Market readiness is the theme for this year’s outlook. The talk of transformation has traction. Too many disruptors are in the healthcare market pushing out traditional models of care. Until you see the information gathered in one document, it may seem transformation is still a while away. Our study of trends and market signals indicate otherwise.

Many post-acute companies are already positioned to respond to a new payer market. Expanding footprints and integrating service lines have them well-positioned for contracting.

Big Goliath companies such as CVS Health are wasting no time by responding to new payment models. Shortly after the announcement of a payment model to deliver dialysis in the home, CVS announced it is in that space.

Medicare Advantage Plans will soon be reacting to greater innovation provided to them last October. This is the market signal of a massive move away from fee-for-service to Medicare Advantage Plans.

Five Market Signals

  1. Disruptors in the Post-Acute Space: Competitor or Partner?
  2. Managing Higher Acuity Patients in the Home Will Redefine Home Care Services
  3. Medicare Advantage Plans Contracting Gets Harder
  4. Remaining Solo Gets Harder
  5. Value-Based Contracting Coming Faster Than You May Think

For post-acute providers, expect to hear further announcements about value-based initiatives in the areas of hospitalizations within the post-acute stay, and Medicare Spending Per Beneficiary. MedPAC’s focus on the need to reduce variations in post-acute spending has the ear of Congress.

2020 will be the year of change for post-acute providers. The Industry is facing reimbursement challenges and new disrupters elbowing its way into the post-acute space. All is not to be feared. Change also brings about opportunity.

2020 Market Trends

Disruptors in the Post-Acute Space: Competitor or Partner?

Once more understood as disruptors to hospitals and physicians, companies such as Walmart, Amazon and CVS Health are moving into the post-acute space. Offering programs such as knee replacements in the home, employee plans combining virtual and in-person visits, and offerings of chronic care management programs will test provider and payer relationships. Providers should be striking-up conversations and contracting opportunities before the big Goliath comes to your market and carves out traditional health care models to be your competitor.

Managing Higher Acuity Patients in the Home Will Redefine Home Care Services

Expectations from other stakeholders including ACOs, physicians and payers will be the oversight and management of higher acuity patients in the home. Risk is increasing for ACOs. Physician need partners to help manage chronic care patients beyond their four walls. Payers are going to up the ante on value-based contracts. For post-acute providers such as skilled nursing facilities and home health agencies, this can be a challenge with cutbacks in reimbursement or an opportunity to expand new care models.

Post-acute models will redefine models that are comprised of integrated teams, services equal to a “virtual” hospital, and a technology infused platform to better manage the high-risk patient population.

Medicare Advantage Plans Contracting Gets Harder

President Trump’s Executive order signed in October last year called Protecting and Improving Medicare for our Nation’s Seniors, expanded Medicare Plan options to offer greater supplemental benefits, technology, and encourage more innovation for Managed Care Plans. Expect in 2020 to see a greater number of managed care plans, new entrants and additional supplement benefits to be announced. The challenge for providers is the expansion of plans and benefits will roll-out on a market-by-market basis making contracting harder. Providers will need market research, sometimes county by county to align with the goals of payers.

How Will Medicare Advantage (MA) Plans Play Out in 2020?

Expect to see more Medicare Advantage Plans expand county by county, and state by state. For example, UnitedHealth Group announced expansion in 100 additional counties. Humana will be in 160 new counties and its PPOs in 172 counties. Cigna is launching its first MA PPO plans in 43 counties across eight states, and HMO plans in 37 additional counties in nine states. What this tells us is expansion of plans and supplemental bene fits will be on a market by market basis.

Beginning in 2020, plans can provide benefits unrelated to health that could reasonably improve or maintain a person’s health. Expect to see benefits focused on chronic illnesses or to reduce their cost-sharing. For example, Cigna Corp. is piloting benefits that address its members’ social needs on a market-to-market basis in several states next year to learn what works best at reducing emergency department visits and healthcare spending.

