Private, Public Sectors Both Needed To Solve Home Care Access Crisis

Vice President Kamala Harris proposed a Medicare home care benefit earlier this month. Some found the proposal innovative and exciting, others found it unrealistic and potentially costly. Many in between found it well intentioned, but wanted to hear further details.

But more broadly, Harris’ proposal evoked an interesting conversation, at least in my mind. Who is better off improving access to home care for American seniors: the private sector or the public sector?

“The best answer is for the private sector to introduce new and varied business models that make high quality home care more affordable,” Arosa CEO Ari Medoff recently told Home Health Care News, in reaction to the proposal. “Innovation comes in many forms, though in our world today too often people define it solely in terms of technology.”

Tens of thousands of home care providers deliver services everyday. They are paid by multiple sources to do so – out of pocket (private pay); Medicaid (home- and community-based services); long-term care insurance; Veterans Affairs (VA); and Medicare Advantage (MA).

Namely, private pay, Medicaid and the VA drive the vast majority of home care services. But private-pay home care costs have skyrocketed over the last three years. Medicaid rates vary greatly by state, leaving access gaps in less sturdy reimbursement markets.

That leaves a huge swath of seniors without access to services that could keep them in their homes and out of more costly brick-and-mortar facilities. Harris’ proposal would theoretically help fix that.

This week’s exclusive, members-only HHCN+ Update considers a key question for home care moving forward: Who should be responsible for bridging the access gap?

Paying for home care

Home care leaders, including Medoff, reacted to Harris’ proposal in an HHCN story this week.

Medoff specifically touched on the need for the private sector to step up, and other leaders brought their own questions and comments to the table.

Among them:

– “What will happen to existing state-level Medicaid programs for private duty services?”

– “Will our states need to redirect Medicaid funding to CMS for a federal home care benefit?”

– “On the surface, this proposal is amazing and great to see, but underneath, it appears a lot of things need to fall into place to even allow something like this to even occur.”

While those details are still unclear, this much is clear: For Americans that don’t qualify for Medicaid, home care is expensive.

The need is so great, though, that some Americans forfeit assets to gain Medicaid eligibility.

The monthly costs for home care services rose to $5,720 in 2023, according to Genworth. That’s just an average, too. Care on an hourly basis costs $30 on average, but is as high as $50 in certain areas. Not to mention, many home care providers require a minimum-hour threshold, which forces families to empty their pockets or avoid paying for care entirely.

Rising billing rates aren’t all bad for private-pay home care providers in the near term. Higher billing rates mean more revenue. Long term, though, those higher rates will not just hurt home care-needy families. They could also hurt providers.

Griswold CEO Michael Slupecki explained this conundrum in 2022, referring to his company’s franchise owners.

“There are some folks that have reached their level of contentment with their income,” he said. “And I think sometimes they’ll go, ‘Look, it’s been an easier year for me. I can make my target income without working so hard. I love this.’ So, as an organization, we’ve got to try to keep pushing through that. Because while they could be doing better, they could be losing market share. And that’s not something we want to do in any market.”

With that in mind, some home care providers – like Arosa – have begun to adjust.

“We need new models in terms of how folks set aside or access funds to pay for care, new operational delivery models that may look different than the 1-1 attention that is the standard today, and new concepts that improve home care jobs so that we can attract, train, retain and treasure amazing teammates who are actually doing the all-important work with clients,” Medoff continued. “It is time for our industry to step up our game.”

New business models would be welcomed in an industry that typically follows a similar formula for private-pay clients. The wage for the caregiver is half the price, and the other half of the price goes to the provider.

For now, providers are starting to explore models that don’t require one-on-one attention, like Medoff mentioned. That helps save the client money, while also easing the staffing burden on providers. Adult day services are an example there.

Short-hour stays are another avenue providers are taking. While some providers still have minimum-hour thresholds, leaders concerned about limited home care access – and losing market share – have begun to usher in new concepts.

“At one point, you had to have at least eight or nine hours of care per week, or maybe even 20 hours per week,” Senior Helpers COO Mari Baxter said. “You had to have a minimum, and that minimum is no longer part of what we believe is the fair and the right thing to do. So we’re encouraging no minimum hours.”

It may take time for that model to become profitable, but Baxter believes it is worth the wait.

Plus, however long that’ll take, it’d likely take longer for Medicare to successfully implement the home care benefit.

Bayada Home Health Care’s Michael Johnson explained the problem with Medicare earlier this week while discussing movement – or lack thereof – on value-based home health care.

“Medicare is a behemoth; it’s hard for them to move quickly, and they’re so tied into physician and hospital payments,” Johnson, chief researcher of home care innovation at Bayada, told HHCN. “But with some smaller regional payers, we’ve had some luck doing value-based purchasing or value-based contracts with them.”

Plus, there needs to be enough home care providers to meet demand. When governments do not reimburse adequately in Medicaid, it stymies innovation and entry into the sector.

“Everything costs a whole bunch of money,” Village Caregiving CEO Jeff Stevens recently told me. “All of a sudden, what’s your profit? None? Maybe 5%? I don’t know. My suspicion is, at that point, some business owners out there would look at it, say a 5% margin, and just say, ‘Let’s just do real estate,’ or, ‘I could get that in the stock market.’”

Chipping in

The presidential candidates battling over home care is a good thing. Harris’ proposal is also a good thing, even if it’s never implemented, in my opinion. It’s an acknowledgement from the vice president that more people need access to home care.

Medicare moves slowly, though, and the upfront costs of the home care program would be significant. One could make a good argument that covering home care for seniors would result in cost savings long term, but it’s still a tough sell.

It’s also tough to expect all for-profit home care providers to put aside that profit for a moment and find ways to care for more people. If it ain’t broke, don’t fix it.

And the Centers for Medicare & Medicaid Services (CMS) is already trying to improve HCBS through Medicaid via the Medicaid Access Rule.

Who should revolutionize home care, then? Medicare? Medicaid? The private sector?

The answer is a boring one: all of the above.

Home care providers know their business better than anyone, and most have the ability to tweak their business models and care for more people. In the end, it will be a shrewd choice to care for more people, and not fewer.

HCBS should be professionalized, and there should be more visibility into each state’s program. Providers should be measured on quality, if possible, but they also shouldn’t be squeezed on margins. If they are, less entrepreneurs and investors will enter the space.

And Medicare can chip in, too. Medicare doesn’t have to cover all home care services, but it could cover respite care for family caregivers. It could cover a certain amount of hours per month for beneficiaries.

There are ways for all parties to get involved in the revolution, and for the proposition of expanding home care access to be a win-win.

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