Home- And Community-based Crisis Prompts Provider Innovation

The home- and community-based services industry has changed drastically over the last decade, from different payer mixes to new service line opportunities.

To navigate Medicaid budget cuts and other uncertainties, providers must adjust operations, improve data collection and tell compelling stories to advance the industry, according to experts on a recent Home Health Care News webinar. 

“Financial pressures continue, margin compressions, workforce recruitment limitations, rising wages,” Bill Zagorski, CEO, American Senior Care Centers, Inc, said on the webinar. “States continue to increase reimbursement rates and promote workforce participation with novel recruitment strategies, career ladders, retention strategies, but the net effect is still uncertain. … There [are still] a lot of tailwinds, leading innovation and nimbleness in the space.”

Tennessee-based, privately owned and operated American Senior Care Centers provide home- and community-based services, including adult day and personal home care services, non-emergency transportation and case management.

Top of mind for Zagorski is the shift away from the traditional fee-for-service model toward episodic care, with high-upside, outcome-based, value-based reimbursement structures.

While Zagorski remains “bullish” about home- and community-based services, recent regulatory changes have raised concerns. For example, Medicaid funding cuts under the One Big Beautiful Bill Act (OBBBA) were estimated to cost the state more than $1 billion in care for home- and community-based care recipients in nursing facilities, according to recent research.

Still, Zagorski is not the only provider optimistic about the operating environment for these services, and industry insiders have outlined strategies for providers to manage pressures and embrace new opportunities.

Strategies for success

Federal Medicaid funding cuts will lead to deep, state-level Medicaid budget cuts, but “nothing brings out creativity and innovation other than a potential crisis,” Zagorski said.

To cope with state-level Medicaid budget cuts for home- and community-based and adult day care spaces, providers must find new ways to innovate, Zagorski said. Providers continue to diversify both their service lines and payer mix.

While providers may have been reimbursed 80% through Medicaid a decade ago, they may now receive only 40% under Medicaid. The change is not due to Medicaid reimbursing less, he said, but to growth from other payers, such as Veterans Affairs.

Private duty services also continue to grow, he said, serving as a significant driver of diversification and sustainability.

Diversifying and blending service lines also serves as a key opportunity.

“It’s not operating in silos anymore,” he said. “It’s brick and mortar combined with home-based care delivery. It’s a natural alignment of priorities among providers, shared by caregivers and clients and payers as well.”

By diversifying payer mix and service models while improving quality outcomes, providers can achieve horizontal alignment with a value-based design, which, when combined with data collection, is the path forward for home- and community-based providers, Zagorski said.

Advocacy

To improve the status quo for Medicaid-reimbursed home- and community-based services, educating lawmakers at the state and federal levels is essential.

“The Alliance had an advocacy week not too long ago, and [one] of the takeaways was that some of the folks that they were meeting with just had no concept of what home health is,” Hillary Loeffler, vice president of policy and regulatory affairs for the National Alliance for Care at Home (the Alliance), said on the webinar. “They don’t have any parents that have used the services or any family members; they themselves haven’t used it, so it’s almost like PR. [It’s] bringing the data and shouting to the rooftops what home health and home care are and how they can be of benefit and how they’re an important part of our health care system. Educating policy officials should be number one for everyone.”

For Zagorski, the advocacy onus falls on providers of home- and community-based services.

“Providers in the HCBS space know they provide a good service, but they have to be able to show it with outcomes and data,” he said. “It is not a heavy lift to be able to do so. It is a heavy lift to be able to package it in a way that’s meaningful.”

When a network of providers comes together to provide lawmakers with intractable data, supported by stories with a human element, “it can’t be ignored,” Zagorski said.

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