Empowering Heroes: Understanding What We Mean by “Home Healthcare” – Part 2
Contributors: Adam Groff, MD ’06, WG ’06 and David Baiada, WG ’06
To learn more about Adam and David, click here
In Part 1 of this three-part series, we described our belief that empowering people is the key success factor in home healthcare. In this article we hope to better describe the current home health sector, before moving onto a third and final article that will explore innovations in home healthcare.
For many people, there is confusion as to what we exactly mean by “home healthcare." We define home healthcare as services where the primary value for the patient comes from people helping other people in their homes. While there are other services that reach into the home like durable medical equipment, home infusion, telehealth or home-based health risk assessments, we see these as being different, because the primary value is not based on direct, physical, interpersonal relationships.
Home healthcare services are delivered by a variety of disciplines and under several types of models, but are broadly categorized as being either “medical” or “non-medical.” Medical home health requires a higher level of clinical oversight, clinical training, and regulatory compliance required by most third party regulatory bodies and reimbursement sources. These organizations are usually “Medicare certified” by Federal and state regulations. Non-medical home care services usually require a lower threshold of clinical oversight and training and are regulated only at the state level.
The types of services performed by medical and non-medical home health can be generalized as:i
Home Health
Patients and families often first learn about home healthcare services after discharge from a hospital or skilled nursing facility. About 20% of Medicare beneficiaries are discharged home with home health.ii Medicare home health was historically seen as a post-acute benefit, but about two-thirds of home health episodes are no longer preceded by hospitalization within 60 days of the episode.
At facility discharge or through a primary care physician, a referral is made to a Medicare-certified home health agency, where a patient who is homebound with a part-time, intermittent, and skilled need can receive, based on their needs, a combination of nursing, social work, and physical/occupational/speech therapy services. Typically, patients receive about 3 visits per week from this interdisciplinary team for wound care, patient education, monitoring of serious illness, or physical rehabilitation.
Episodes last 60 days, and about 20% are recertified for a subsequent episode, with Medicare paying approximately $2,700 per episode on average. Medicare Advantage plans pay for a similar service, but frequently pay on a per-visit rather than episodic basis. Total Medicare home health spending was $18 billion in 2012.
Home Hospice
Most people at the end-of-life would prefer to die at home, in comfort, surrounded by their loved ones. Increasingly, home hospice is utilized at the end of life to achieve this goal, with about 45% of Medicare decedents using hospice, up from 20% in 2000.iii
Hospice eligible patients have a terminal diagnosis with a life expectancy of 6 months or less, as certified by their physician. The hospice care model is interdisciplinary, with case managing nurses, social workers, physician medical directors, spiritual counselors, bereavement counselors, volunteers, and home health aides being part of the team. Patients enrolled in hospice focus on care that improves symptoms and quality of life, and hospice pays for medical equipment and medications related to the terminal diagnosis.
Hospice is paid primarily by traditional Medicare on a geographically adjusted per diem basis of about $150 to $200 per day for routine care. Starting this year, hospice payment will further be adjusted by a “service intensity add-on” payment during the last 7 days of life, which will mitigate the higher costs of short length of stay patients. In 2013, 1.5 to 1.6 million patients received hospice care, with about $15 billion in expenditures.iv
Medical Home Care (often called “private duty nursing”)
For people with complex, chronic conditions, long-term home care keeps people in the community and out of nursing home facilities. Patients with complex needs include children and adults with significant medical issues. Caring for these patients requires specialized training and up to 24 hours a day of home care from nurses and home health aides.
Staffing these cases is challenging but helps to relieve family caregivers and provides additional safety in the home. Most of these services are paid on hourly rates ranging from $13 to $40 per hour depending upon the required discipline. Most hours are paid at the lowest rate which covers home health aide services that usually provide people with assistive care services for activities of daily living, but sometimes also with skilled needs.
Adults with complex medical needs are often poor, so Medicaid is a primary payer. Children with high-risk needs such as tracheostomy or vent care, but whose parents don’t qualify for Medicaid, often fall under a Children’s Health Insurance Program (CHIP) payment. In 2013, total expenditures for medical home care was about $28 billion.
Non-Medical Home Care
A final category of home healthcare services is non-medical home care to assist seniors who want to age at home. These services usually supplement activities of daily living. Most frequently, home health aides will provide services like light housework, meal preparation, laundry, dressing, bathing, and medication management. The majority of payment is out-of-pocket, with some coverage from long-term care insurance.
This is a very competitive segment because of low barriers to entry. Typical pay rates range from $18-25 per hour, with 60-70% of revenue paid to the staffed caregiver. Technology-enabled startups like HomeTeam, Honor, and HomeHero have entered this category. Non-medical home care is a $15-23 billion market and is probably the fastest growing due to demographic needs.
Summary
Home-based care is a growing and increasingly important segment of healthcare that serves people in many ways. At BAYADA, we are unique as a national organization in that we provide the entire spectrum of home healthcare services. Our service model adapts as new opportunities and needs arise. In the last of this three-part series we will describe how we plan to combine our strategic focus on people with the payment and services innovations emerging in home healthcare.
Contact Adam at: [email protected]
Contact David at: [email protected]
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References:
i BAYADA analysis
ii http://www.medpac.gov/documents/data-book/june-2015-databook-health-care-spending-and-the-medicare-program.pdf
iii https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/Downloads/March-2014-NHPCO-Slides.pdf
iv http://www.nhpco.org/sites/default/files/public/Statistics_Research/2014_Facts_Figures.pdf