Are changes to Medicare Advantage making home healthcare providers re-strategize?

The way home healthcare companies operate hasn’t changed significantly over the past few decades. They usually follow a private-pay model; a standard system where patients are billed for care based on the number of hours per week. This, however, is about to undergo a drastic overhaul. All because the way medical coverage is provided in the United States is changing.

If you reside in the United States, you would be familiar with Medicare. The federal government manages Original Medicare. However, there are supplementary Medicare Advantage (MA) Plans as well, where private companies provide Medicare benefits.

Recent changes to Medical Advantage plans have been welcomed by both the patients as well as home healthcare providers. However, to fully benefit from the improved coverage, the current infrastructure has to evolve.

New allowances for in-home care


Just recently, the Centers for Medicare & Medicaid Services (CMS) announced that it has reviewed Medicare Advantage plans and added a range of supplemental benefits which can be availed starting next year.  

The idea is to improve or maintain the health or overall function of patients living with chronic conditions or physical impairments. With these benefits in place, the Centers for Medicare & Medicaid Services (CMS) is looking to reduce avoidable emergency room utilization. Another goal is to enable the provision of better preventive care.

According to the CMS Administrator, Seema Verma, Medicare Advantage enrollment is at an all-time high as seniors are opting to enroll in private Medicare health and drug plans. This is one of the reasons why CMS has worked on more inclusive plans which meet the needs of seniors.

New supplemental benefits include in-home support services, in-home palliative care, non-medical transportation, and even support for family caregivers. The inclusion of these benefits in MA plans means that there more seniors can get the required care in the comfort of their home at an affordable cost.

What does this mean for home healthcare providers?


According to AARP, only 3.4% of MA plans offered in-home support services in 2019. This is because insurance providers did not have enough time to create tailored plans following CMS’s announcement. However, this percent will definitely increase in 2020 as more and more providers are now including the supplementary benefits in their offerings.

This means that there is a huge opportunity for home healthcare companies because the healthcare industry is slowly realizing the importance of less expensive, less invasive and preventive care, particularly when it comes to seniors.

However, there is also a challenge. A sector that has traditionally relied on a pay per hour model has to adjust to new payment models to benefit from these supplementary benefits.

These payment models are being implemented to ensure the right care is delivered at the right cost. One such model is Patient-Driven Groupings Model (PDGM), which is probably the most significant payment overhaul home health system has witnessed in the recent history.

PDGM, which will go into effect starting January 2020, would require patient characteristics and needs to be evaluated and reimbursements for services will be made accordingly. This will take the traditionally used method, which is visit volume, out of the equation.

Revisiting the approach to in-home care delivery


With insurers including supplementary benefits in MA plans and more and more seniors opting for Medicare Advantage. This means that home healthcare companies have to evaluate their current offerings and take a more patient driven approach to become cost effective and benefit from the new Medicare Advantage allowances.

Incorporating technology, looking at telehealth options, and using wearable devices to collect data are some ways in which home healthcare companies can closely monitor the needs of the patients and provide the required services.

While home healthcare companies have this task on their plate, other disruptive, unconventional players are entering this lucrative market. For instance, last year, Amazon expanded into the Medicaid market by offering Prime memberships to beneficiaries for $5.99 a month.

In addition to dabbling into things like telemedicine, Amazon has made an important announcement. The company’s Alexa Skills Kit now has a U.S. Health Insurance Portability and Accountability Act of 1996 (HIPAA) compliant environment. The company can now facilitate transmission of protected health information as part of an invite-only program.

Though it’s available to select entities at this point but this offerings from Amazon can enable patients to do a lot. They can book medical appointments, reference blood sugar readings and access post-discharge instructions.

Similarly, smaller start-ups are working on IoT devices, B2B platforms and other services which can gather data that can be used to improve personalized and preventive care. This data, especially when made available in real-time can help deliver prompt care, derive insights, and deploy medical resources if needed.

What’s next?


While these technology companies are changing the home healthcare dynamic they do not necessarily pose at competition for traditional home healthcare providers. This can be seen as a partnership opportunity.

By combining the multi-decade expertise of home healthcare companies with technological prowess of technology companies, a truly unique offering can be created which has the potential to change how the industry delivers care and benefits from Medicare Advantage revamp.