PDGM And Divergence Of Revenue Streams In Home Health Care Industry

Author: Trudy Seeger

Last year was considered to be the banner year for the home health care industry expecially for those that are Medicare certified. There are several reasons to term 2018 as a banner year. These are:

  • The big health care providers got even bigger, thanks to the creative mergers and acquisitions.
  • In addition to that, the number of admissions as well as utilization held strong.
  • This year also saw the emergence of the new telephonic-health services and in general
  • The revenue was seen to have reached an all-time high.

This does not mean the following years will be as bright as 2018 or even better. In fact, the years coming up is considered to be full of uncertainties by the industry experts. They consider the primary culprit to be the Patient-Driven Groupings Model or more commonly known as PDGM. The experts say that:

  • The PDGM is expected to dominate the entire home health care industry
  • 2019 should look past the other significant trends
  • Health care providers should check out the trends in the non-medical home care industry as well.

It is also expected that there will be a variation of revenue streams as well as compared to the years past. In the past years home health care companies such as myallamericancare.com and most of the others were exactly just that: providers that focused on providing Medicare certified and expert home health services in home setting.

However, now that notion is changing drastically since the health care providers are set to diversify their service offerings. This is done and will be done simply to cover a larger piece of the variety of care so that they can effectively and efficiently insulate them against the regulatory challenges that are unforeseen.

The industry-wide diversification trend

The diversification trend is seen all over the health care industry right from the Louisiana based Amedisys Incorporation to smaller one in urban and semi-urban areas. Companies are trying to improve and enlarge their hospice presence which is why in October Amedisys announced its acquiring of New Jersey-based Compassionate Care Hospice, one largest hospice providers in the United States, for a whopping $340 million agreement. There are a few things that is worth noting in this regard. These are:

  • With such acquisition, Amedisys now is the third-largest hospice provider in the US and is expected to grow even bigger.
  • Such acquisitions are however welcome by the aging and ailing patients as they near the end of their lives because such hospice care centers are the one-stop-shop for both the payer as well as the health system partners.
  • The investment of Amedisys into hospice also comes at the wake of and in tandem with PDGM and
  • This is the most significant overhaul in decades to the home health payment system by the Centers for Medicare and Medicaid Services or CMS.

CMS has also finalized PDGM which in October was mandated to be budget neutral by the Bipartisan Budget Act of 2018.

  • There are several provisions in this budget and the most significant provision amongst all is that the PDGM is deliberate to eliminate incentives to over-provide therapy services without any proper considerations. They have planned to more strongly weigh the clinical characteristics as well as other patient information about the matter, according to CMS.
  • In addition to that, PDGM also reduces the old 60-day unit of payment to half to 30 days and at the same time has doubled the billing requirements for health care providers.

In addition to that, more and more such home health care providers are now more inclined to be involved in MA or Medicare Advantage for the first time. This is because these home health providers wish to become more valued partners with MA plans. In order to accomplish that goal the data on the ability of the home health care service providers to keep patients at home at the lowest cost setting will be the primary factor.

Seeing all these trends the experts predict that health plans will be eventually convinced that the home health care services drive more cost savings. It is also expected that as a result they will be more likely to roll out new programs in a larger scale to increase the access to such care by the beneficiaries.

The game of partnership formation

With the merger and acquisition engine remaining strong in the home health industry in 2018, partnership formation has become a game of musical chair involving high stakes. This is even fueled by the desire of the health care providers to diversify their revenues and become a one-stop-shop for payers.

  • It is expected that more wholesale acquisitions like the Amedisys’ Compassionate Care deal will continue to take place and will eventually become the one and only way to diversify health care services and revenue in 2019.
  • In addition to that it is also expected that duplicating joint ventures and other form of partnerships focused on this specific area of service will also become a possibility and take on an increased status as well.

However, it gives rise to a quite natural question: why such partnerships are then so important? This is because it will enable the home care service providers to design more integrated health care delivery models. They think that these models will be better and more effective because it will tie together almost all participants in the health care delivery system including:

  • The physicians
  • The entire health systems
  • The post-acute care providers and
  • The technology venders.

It will also bring together all others who have proved to provide noteworthy value to the health care method in shortening emergency department appointments and re-hospitalizations.

It is also expected that the home health providers will not be the only ones looking out for such partnerships. In fact, there will be several other senior housing, independent and assisted living communities that will also look to make a connection as well.

With such a rise in demand the onus is on moving quickly to establishing relationships and formalizing contracts or running at the risk of being left out of the game.