‘Dour and Bleak’: Analysts Estimate -2% Operating Margins in Home Health

McKnight’s Home Care | By Adam Healy

The Centers for Medicare & Medicaid Services’ data is flawed: Home health agencies are operating under much tougher margins than is commonly believed. That’s according to Beau Sorenson, the chief operating officer of Visionbound International and a home care agency owner, and Kalon Mitchell, owner of Kalon BI Consulting, who spoke about home health agencies’ margin struggles Monday during the 2024 National Association for Home Care and Hospice conference in Tampa.
 
The Medicare Payment Advisory Commission, which advises CMS, reports that home health enjoys roughly 22% profit margins from Medicare reimbursement. While this estimate is not far off, Medicare margins alone do not tell the full story, Mitchell and Sorenson said. The two experts estimated that home health agencies’ total aggregate margins — based on their average costs and revenues from both government and non-government payers — were -2.1% in 2022. That’s a decrease from 2020, when they maintained a 1.48% total operating margin.
 
However, MedPAC only considers Medicare margins when making its recommendations to CMS. The commission recently called on CMS to cut home health rates by 7% because of these perceived high margins. 
 
“I don’t question their math,” Mitchell said. “My question is, why do they exclude all-payer margins?”
 
As a result of recent Medicare cuts, home health agencies — particularly smaller providers — face an increasingly difficult operating environment. While small home health agencies receive the most money from both Medicare and Medicare Advantage on average, they also have costs that well exceed those among medium and large home health agencies.
 
Beyond Medicare cuts, home health providers also face a variety of challenges related to MA that further harm margins. Prior authorization denials and high overhead costs related to contracting with Medicare Advantage payers, for example, present significant strains on providers’ earnings, Mitchell and Sorenson noted.
 
“The short-term trends look somewhere between dour and bleak,” Sorenson said. “It’s not something you want to hear … but it is the reality.”
 
Surviving under these financial pressures requires efforts to improve both operational efficiency and government advocacy, according to Sorenson. But the most important thing providers can do, he said, is ensure cost reports to CMS are accurate.
 
“It is the holy grail for payment policy,” Sorenson said. “It is what [the government] bases decisions off of … and so the bad data that we submit now is going to come back and bite us in five years.”

CMS May Adopt Strict OSHA Requirement for Home Health Participation

McKnights Home Care | By Adam Healy
 
Numerous standards set by the Occupational Safety and Health Administration may soon be incorporated into the home health conditions of participation, according to Arlene Maxim, the senior vice president of clinical services at home care software solutions firm Axxess.
 
Under OSHA guidelines, employers are required to maintain a workplace “free from recognized hazards that are causing or are likely to cause death or serious physical harm to its employees.” For healthcare providers, some guidelines are stricter. OSHA recommends providers develop a written violence-prevention program that involves: management commitment and employee participation; worksite analysis, hazard prevention and control; safety and health training; and recordkeeping and program evaluation. 
 
These kinds of requirements and more may soon be codified in the home health conditions of participation, Maxim said Monday during the 2024 National Association for Home Care & Hospice conference in Tampa, FL.
 
“My guess is that at some point, our conditions of participation are going to require this,” Maxim said. “It might not be next year, but my guess is that at some point they’re going to require us to keep track of all this.”
 
Other OSHA standards for healthcare providers involve establishing safety committees, developing investigation frameworks for when safety incidents arise, and training employees on workplace safety best practices, Maxim explained. The agency also has guidelines specifically for home healthcare; these include tips for caregivers working in high temperatures, unsanitary homes or other unsafe conditions. Maxim recommended that providers stay up to date on their safety due diligence to avoid any potential liability.
 
“It’s better to have this done beforehand than wait until you get fined and have something happen to you,” she said.
 
OSHA’s involvement in home care safety recently deepened following the death of Joyce Grayson, a visiting nurse from Connecticut. The safety administration disclosed in May that it cited Elara Caring, Grayson’s employer, for willfully neglecting to protect the employee from harm. The citation carried a fine, and OSHA also reminded home care agencies to maintain the kind of workplace violence prevention program recommended for all healthcare providers.