Medicare Advantage (MA) plans will have the option of covering for example, someone with diabetes to get transportation to a doc- tor’s appointment, or to a diabetes education program or to a meeting with a nutritionist. MA plans can even pay for cooking classes as part of improving someone’s diet. For someone with heart disease, an MA plan could provide heart-healthy produce or other food. For beneficiaries with asthma, the plan could cover home air cleaners or even pay to shampoo a member’s carpet to remove the irritants that often trigger asthma attacks.

Also beginning in 2020, MA plans may pay for improvements to a member’s home, such as permanent ramps or wider hallways and doors to accommodate wheelchairs.

CMS expects that about 500 plans will offer about 2.6 million enrollees health-related supplemental benefits such as adult day programs or caregiver supports. About 250 plans will offer non-medical supplemental benefits to about 1.2 million enrollees. These include services ranging from rides to the grocery store to pest control.

Remaining Solo Gets Harder

Market signals indicate it will get harder and harder to remain as a “solo” provider. Companies like Addus Homecare, Amedisys, and LHC Group are diversifying service lines and expanding their geographic footprint. Responding to new market transformation, these companies are developing multi-service lines to deliver a post-acute continuum of care model. For example, Addus has been on the merger and acquisition trail buying up multi-state hospice, home health, and personal care providers. This creates the ability to care transition patients to different levels of care in a post-acute network. Payers are looking for the convenience of one-stop resources for contracting. Not a national company? … you’ll need to start forming strategic partnerships to create a similar model.

Value-Based Contracting Coming Faster Than You Think

If your mind lets you wander into thinking value-based care is still a long way off, take a look at these stats. Here’s how many hospitals and providers have inked value-based payment agreements with the five largest commercial U.S. insurers:

  1. UnitedHealth Group had 1,100 hospitals and 110,000 physicians in value-based care arrangements in 2017
  2. Aetna had over 1,900 value-based contracts with providers as of Jan. 30, 2018.
  3. In April 2017, Anthem had 159 ACO agreements and more than 64,000 providers in ACOs and patient-centered medical homes, according to Forbes.
  4. More than 240 primary care provider organizations, 500 hospital facilities and 270 specialist programs are under value-based contracts with Cigna.
  5. As of Sept. 30, 2018, Humana had value-based payment agreements with more than 52,000 primary care physicians.

A 2018 survey of 120 U.S. commercial insurers found nearly two-thirds of their payments are tied to some kind of value-based arrangement rather than fee-for-service. And by 2021 the insurers expect only 26% of their claims to be from straight fee-for-service.

Last September MedPAC, The Committee that advises Congress on Medicare, proposed a value-based incentive program to include a number of risk-adjusted claims-based measures including all-condition hospitalization within the post-acute care stay, successful discharge to the community and Medicare spending per beneficiary. The incentive program also accounts for social risk factors by comparing providers with similar shares of dual-eligible beneficiaries. A 5% withhold would fund the incentive payments. But the Commission said that the number might change based on feedback from its members.

The program would establish a unified value-based incentive program to evaluate providers across a standardized set of measures, including:

  • Risk-adjusted, claims-based measures such as Medicare spending per beneficiary.
  • Uniform performance targets that account for social-risk factors.

The value-based incentive encourages increased focus on quality measures, the patient experience, and social-risk factors that might impact performance payments. Recommendations are expected to be finalized next year.

The value-based measures are in preparation of the IMPACT Act aligning the various PAC prospective payment systems (PPS) across settings. Home health agencies, skilled nursing facilities, inpatient rehabilitation facilities and long-term care hospitals comprise the different settings considered under the PAC PPS.

There is great attention to “un-siloing” the care continuum. The alignment of physician care management payments, technology expanding across providers, the need to reduce the cost of care, and the commonality of goals and quality measures across providers and payers is supporting the push. Lean into innovation. Market dynamics suggest the time is now.