Home is Where the Value Is – But It’s Not Without Risk

Date: November 14, 2022 Lincoln Intelligence Group

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The economics of healthcare produces its own unique kind of “physics.” Specifically, the sheer weight of the system’s drive for value causes the compression of 1) adjacent healthcare settings into one another as well as 2) care into the lowest-cost setting. While this pressure has resulted in a rise in the awareness of in-home care‘s potential within our system, this rise in profile has not translated directly into market power. This is not to say that home care’s promise is without opportunity; however, the opportunity is simultaneously accompanied by additional risk as the system migrates away from fee-for-service to value.

Value is in the eye of the (be)holder and, specifically, the holder of the healthcare financial risk. The drive for value has forged a divide between entities that are upstream, or closer to the premium dollar, and downstream, or closer to the final health outcome. Ultimately, healthcare physics has caused downstream providers to feel commoditized and, therefore, pressured on a reimbursement-to-value basis. As such, providers are rightly pushing back against unfair payment rates and terms of service.

To resist the physics of downstream commoditization, home-based providers are pursuing multiple fronts in order to both better partner with payers and other providers and grab a fairer share of the premium dollar:

  • Acute Care Hospital at Home: Hospitals who have made the leap from “heads in beds” to “days at home” - often at the urging of a parent-sponsored health plan - are diverting acute care episodes to the home in greater and greater numbers. Acute care hospitalization in the home looks likely to become a permanent part of the landscape.
  • Serious Illness Management: Many hospice and palliative care providers are morphing into serious illness providers who can sub-capitate for part of or all the patient’s care as their disease state progresses.
  • SNF at Home: Upwards of a third of the SNF-eligible could be cared for at home when the circumstances are right. These circumstances require alignment between “4 Ps” - patients, providers, payers, and planners. A key hurdle for SNF at Home will be to supplant the term “SNF-eligible” with “Home-eligible” in the parlance of case managers and discharge planners.
  • Chronic Care Management: With an ever-expanding complex care population, payers are now recognizing the need to manage patients before they become complex. However, the goal of home-based, population-based, chronic care management has been elusive due to capacity and cost constraints. The degree of difficulty rises proportionally when caring for rural enrollees.
  • LTSS: Some personal care providers who have embraced the government as a payer have been able to achieve upside bonuses with managed Medicaid programs.
  • Medicare Advantage: The absence of a standardized home health benefit under Medicare Advantage has led providers to contract creatively for additional services not authorized by the plans, who often pay per visit. This results in convolutions whereby a payer authorizes one set of services and the hospital, for example, funds add-on services such as transitional care. The hospital’s aim may be alleviating occupancy, meeting length of stay benchmarks, and/or reducing hospitalizations. In this case, being aware of the hospital’s incentives provides an opportunity to help them offload the risk of an unreasonable payer.