HHS Working to Increase Access, Supply of IV Fluids Following Hurricane Helene

NAHC Report

Following storm damage from Hurricane Helene at Baxter International Inc.’s facility in North Carolina, the U.S. Department of Health and Human Services (HHS) and its subagencies continue taking action to support access to intravenous (IV) fluids, including ensuring restoration of key production sites, protecting products, and opening imports, in partnership with manufacturers, distributors, hospitals, and other stakeholders. As a result of these steps, hospitals have 50% more product available to them now compared to right after the hurricane. Baxter has moved and begun distributing more than 450 truckloads of product from their North Carolina facility over the past 10 days and is already importing additional product from their foreign plants. FDA acted quickly to conduct scientific and regulatory assessments to help facilitate the temporary importation of 23 different IV and peritoneal (PD) fluids from five Baxter facilities around the world. Baxter communicated that supply availability is continually improving and they expect to further increase customer allocations to 90%-100% of historical levels for many IV solution product codes no later than the end of the year. These supply improvements, combined with increased output from other manufacturers, will help hospitals get more of the product they need over the coming weeks.

HHS, Food and Drug Administration (FDA), the Administration for Strategic Preparedness and Response (ASPR), and the Centers for Disease Control and Prevention (CDC) continue to use all available authorities to protect patients, support supply, and keep stakeholders informed, in partnership with manufacturers, distributors, hospitals, and other stakeholders. Additionally, HHS is announcing additional information about the airlift of Baxter products into the U.S. from international facilities, with first flights scheduled for October 19.

NEW: Airlifting in International Product

• Importing IV solution to the U.S. While Baxter North Cove is returning to full operational capacity, ASPR is supporting Baxter’s efforts to airlift their product into the U.S. Baxter and ASPR have been collaborating with the FDA, DHS customs officials, and aviation partners to rapidly bolster domestic supply through the importation of Baxter’s international product that has been granted regulatory flexibility by the FDA. Over the coming weeks this will include millions of units of product from at least four different international facilities.
  
  
• First flights on October 19. The first flights are scheduled to arrive starting on Saturday, October 19. Each flight will carry over 100,000 units of Baxter products from international facilities. Product will continue to be airlifted in the coming weeks to assist in meeting domestic demand as Baxter progresses its remediation efforts at the North Cove facility. The product coming into the United States as part of this effort will be distributed through normal distribution channels consistent with Baxter’s current projections. In partnership with Baxter, ASPR has enabled expedited distribution once reaching the U.S., reducing typical distribution times from 5-10 days to less than a day in some cases.

Supporting Domestic Supply:

• Reopening the North Cove facility. Baxter’s more than 2,500 North Cove employees are now returning to work across multiple round-the-clock shifts, during which they are focused on site remediation and equipment assessment efforts. Progress in restoring physical facilities has exceeded expectations, including full restoration of utilities and IT infrastructure. The building is structurally sound, and phased testing of priority equipment will soon support resumption of line operations in phases. ASPR is actively working with Baxter and FEMA to support infrastructure repairs and ensure the facility resumes operations as quickly as possible. ASPR is coordinating with FEMA leadership and the Army Corp of Engineers to support additional bridge access to the facility. In addition, FDA has committed to expedite any and all necessary regulatory actions needed to help bring North Cove back on-line as quickly as possible. Baxter has also moved more than 450 truckloads of product that was produced prior to the hurricane out of the facility and into the supply chain.
  
  
• Product assessment action. FDA acted quickly to conduct scientific and regulatory assessments to help facilitate the temporary importation of IV and PD fluids. To date, FDA has announced regulatory discretion for 23 different product lines at five Baxter facilities around the world. These facilities are currently ramping up production to increase supply available to the U.S. FDA is expediting reviews of enforcement discretion in additional circumstances, including considering requests from other manufacturers of IV and PD fluids. 
  
