The Centers for Medicare & Medicaid Services’ (CMS) six-month moratorium on new Medicare home health enrollments limits one pathway for providers to scale, but operators can still expand organically and through M&A.

Growth-minded operators can increase census, improve workforce availability, acquire other businesses and forge joint ventures, home health industry insiders said during a recent Home Health Care News webinar.

Organic growth can mean improving conversion rates from referrals, expanding partnerships and developing operations, said Andwell Health Partners CEO Ken Albert.

“[Compliant and effective] providers will just double down on things that they’re already doing: increasing census within areas within their existing service area, strengthening referral relationships, improving conversion rates for appropriate referrals, reducing the stay volatility, expanding clinical capacity — in other words, workforce, where that’s available, and really differentiating themselves on quality, access and responsiveness and compliance,” Albert said.

Beyond doubling down on the drivers of organic growth, Albert also suggested providers consider expanding service lines outside of home health, such as starting or enhancing palliative care lines.

Andwell Health Partners, formerly known as Androscoggin Home Healthcare + Hospice, provides home health care, hospice and palliative care, community services, therapy and clinical services within Maine.  

Companies can also expand through mergers and acquisitions, though joint ventures may prove more attractive. M&A comes with complicated analysis on whether deals are permitted under CMS’ moratorium — which could very well last longer than six months.

“You’re more likely to see an expansion of joint ventures and affiliations,” Albert said. “I think providers will look to see how to increase their census and increase patients, the numbers of patients in their care by looking at affiliations, more formal, whether that’s management agreements, integrated partnerships, shared service models, affiliation agreements. I think that’s going to be [the case] especially if we see the moratoria extended.”

Unintended moratorium consequences

CMS has said that the moratorium is designed to protect patients, prevent Medicare fraud and safeguard the home health and hospice sectors’ reputations.

However, the moratoria could limit competition within the home health and hospice industries as an unintended consequence — especially if root causes of fraud aren’t first eradicated, said Hillary Loeffler, vice president of policy and regulatory affairs at the National Alliance for Care at Home.

The National Alliance for Care is the United States’ largest advocacy organization representing home health, hospice and Medicaid community-based services.

“It’s a very blunt policy tool that can actually restrict participation from legitimate high-quality organizations that are seeking to serve beneficiaries, particularly in areas where there is access need,” Loeffler said. “We don’t want the moratoria to reduce competition [or] constrain access, but unfortunately, I feel like sometimes it can do that.”

Many legitimate providers that might get swept up in CMS’ enforcement actions cannot afford attorney fees to withstand undue enforcement, Loeffler said. If compliant providers are inadvertently implicated in CMS enforcement efforts, competition and innovation could be stifled. It could also make it difficult for quality providers to expand into new areas.

Going forward, home health providers must work to educate policy makers so they can understand how their regulatory actions affect not just fraud but access, competition, provider diversity and market consolidation, said Loeffler.

Ideally, CMS would take an approach that includes robust provider screening, data-driven oversight and targeted enforcement against bad actors while ensuring qualified providers can continue to care for patients.

“The thing that I like to focus on and would like to see happen is once the bad actors are identified, whether it be through the moratoria or through current providers that are already out there, is that they’re held accountable,” Loeffler said. “We’ve seen some of that change over the past couple of years or so where that hasn’t happened, and I think that sends the wrong message.”