New year, new payer sources? Going into the new year, I have some aggressive goals, and encourage you to do the same. The best opportunity in home care that I foresee is to expand and build a diverse payer source mix. There are more payers for home care now than ever—and you deserve a bigger slice of the pie.
The Current Payer Landscape
Private pay—care paid out of pocket—has historically been the largest payer of private duty home care services. It’s likely a big part of your business today. That figure has steadily declined across the board. Contrastingly, Medicaid and Medicare are the most critical payer sources for long-term care, but that doesn’t even begin to scratch the surface of the entire landscape.
Other payer sources include the Program of All-Inclusive Care for the Elderly (PACE), religious or cultural organizations (like the Claims Conference for Holocaust survivors), VA benefits, long-term care insurance, local charities, and more. States are continuing to see the value of home care services. Washington, for example, has implemented the WA Cares Fund, a public long-term care insurance program to help families access the care they need.
It has been an uphill battle trying to sit at the table with our peers in acute care. Non-medical services are among the lowest reimbursed direct patient care services available, despite the impact of these tasks on health outcomes. Now is a great time to demonstrate to referral payer sources (and of course, power partners) that home care is here to help them and that it deserves reimbursement rates that correlate to the value of what caregivers do.
What Your Payer Source Mix Might Look Like Today
Every market is slightly different in what payers are available. The extent to which they cover home care likely differs too. Looking at the 2023 HCP Benchmarking Study, it looks like:
- 64% Private Pay
- 11% Long Term Care Insurance (LTCI)
- 7% Medicaid Waiver
- 7% VA
- 3% Medicaid (Direct)
Is your agency’s mix different? Rest easier knowing that there’s no silver bullet or perfect formula.
Even though private pay might be your preferred payer source, the decline in private pay business is a blessing in disguise. Clients have historically paid for care out of pocket, and that is not sustainable. Factors like advances in medicine and longevity, aging houses, and declining birth rates mean that fixed incomes and rainy-day funds are not keeping pace with funds earmarked for direct care costs. The data shows that length of stay has decreased: clients use less care and not as long—and it’s not because their needs decreased. What is needed is a better mix of payer sources to ensure that clients can continue to receive the care and outcomes they need.
What does this mean for the overall market in 2024?
Trends For Home Care Payers Are Changing For The Better
The Affordable Care Act (ACA) didn’t just shore up health insurance gaps for uninsured individuals. It also acted as a catalyst to evolve and transform the way that home care is viewed by the healthcare system at large.
One example is capitation programs. At a high level, payer sources in this model pre-pay providers like hospitals a fixed cost or capitation per patient. This incentivizes providers to be innovative, creative, and patient-centered to lower costs while improving care quality: a win-win for all around.
Home care is a great way for acute systems to improve outcomes at a lower cost.
Capitation programs have—since the ACA—looked at home care agencies as a fulcrum for 1. decreasing care costs per patient and 2. preventing avoidable readmissions. Research has shown that health outcomes are most significantly impacted (about 60%) by social, non-medical factors, like your environment, social engagement, food, transportation, and more: the bread and butter of what home care agencies do day in and day out.
With that in mind, here are some other payers for you to consider:
- MCO Direct Contracting: 40 states have a program, see if your state has an MCO. If they have one, look into joining their provider network, and you’ll go through their credentialing process to make sure that their standards will be met. Once you’re in their system, you can care for MCO (Medicaid) patients and receive payment directly from the MCO.
- Veterans Affairs: The VA is a great way to give back to veterans, and home care has been a staple of the care they provide. The VA is constantly looking for new providers, particularly in states with high rural population groups. The VA also has new opportunities to engage home care providers, like the Veteran-Directed Care (VDC) program, and Program of Comprehensive Assistance for Family Caregivers (PCAFC), and more. The Elizabeth Dole Act passed the House of Representatives but hasn’t passed the Senate yet. This is all to say, there’s a lot of opportunity for home care providers like you to elevate your power partnerships with the VA.
- Medicaid Waivers: Medicaid Waivers are not age-based, and include older adults and people living with disabilities. A new KFF report showed that HCBS waiting lists have included more than 700,000 people most years since 2016. What’s more, they also shared that the average waiting list time was 36 months. You can play a direct role in helping to push those times down.
Utilize Caregiver Data To Quantify The Impact Of Your Efforts With Payers
Payers are increasingly working with home care agencies like yours. That’s a cause for celebration. However, we have to continue to ensure that our voices are represented.
We see amazing patient and client transformations every day; home care brings families together while helping clients to maintain independence and a sense of purpose. What we need to do is document and quantify these outcomes.
If your agency has a client that discharged from rehab with mobility issues and your caregivers help them exercise and recover, you need to write that down. Share these stories on social media. Invite families into your office for a video or photo shoot.
Celebrate these transformations with your clients. And share the proof with your payers. When payers continue to be inundated with these stories and hard numbers, you’ll be able to better negotiate rates and work toward the value-based care transition. It might not happen today, but we need to be prepared.
How will your agency reinvent your payer source mix in 2024?