Medicare Advantage plans."
Although few insurers managed to incorporate non-medical in-home care in time for the 2019 plan year, the authors concluded that there, nonetheless, "remains an enormous growth opportunity for non-medical care providers and their investors." Even with a short period of time in which to reorient plans for the 2019 plan year, according to an AARP analysis, three percent of Medicare Advantage plans managed to offer these services in 2019. If consumers get good advice and prefer the additional benefits, there is little that number of plans providing the additional benefits will escalate as insurers vie for market share.
These same reforms have also spurred investment in telehealth, already a growing segment in broader health care. According to the authors, telehealth services have for decades helped keep employers’ and certain commercial plans’ healthcare costs lower, especially for under-served or rural populations. But, they write, "Medicare, Medicaid and providers have faced challenges getting paid for these tech-enabled services, which include video consultations, Personal Emergency Response Systems (PERS), or remote vitals monitoring."
The authors conclude that many of these challenges have likewise changed with the recent reform, specifically because CMS approved a final rule giving Medicare Advantage plans more flexibility to cover telehealth services in the home setting, even for patients in urban areas, where there is rarely a dearth of quality providers. CMS had only allowed telehealth reimbursement in situations where patients were managing a clinical condition without ready access to care, thus excluding most patients from access to the Aging-in-Place-technology.
The authors suggest that telehealth solutions will expand rapidly and naturally:
The convenience and affordability of telehealth solutions resonates with many patients and their families. According to Deft Research’s 2019 Medicare Shopping and Switching Study, the majority of Medicare Advantage members would change plans in order to procure access to telehealth services. Physicians and other clinicians benefit from the enhanced visibility they gain into their patients in real-time, as well as the stronger patient engagement in care that results from these tech-enabled tools. The addressable market for telehealth solutions is expanding rapidly as patients desire the convenience, providers appreciate the assistance, and health plans cover their use.
The authors see investment and capital following the opportunities:
Private equity firms and strategic corporations are shaking up the landscape—to patients’ benefit, encouraging flexible treatment solutions that are becoming more innovative and widespread. Large private equity funds like Welsh, Carson, Anderson & Stowe and KKR have already made investments in home and community-based care in anticipation of the tremendous future growth opportunities.
Skilled and unskilled home care markets and companies like Amedisys, Kindred at Home and Elara Caring are likely to consolidate, building a continuum of care from post-acute to sub-acute home and community-based capabilities. In the telehealth space, already established players are being challenged by newcomer startups offering to place quality care in the palm of patients’ hands.
The future is promising for both those planning to Age in Place, and for those seeking to invest and profit in making the option of Aging in Place viable and cost-effective. This is welcome and disruptive reform to a senior health care system that has too long preferred long-term institutional care.
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