Medicare Advantage (MA) is at an inflection point, prompting home-based care providers to rethink how they grow and whom they contract with.

Plans and providers both need to adapt to changing MA trends, according to experts at Home Health Care News’ PAYER Summit. For providers, that could mean prioritizing collaborative payer relationships and, in some cases, shrinking their operations to build more sustainable businesses.

“Medicare Advantage is here to stay,” Allison Rizer, chief growth and innovation officer at ATI Advisory, said on a panel. “But the program is facing significant headwinds right now. There are just fewer dollars. We’re seeing plans exit markets, which is putting pressure on the plans that remain. It’s creating a change in the negotiating power that providers have. If there are fewer plans, you may have less negotiating power.”

Medicare Advantage patient acuity has also increased, Rizer added, causing costs to increase even as payments decrease. This trend requires organizations to do some “soul searching,” taking a hard look at their margins and determining where they can make concessions or pull down on administrative overhead.

Negotiating power may continue to decrease, Rizer said, as Medicare Advantage plans shift out of the PPO space, where people can go out-of-network, and into HMO.

Founded in 2014, ATI Agency is a health care research and advisory services company based in Washington, D.C.

Being selective with payer partners

h/care CEO and Founding Principal Ryan Haller noted that providers may need to consider reducing their census or payer networks to focus on profitable contracts. For example, h/care acquired a home health agency with a census of 400 patients and a -20% EBITDA margin. Following the acquisition, leadership shrank the agency’s census to 120 patients but brought the EBITDA margin up to 8%.

After h/care acquired the agency, a 95-year-old Ohio-based provider, a margin analysis showed that 80 out of its 100 active payer contracts were losing money.

“In any market, [and] this one in particular, Cleveland, there are certain parts where you have a higher penetration of Medicare Advantage than others. We typically see a higher Medicare Part B type penetration rate in some of the higher-earning zip codes. We made decisions that for 95 years [of] being known in that particular market as kind of the leading provider in the area, to really [shrink] our size.”

The decision to shrink patient census can be a difficult one for not-for-profits, Haller said, as these organizations are brought up on the concept of serving as many patients as possible. Still, less is more, he said.

Nashville, Tennessee-based h/care is a health care management organization. The company provides home health, hospice, palliative care and pediatric care at home.

Providers should be selective about their payer partners, Coreen Dicus-Johnson, Network Health president and CEO, said.

“That’s how we’ve been contracting at Network Health for the last 10 years,” Dicus-Johnson said. “As we take cost out, as we improve quality, as we’ve been able to get the bonus, we share in that. … So looking at your payer as your partner, and maybe eliminating some of those who don’t act like partners … can be a game changer.”

Network Health is a provider-owned Medicare Advantage plan offering health plans to individuals, families and employers in Wisconsin.

Becoming better partners

One way Network Health is working to become a better partner is by improving its hospital discharge process, Coreen Dicus-Johnson said.

“One of the frustrations I think everyone has is that we don’t do enough planning early in the process related to a discharge,” Dicus-Johnson said during the panel. “We’re discharging at the last minute. Hospitals want to get the patient out because their average length of stay is starting to climb. We haven’t done it early enough to be able to prepare the family, to prepare the patient and to prepare either the school nursing or the payer.”

“This is an issue. It is a big issue because expectations are not being met, because we’re not setting them earlier on in the process,” Dicus-Johnson added.

For providers working to improve their payer strategy, or their relationship with a specific payer, one key method could be focusing on fraud, waste and abuse, Rizer said.

“This is a huge issue keeping health plans up at night, especially on the Medicaid side. We’ve got the federal government really coming down hard, in particular on home care,” she said. “So any places where you can be a partner to a health plan on fraud, waste and abuse, maybe it’s leaning into [electronic visit verification] (EVV) systems a little bit differently, or more, that’s going to give them a better value story for the state. It’s going to work better for everyone.”