United States: Medicare Advantage Plans: The Investor's View For Building Tech Enabled Home Health Models That Deliver Value

A panel of top investors comprised of Nancy Brown, Managing Director at Oak HC/FT, Dan Gebremehdin, Managing Director at Flare Capital, and Laura Veroneau, Managing Director at Optum Ventures, convened in a webcast on January 17, 2023 sponsored by HomeCare100 and moderated by partner Christopher Donovan of Foley & Lardner LLP to discuss their purpose built home care models designed to achieve higher reimbursement for better outcomes within a population of higher acuity patients. The panel discussed their investment rationales, partnership designs and the use of technology both to deliver care and to harvest outcomes data deemed necessary to document better outcomes.

The discussion took place against the backdrop of significant innovation in home health delivery away from the traditional Medicare Fee for Service volume model to a variety of delivery and payment models including: acute care at home, skilled nursing at home, urgent home health care, Long-Term Services and Supports (LTSS) focused care, and home based primary care as evidenced by many investor backed companies espousing these models today. Some of these models appear to focus on a niche area but almost all have the need to either partner with or develop de novo core home health capabilities. In all models, the panel recognized the need for home care agencies to participate.

Several key takeaways came from the discussion:

1. Know Your Lane

Home care agencies are well advised to know their core competency so they can articulate the value they can deliver to a particular care model. For example, clinical programs and staff that are good at traditional less intensive home based care may not be well suited as partners for an acute care at home model requiring higher level of care/acuity, higher frequency of patient interaction, use of technology and care coordination with many other suppliers and clinicians. The panel suggested providers ask themselves "What is your core competency" and "Where do local Medicare Advantage plans have gaps in their coverage and care delivery models".

2. Role of Technology

All new innovative models have a healthy component of technology investment to harvest key data, allow greater care coordination and increase patient satisfaction. All of this requires capital, education of clinicians and integration into existing care models. For many agencies this will entail a significant financial and cultural lift to educate and train staff. Choosing the right partners, payers and ecosystem for these efforts, be that pilot types or broader, entail careful balancing of cost and upside potential.

3. Value Based Care and Attribution

The panel recognized that value based care models have achieved some success in certain areas but are still a work in progress in many others with a variety of payment methodologies from full global capitation per patient per month (PMPM) to case rates, upside only and two-sided risk models. What's key for home health sponsors is being able to attribute their specific value in a value based payment system having a multi-provider clinical model—this is especially the case where most value based models have the physician group or hospital system as the primary risk taker and home health risk is subcontracted.

The panel recognized in many cases that getting access to plan data is not the issue. Nor is identifying the benchmarks that plans are looking to achieve for new home health delivery models (e.g. discharge timeframes, readmission rates, patient satisfaction etc.). Delivering scalable partnerships in tandem with primary care and other providers taking broader global risk beyond home health unlocks both the opportunity and challenge for home health operators.

4. The Outlook for 2023

The panel acknowledged that against the backdrop of unprecedented funding of tech enabled home care, investors have now shifted to portfolio profitability which will entail some needed belt tightening. This may cause a level of consolidation in the space with competitors or acquisitions by well- funded strategics as evidenced by the recent expansion of retail and pharmacy providers as well as health plans into primary care and home care . A "shakeout" to identify the top winners per category in the long run would better position those companies with plans as well.

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