  
• Defense Production Act use. The USG is actively working to help increase manufacturing capacity for these critical products. HHS has invoked the Defense Production Act to help Baxter obtain materials needed to clean and rebuild the North Cove facility. ASPR has issued a priority rating to Baxter for a remediation material they were unable to secure. This product was a limiting factor in their ability to restart production. ASPR is engaging with manufacturers to identify any other supply chain challenges that may require DPA authorities.
  
  
• Compounding flexibilities. In general, drugs on the FDA shortage list can be compounded to support domestic supply, with fewer restrictions than those that apply to drugs that are not on the FDA shortage list. FDA released an immediate-implementation guidance which provides additional flexibilities to support more timely production and distribution of certain compounded IV solutions by hospitals and other facilities during the shortage, while still ensuring appropriate safeguards are in place. The agency has also received questions about its draft guidance for industry on hospital and health system compounding under section 503A. In 2021, FDA revised that draft guidance to, among other things, remove a provision about the distribution of the compounded drug beyond a one-mile radius. FDA reiterates that there is no one-mile radius policy. In addition, although the 2021 draft guidance proposes the such compounded drugs be used within 24 hours, the new guidance for immediate implementation includes no such provision.

Conservation Efforts:

• HAN advisory. On October 11, CDC issued Health Alert Network (HAN) Health Advisory to inform healthcare providers, pharmacists, healthcare facility administrators, and state, tribal, local, and territorial health departments of a supply disruption of IV and PD solutions from the Baxter International’s North Cove facility in North Carolina, due to Hurricane Helene. The supply disruption may impact patient care and require adjustments to the clinical management of patients, particularly for institutions that operated a just-in-time supply for these products. CDC is encouraging healthcare providers, pharmacists, healthcare facility administrators, and state, tribal, local, and territorial health departments, regardless of product availability status, to immediately assess their supply and develop plans and mitigation strategies to reduce the impact on patient care.

Stakeholder Communications:

HHS continues to keep relevant stakeholders informed on the progress of the effort.

• Upcoming stakeholder call. HHS will hold its third large stakeholder call with HHS leadership and Baxter executives on Friday, October 18, 2024.
• FDA updates. FDA has established a designated website for essential Hurricane Helene response FDA updates.
• Additional information. HHS has released two prior public documents, a stakeholder letter and prior fact sheet.

The Hospice CARE Act’s Potential to ‘Dramatically Reshape’ End-of-Life Care Delivery

Hospice News | By Holly Vossel

Hospice providers and stakeholders are carefully examining the proposed changes included in the recently introduced Hospice Care Accountability, Reform, and Enforcement (Hospice CARE) Act as the bill begins its journey through the legislative process.

Leading concerns in the industry include the bill’s suggested regulatory reforms to address program integrity in the hospice industry, along with potential changes to reimbursement, caregiver support and palliative care payment pathways.

The Hospice CARE Act has a “long road ahead” before enactment, but its introduction presents both significant challenges and opportunities for hospice providers, said Ethan McChesney, policy director at the National Partnership for Healthcare and Hospice Innovation (NPHI).

“The payment provisions alone would dramatically reshape a reimbursement model that providers have relied on for decades with minimal change,” McChesney told Hospice News in an email.

Transforming hospice policy

The Medicare Hospice Benefit has remained largely unchanged since its establishment in 1983. The benefit was designed to help providers offering palliative services and other support to terminally ill patients and their families.

Recent years have brought mounting financial and operational pressures for providers, who have seen demand rise alongside swelling aging populations. Nearly half (49.1%) of all Medicare descendants utilized hospice services in 2022, which was a similar rate to prior years, reported the National Alliance for Care at Home.

Rep. Earl Blumenauer (D-Oregon) introduced the Hospice CARE Act last month. The Congress member first announced the bill at the Hospice News Elevate conference in Washington, D.C. this summer. The bill includes an overhaul of the per-diem payment system, along with a slew of other regulatory updates and changes to the benefit…

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