‘They’re David Without The Slingshot’: How Small Home Health Providers Can Gear Up For MA Negotiations

Getting to the negotiating table with Medicare Advantage (MA) plans and coming away with a good deal is tough enough for even the biggest players in home health care.

For smaller providers, it’s an even more daunting and intimidating task.

However, there are steps those smaller providers can take in order to become more attractive and valuable managed care organizations.

“I think the biggest challenge that providers have is they don’t have the data to show what they’re truly doing,” McBee Associates President Mike Dordick told Home Health Care News. “Providers need to be able to show value. There are plenty of agencies out there that can do the work — and some that’ll take low rates. But in order to get to the table, regardless of size, you need to be able to show your readmission rates, show that you have superior data and show that you have programs that no one else has.”

McBee Associates is a consulting firm that works with hospital, home health, hospice and skilled nursing clients.

Smaller home health providers are at a natural disadvantage when it comes to getting those more preferable MA contracts. It’s difficult for them to carve a path for themselves in concentrated markets where larger providers have significant footprints.

That’s where the proof of value becomes even more paramount.

“We’re focused on mining the data and understanding what the insurance companies want,” Continuous Home Care CEO Will Putman told HHCN. “One big thing is hospitalization rates. Another is getting care started on time — the initiation of care. Recently, we’ve seen a big push on transition of care appointments, so we’re making sure our nurses are helping facilitate that. Then it’s all about taking that data back to the insurance companies to show the value we provide them.”

Continuous Home Care is a Pennsylvania-based home health provider with about 350 employees. Today, the company’s revenue breakdown is about 40% traditional Medicare and 60% MA.

When negotiating with MA plans, Putman puts an emphasis on benchmarks and makes an assessment on whether Continuous could be a good partner.

“If we can keep the hospitalizations down, if we can show them that we can hit their benchmarks, then it becomes easier for us at the negotiating table,” Putman said. “If we can say we can provide good, quality care, can be done in less than 30 days and maybe in seven or eight visits instead of 12 or 15? Then we’re getting somewhere. Because then, not only are these payers getting quality care, it’s a cheaper value for these managed care insurers.”

Managed care companies obviously care about cost, Dordick said, but outcomes are as important as value-based care proliferates.

Unique, value-based programs in concentrated markets could be an avenue of success for smaller providers who have the ability to pivot easier.

“If you can show you’re providing better value than your competitors, that’ll give you a better chance for a seat at the table,” Dordick said. “The small providers have the ability to be more nimble, but they need the data to show why. Even with all of that, that doesn’t mean they’re going to get a seat at the table. But it gives you a chance.”

Once providers are at the table, knowing your worth to MA plans is also a negotiating tactic that can work — so long as the numbers are there to back it up.

“The big thing for us is data,” Putman said. “Sitting at the table knowing that, ‘Hey, your network referred 700 patients to us this quarter. We’re a valued asset to you. Not only can we keep those patients out of the hospital and reduce your costs, but what are the other things we can do to help your plan achieve its goals?’”

David versus Goliath

At the end of the day, small providers face an uphill battle with MA plans at a time when the latter are becoming a much larger part of the former’s business.

“Small providers are David,” Fred Bentley, managing director at ATI Advisory, told HHCN. “To use the metaphor, without the data, it’s David without the slingshot. This is what [plans] do. They contract with providers, they’re incredibly experienced with this and they are accustomed to negotiating with extremely savvy, crafty and large health systems. In every way, shape and form, the smaller mom-and-pop home health agencies and providers are outgunned.”

The Washington, D.C.-based ATI Advisory is a health care research and advisory services firm.

Bentley added that some small providers who have leaned on Medicare fee-for-service don’t necessarily come to the MA negotiating table with the same sophistication as other providers.

However, some do have experience in negotiating whether it be through private duty or Medicaid contracts.

“As far as accepting and servicing Medicare Advantage patients, we’ve got to pay the bills, but we don’t want to discriminate against patients who have Medicare Advantage plans,” ProHealth Home Health & Hospice CEO David Lester told HHCN. “Our referral partners also expect that we don’t just cherry pick the good paying referrals that they send to us. So it’s really a delicate balance.”

ProHealth is a Birmingham, Alabama-based provider with seven home health branches, four hospice branches and two skilled nursing facilities. Between home health and hospice, the company serves an average of about 1,200 patients per month.

Nearly three-quarters of ProHealth’s revenue split is traditional Medicare. About 28% is MA.

One of the strategies in dealing with MA penetration is to contract with more regional plans.

“The national companies definitely have more leverage than we do in negotiating more advantageous contracts with the Medicare Advantage plans,” Lester said. “We’ve had better success in negotiations with clinical plans: Viva, Cigna Health Springs, companies that have contracting teams on the ground in Alabama.”

At the same time, as ProHealth continues to steadily grow in Alabama — and with plans to expand across state lines — national payers have started to pay attention.

“As we’ve grown, especially over the last two and a half years, and as our footprint has extended to most of Alabama, national plans are — I wouldn’t say eager — but more willing to entertain rate adjustments for us,” Lester said.

Whether it’s through data, hyperlocalization or unique programs, the key is finding differentiators.

“It comes down to unique programs,” Dordick said, “If a large provider closes admissions at five o’clock on Friday and you’re a smaller provider and can go to a managed care company and say, ‘We’re flexible, we can work with you to get critical patients seen,’ that stands out. There needs to be something you can do to differentiate. Maybe you can’t take as many patients as the big providers can, but if you can do things more creatively or more aggressively with better outcomes than others, you’ll get yourself noticed.”