In the coming years—based on feedback from Medicare Payment Advisory Commission (MedPAC) and the rising costs of care—the Centers for Medicare & Medicaid Services will be increasing the number of Medicare beneficiaries that are part of a Medicare Advantage (MA) plan significantly. According to the current MedPAC Medicare Payment Policy Report, 46% of beneficiaries are enrolled in an MA plan, an increase of 10% over 2021.
For years, home health and hospice have tailored their businesses around traditional Medicare reimbursement, which has steadily decreased for years as reporting and regulatory requirements have risen. In fact, it is estimated that by 2040, 70% of Medicare payments will be reimbursed through MA plans. The Medicare Advantage learning curve has been difficult to manage for some homecare organizations, with many being discouraged by the lack of success. Engaging with managed care, and specifically with MA, requires much preparation and a strategic approach—more than just dipping your toes in the water.
Given the vast numbers of Medicare beneficiaries who will be automatically enrolled in these plans, it is mission critical to start preparing for this seismic change. The agencies that get involved now will have a distinct advantage over those who wait until the last minute. Embracing this future starts with being prepared for it. During times of increased chaos and change, the best way to navigate through the fog and lack of clarity is by using a strategic process.
Start Your Journey With Internal, Competitive & Market Analysis
Let’s say your organization has an active telemonitoring program. Let’s also assume you are actively reducing rehospitalizations and have developed good relationships with the referring congestive heart failure (CHF) physicians in your area. Where do you go from there?
Strategic processes start with an internal assessment. This allows you to know what your organization is good or not so good at. Reflect on your current programs. Can they be done better? Critically examine what you can do and begin exploring what needs to happen so you can meet challenges and evolve as an organization. Where does this program fit as you move forward? You can use these outcomes to support either referrals or payer relationships. Make no mistake—these questions for all of your programs will take the efforts of your entire organization to accomplish, not only the strategy but the evolution into a managed care environment that will reconstruct how you operate.
Next, look at the market you compete in. You need to ask those same critical questions that you asked yourself about your competitors. Do your competitors have similar programs like telemonitoring, rehospitalization reduction and strong referral relationships for CHF? Let’s assume they do. Let’s also assume you are in the middle of the pack with your outcomes. One thing to remember is that while you are improving your program, your competitors are also improving theirs. Being meticulous is important. Look to your team to help you identify where you can improve. They are involved in this very deeply and they really do know what can stand to change. Use them.
Now look at what is happening within the entire managed care insurance market for the geographical areas you cover. Could one or more of these payers use the new and improved program you have developed? It could be a small payer wanting to increase its position or the current market leader wanting the best of breed. Look at how this aligns with the prevalence of disease in your coverage area. Program offerings in each of your markets may be different, as diseases and outcomes can vary from community to community.
From Findings to Action
The next step is where you can get creative, or you can use the tried-and-true steps you have taken during similar business transformation processes you have completed. Most of your time should be spent on what your findings reveal.
Say you evaluated your organization, the competition, and the payers and discovered that your telemonitoring program could be special. Be sure to not take on more than you can manage; one major program change at a time is the most many organizations can handle well. Focus your efforts to ensure you get the best outcomes, not only for your patients, but for your staff and leadership team.
The difficult questions allow the organization to evolve. We all say that change is a four-letter word. It is also a powerful word, one that many people are afraid of.
We have all experienced a former leader talking about change in a way that was disingenuous. They were not committed, and it seemed as if change was a buzzword on the business bingo card. Change must be strategic; change is necessary for the organization to evolve to meet the challenges of the future.
Take the newly minted program and start working with a selected payer. This may take a bit of time, but it is important to network. Even if you cannot sell that program immediately, the effort here goes toward building a relationship. Similar to managing the change within your organization, try not to create too many relationships initially. What happens if the four payers say yes? You need to service what you sell, so please remember that. This new relationship is now at a point where you can begin the discussions on your contract and how you can help the patient outcomes of the populations the payer is managing. Leverage your ability to help the payer reduce the costs of care and increase the quality of care as well improving outcomes.
When looking at MA contracts, it is essential that you thoroughly understand your agency. You must evaluate where your volumes are. Is the business you are looking for from an MA relationship incremental? The incremental business, from a standpoint of what it costs to service the patients, is just the direct costs, which are the clinical expenses, intake and billing, but not items like rent, administration or other support services. Even at lower rates, the margins can still be achieved, if those costs are lower than the rates MA pays you in your current contract. Another thing to understand is that you are not paid to provide care management, which could be a major reason why the rates are lower. You can leverage what you are doing to forge better relationships, which can ultimately provide better rates or rates that consider your value to the MA plan and its members.
The fear we all see looking into the unknown can ultimately turn into an opportunity for your organization to adapt, innovate and thrive. It helps you begin to evolve to meet the ways that these MA plans will deconstruct what providers do today. It is not as scary as it seems because you are prepared.
