In-Home Support Options for Medicare Advantage Plans and Health Systems

As we grow older, we all may lose a little of our memory, some of our hair and a good chunk of our energy. But the one thing none of us wants to lose is our independence.  Today’s Baby Boomers don’t want to live under anyone else’s rules. They want to remain in their own homes as long as possible, even when facing limited mobility or chronic health conditions. Of seniors 65 years of age and older who need day-to-day assistance, 87 percent say they want to age in place, and for many, that would require in-home care.  

With the number of Americans over age 65 set to double by 2030, Medicare Advantage plan providers and health systems can benefit by getting in front of seniors’ needs now and putting their companies top of mind during open enrollment. But if you’re a Medicare Advantage insurance plan or health system, what in-home care options do you have to appeal to this group to win favor, stay competitive and protect your bottom line? We’ll take a look at the expected growth in the home care industry and the possible opportunities available as the market evolves.

An Overview of the Home Care Services Market and Trends

Home care is one of the fastest-growing healthcare industries in the U.S. In addition to the rapid growth of the senior sector and an aging population, many of today’s seniors watched their parents lose privacy, autonomy and independence in traditional long-term service facilities such as a nursing home and have decided they don’t want that lifestyle for themselves. Some have seen their parents spend life savings on long-term care. Some have become caregivers themselves, devoting their lives and finances to caring for their parents.  These experienced retirees have become savvy about senior care and are taking steps now to remain independent at home for as long as possible.

Preparations include advance care planning by purchasing long-term care insurance, comparing Medicare Advantage and Medigap insurance plans that provide long-term care options, and choosing health systems that offer a home-care component or that partner with an agency that does. The choices these seniors are making are changing the landscape of skilled care and home care. After the nursing home boom of the 1980s and 1990s, the number of skilled nursing home facilities in the U.S. flatlined at about 15,000, where it’s stayed for over a decade. Over the next two years, it’s expected to drop 20 percent. On the flip side, senior in-home care is expected to grow by 6.7 percent over the next year alone.  

While a skilled nursing facility unquestionably has its place in long-term care services, especially when a senior needs 24/7 medical care, professional home health and home care services offer numerous benefits that make them desirable. Research shows receiving home health care lowers one’s risk of hospital readmissions by up to 25 percent, eases the isolation and loneliness that can have a negative impact on a senior’s overall health, and delivers significant cost savings to patients and their insurance plans.  Senior in-home care is truly patient-centered, one-on-one care.

Those services that fall under the home health umbrella include:

• Homemaker and companion services, which assist with activities of daily living (ADLs), for instance, help with grooming, housework and transportation
• Physical, occupational and speech therapy
• Skilled medical care following an acute health setback, including nursing care, wound care and disease education
• Dietary services
• 24-hour personal care
• Palliative care programs and hospice care

Depending on a patient’s needs, they made need only one service over the course of their lifetime or a combination of multiple in-home services. But with 60 percent of Baby Boomers diagnosed with a chronic condition, such as diabetes, heart disease and arthritis, there’s a good chance home-based care is on the horizon for many.

Market Share Projections for the In-Home Care Industry

Let’s take a look at the in-home healthcare services industry to see where the growth lies and where Medicare Advantage plans and health systems can focus their efforts to financially benefit over the next few years.  According to marketing research company IBISWorld, the 2019 market share of the home care industry is divided into five main segments:

• Traditional home healthcare and home nursing care – 57.9 percent
• Home hospice – 22.1 percent
• Home therapy services – 8.9 percent
• Homemaker and personal services – 6.4 percent
• Other – 4.7 percent

Currently, these in-home services generate $99.4 billion in annual revenue, and over the next five years are expected to increase another 5.7 percent. By shifting to the lower-cost models that seniors prefer, health systems alone, for example, can save up to $6,500 per patient each year while better managing chronic conditions.

Non-Clinical Homemaker and Personal Service Opportunities for Health Insurance Plans

Among the five segments that have captured the attention of seniors and health insurance plans, there is one that has become particularly newsworthy over the past year—homemaker and personal services, or in other words, non-clinical in-home care services.

Recently, the Centers for Medicare & Medicaid Services (CMS) delighted senior patients by relaxing their regulations on non-clinical home care, allowing Medicare Advantage health plans to offer non-clinical home care services as a supplemental benefit to diagnose, prevent or treat an illness or injury, compensate for physical impairments, improve health conditions, or reduce avoidable emergency and healthcare utilization. Up until now, CMS would cover in-home aide services only if they were in relation to an acute illness or injury. If a senior had any other issue associated with an activity of daily living, such as the inability to cook for themselves because of severe arthritis, they had to pay for any home care out of pocket, or if patients qualified, Medicaid long-term care assistance could pay. With the policy change, seniors who had to rely on family caregivers to help them, or dip into their savings for professional care, may now qualify for home care benefits through their Medicare Advantage or Medigap insurance plan.

