New rules from Centers for Medicare & Medicaid Services will expand market
New business opportunities are coming to the home care franchise sector through expanded Medicare Supplemental Plan offerings but not without the willingness to make significant investments to meet federal requirements.
New Centers for Medicare & Medicaid Services (CMS) rules that went into effect on Jan. 1, 2019, are finally making a breakthrough to include personal care services as eligible for coverage under some Medicare Advantage supplemental plans. Previously, that has not been the case on a broad basis.
Although some long-term care insurance policies have provided coverage for non-medical care for many years, this is the first time that there is a true CMS edict that Medicare Advantage supplemental plans can formally cover personal care services.
What is non-medical home care?
Non-medical home care taps into the market of people who don’t need clinical medical care but can use some help to remain independent. This can take the form of companion and personal care services such as:
- Basic housekeeping help
- Assisting with personal needs such as bathing, feeding or grooming
- Transportation for errands and appointments
- Travel assistance and companionship
- Preparing meals
From a business perspective, non-medical home care services have traditionally been private pay. Without the need to comply with federal regulations or insurance requirements governing reimbursement, non-medical home care owners have prospered with only a portion of the true market utilizing services. The majority of states nationwide do require non-medical home care businesses to be licensed but with low barriers to entry.
The new coverage changes through CMS do come with a price. Although CMS is now permitting Medicare Advantage Supplemental plans to cover some personal care services, home care providers will have to meet higher standards.
The 21st Century Cures Act mandates the use of Electronic Visit Verification (EVV) and Electronic Home Health Records (EHR) for services that require an in-home visit by a provider. In addition, home care providers can seek accreditation with approved national organizations. These three new standards alone will require eligible, approved home care providers to make advance investments in their infrastructure, service processes and technology systems to remain compliant.
Although the rules went into effect on Jan. 1, 2019, the transformation is not going to be instantaneous. In the run-up to the rules going live, there was not a massive number of insurers announcing Medicare Advantage Supplemental plans to incorporate the coverage. There has not been a big push from insurers yet to offer new benefits. The change will probably be more impactful for the industry beginning in 2020 once carriers have a better sense of the impact, pricing and the state of the market. As they incorporate the coverage, it will begin expanding the market of potential clients to be served under the Medicare coverage of long-term care.
With 86 million people in the United States expected to reach age 65 and beyond by 2050, the market for home care services has already been growing dramatically. The rule change will open up more sources of payment for non-medical home care services and has the potential to create a massive increase in the number of potential clients in the years ahead.
There were 19 million people enrolled in Medicare Advantage Supplemental plans in 2017, according to the Henry J. Kaiser Family Foundation. If even some percentage of those numbers are now eligible for coverage of personal care services, that’s a significant potential spike in clients for successful, well-prepared home care companies to serve.
The CMS rule change is exciting news for the home care industry, but business leaders must be clearly aware of the costs and potential pitfalls that come with the new opportunities. There are substantial requirements for home care businesses seeking to become properly credentialed to receive payments from Medicare Advantage Supplemental plans. This opportunity is not to be taken lightly. It’s not going to be easy.
To be best positioned for future opportunities when they occur, home care businesses must follow all of the steps and meet all the federal requirements ahead of time. This will require some big operational shifts — and major investments — from each home care provider and the industry as a whole in order to meet the increasing demand and provide the type of services covered under the CMS rule change.
In coming years, the CMS rule change will create greater separation between progressive, well-prepared home care businesses and the rest of the industry because not everyone will step up and make the advance, major investments to meet the requirements. The CMS rule change represents a fundamental expansion to Medicare Advantage Supplemental Plan benefits. Leading home care companies who have made the advance investments and have maintained higher levels of service delivery will be up to this new challenge.
Jeff Bevis is co-founder and CEO of FirstLight Home Care, which is a top-rated non-medical home care provider with a network of offices that provides more than 105,000 hours per week in care for more than 5,300 clients in over 34 states.