Granted, health plans must choose these options, get them approved by CMS, and embed them into their benefit plans before members can take advantage of them, and Medicare coverage applies. With few plans currently offering home care supplemental benefits, those who do are going to have a competitive advantage by retaining current members and attracting those new or soon-to-be retirees who have home care at the top of their must-have list. In 2019, only 7 percent of Medicare Advantage members will have access to these benefits, giving interested seniors the incentive to comparison shop for plans that provide them. While it will take time for the health insurance industry to catch up with the new guidelines, the homemaker and personal services line is getting ready to explode over the next few years.

How do non-medical in-home services like homemaker and personal services benefit patients and their family caregivers?

Homemaker and personal services go by many names—home care, home care aid, non-medical care, non-clinical care, custodial care, personal care, in-home care services, and companion care. Regardless of how you refer to them, the overall goal is to assist seniors who are struggling with activities of daily living because of a temporary illness or injury or a chronic condition, such as dementia, diabetes or heart disease. Personal services allow the senior to age in place in the home they love and hold on to their independence a little bit longer.  Professional non-clinical homemaker and personal-service aides typically provide the following help:

• Assistance with bathing and dressing
• Meal preparation and diet monitoring
• Medication reminders
• Light housekeeping
• Assistance with walking and light exercise
• Shopping and other errands
• Respite care for family caregivers
• Companionship to reduce the health risks that come with loneliness

Homemaker and personal services can be short-term or long-term, a few hours a day or 24 hours a day.

How is in-home care expected to grow over the next few years?

With the industry shift to lower-cost, patient-centered care and 70 percent of Americans over age 65 requiring personal care at some time in their lives, homemaker and personal services are set to generate 6.4 percent of revenue for the Home Care Providers industry in 2019, per IBISWorld. According to the U.S. Bureau of Labor and Statistics, the number of clinical home-health and non-clinical personal-care aides is set to grow a whopping 41 percent from 2016 to 2026, faster than the average of all occupations.  A portion of this growth is within regional and national health systems that are incorporating their own personal care and home health aide programs into their lineup of services or partnering with home care agencies who can deliver care. Because the CMS’ Hospital Readmissions Reduction Program cuts payments to hospitals with excess readmissions, health systems are taking a closer look at what they can do to improve patient outcomes and increase reimbursements. And as previously noted, multi-disciplinary home care teams can reduce re-hospitalizations and emergency room visits by 25 percent.

How can Medicare Advantage insurance plans and health systems add these benefits to their service lines?

In 2019, only three percent of Medicare Advantage plans are expected to offer home care supplemental benefits. The newly allowed benefits for Medicare coverage by the CMS came quickly, allowing health plans little time to put in place the systems and processes that are needed to ensure efficient and sustainable delivery of services. In 2020, that statistic is expected to go up.

Several Medicare Advantage plans are already drafting new benefit designs that include homemaker and personal services for the elderly, and partnering with home care providers who can hit the ground running—agencies that offer high-quality services, a strong employee base, interconnected programs with healthcare providers, and the data to back up success stories. Medicare Advantage plans will need to submit their 2020 benefit designs to CMS for approval by June 1, 2019 to ensure funding for 2020. Those health insurance plans that are able to slide in before the deadline have an advantage over competitors when seniors begin to weigh the pros and cons of each plan.

For health systems that want to jump on the home care bandwagon as well, whether that’s creating their own program or aligning themselves with a home care provider, experts say the first step is staying on top of the ever-changing CMS regulations in regards to home care. Remarked one healthcare industry veteran to HealthLeaders, “Medicare is looking at new ways to stratify which patients we see and how often we see them. You need to have a clinical person in place to keep you compliant with all of the changes CMS is making for home health.”

Clinical Home Health Opportunities for Health Insurance Plans

With clinical home health care, patients can receive many of the same skilled nursing services they would receive from traditional long-term care facilities, such as assisted living facilities and nursing homes, but at a lower cost, including:

• Medical assessments
• Wound care
• Pain management
• Disease and medication management
• Medical social services

The shift toward clinical home health care to reduce costs is a smart financial choice for Medicare Advantage plans and their beneficiaries: the monthly cost for in-home care is about half of what a private nursing home room runs. Other benefits:

• Seniors age at home where they want to be
• Health plans can grow their businesses and improve customer retention by being facilitators of those preferences
• At home, patient care is custom and can include home modifications, dietary personalization, and tailored activities of daily living
• The burden of care is reduced for family members

Important to patients, healthcare systems, Medicare Advantage plans, and traditional Medicare is that home health care can help prevent re-hospitalizations and readmissions in the 30 days after discharge—a key benefit as one in five seniors is readmitted within that same time period at the cost of more than $26 billion each year. By having a home health care supplemental benefit integrated into your plan, you can help drive down hospitalization costs that drive down earnings. Depending on the condition of the senior, non-clinical home care can also provide this benefit.

Home Hospice Care and Palliative Care Opportunities for Health Insurance Plans

In addition to home health care services, home hospice care has become a critical discussion point among those of social security age and their families. When seniors approach end of life, many of them want to spend their final days in the home they love, surrounded by the people they care for, and not in a skilled facility. In 2016, 1.43 million Medicare beneficiaries were enrolled in hospice for one or more days. Hospice care allows patients who have a terminal illness, such as end-stage renal disease or advanced Alzheimer’s disease, to have greater control over their end-of-life care decisions. By bringing care and comfort to them, a hospice agency can help manage a patient’s pain, provide needed medical services, and offer psychological and spiritual care.

While hospice care can be delivered in nursing homes, hospitals and freestanding hospice facilities, in 56 percent of cases, it’s delivered in the patient’s home. Original Medicare covers home-hospice services even if a senior is in a Medicare Advantage plan. When a healthcare provider recommends non-curative care, the patient reverts to fee-for-service traditional Medicare for payment. If the patient does not disenroll completely from their Medicare Advantage plan, the insurance company will continue to provide prescription drug coverage and medical treatments as usual. For instance, if a senior is receiving hospice care for cancer, but also suffers from severe rheumatoid arthritis, their RA drugs can continue to be covered under their Medicare Advantage Part D supplemental benefits. However, in 2019, the CMS announced it was expanding its Medicare Advantage Value-Based Insurance Design model to include an end-of-life care carve-in pilot program for 2021, giving members the opportunity to stay on their chosen plan.

As Home Health Care News reported, “The change is designed to increase access to hospice services and facilitate better coordination between patients’ hospice providers and their other clinicians.”  For Medicare Advantage plans, this new change requires a learning curve for hospice costs, benefits and guidelines. Over the next two years, plan providers will be incentivized to learn more about the hospice landscape in order to integrate the benefit into their plans, which means building relationships with hospice providers and health care systems and establishing processes that ensure a seamless approach to care coordination.

Home Therapy Opportunities for Health Insurance Plans

Finally, home therapy services have seen a significant increase among older generations, used both when recovering from an acute health condition or managing a chronic health issue. Any Medicare Advantage member can qualify for services if they meet the following qualifications:

• Their healthcare provider has certified them as homebound per CMS criteria
• The patient requires skilled nursing care on a part-time, short-term basis to improve their health condition or prevent an injury or illness from reoccurring
• The patient receives home therapy services from a Medicare-approved home health agency

But what does Medicare cover? Some of the common home therapy services include respiratory therapy, occupational therapy and speech-language pathology. However, home infusion therapy accounts for nearly 65 percent of the industry’s revenue, covering intravenous administration of nutrients, antibiotics, pain management drugs, and chemotherapy drugs.  Medicare Part A will cover long-term home health care therapy services for Medicare Advantage plan members as long as they are doctor-ordered and the patient can’t leave home for care. However, care is limited to 28 or fewer hours per week (or up to 35 hours if the condition is particularly critical), and daily care is only provided for up to 21 days after a health setback unless an appeal is submitted.  While a Medicare Advantage plan must provide the same level of care as Original Medicare, many have imposed their own rules and restrictions, such as prior authorizations, copayments and requiring beneficiaries to use home therapy agencies in their network. For recent Baby Boomers who are comparison shopping plans and understand the importance of home therapy services in their long-term care, stringent guidelines from a Medicare program can be a make-or-break decision.

Home Care: Win-Win for Medicare and Medicaid, Health Systems, and the Patients They Serve

Today’s Baby Boomers grew up in an era of patient-centered care and expect healthcare choices that match their preferences. As retirees begin looking at care for their golden years, they’ll lean toward those Medicare Advantage and Medigap plans as well as healthcare systems that take consumer-driven principles to heart.  Thankfully, both the healthcare industry and CMS have recognized that direct-to-consumer home care improves patient outcomes and saves costs by preventing problems from escalating, reducing re-hospitalizations, and staving off the nursing home until absolutely necessary. That across-the-board demand will continue to propel the in-home care industry forward with expected year-to-year growth. By taking advantage of the recent CMS changes as soon and as efficiently as possible, plans and systems can provide seniors with a solid foundation to protect their independence for years to come.