What HHVBP Means for Managed Care, SNF Utilization

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With the nationwide rollout of the Home Health Value-Based Purchasing (HHVBP) Model inching closer, home health agencies are feeling confident about their ability to adapt.

Not only are operators confident, but some are even excited about what HHVBP might translate to in terms of improved managed care relationships and further diversion away from skilled nursing facilities (SNFs).

“If we do well under HHVBP, that should help prove the value of home health care,” one executive recently told me. “Medicare Advantage [plans] can see all of that information.”

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Yet with roughly seven-and-a-half months to go, more questions about HHVBP’s broader impact on quality of care and patient access are starting to pop up. This year’s annual evaluation report on HHVBP, for example, suggests there’s a gap between the care fee-for-service Medicare beneficiaries receive and those who also have Medicaid coverage.

“If HHVBP does not uniformly affect all patients in the same way, the model could have important implications for health equity,” noted the report’s authors, who worked for both the Arbor Research Collaborative for Health and L&M Policy Research.

Home Health Care News has written about the 50-state HHVBP expansion extensively. But after talking to more executives about HHVBP and reading through the recently released 169-page evaluation, I wanted to share a few new big-picture insights on the model.

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In this week’s exclusive, members-only HHCN+ Update, I analyze the latest on HHVBP and offer key takeaways for home health agencies, including:

– HHVBP puts home health agencies in a better position to demonstrate value to managed care. But payer partners want to be “wowed” by data, and evidence suggests that HHVBP mostly leads to relatively modest quality improvements.

– With agencies participating in the nine-state HHVBP demonstration, there was a clear decrease in SNF utilization. This could be one of the most significant macro-level consequences of value-based purchasing if that trend holds in 2023 and beyond.

– Already, there have been concerns that HHVBP will incentivize home health operators to focus on patient populations associated with positive-payment adjustments. New data supports that idea, meaning changes to HHVBP’s design are likely, given regulators’ current prioritization on health equity and access.

Better bargaining with managed care

Home health providers have become more vocal about their relationship with managed care, highlighting how Medicare Advantage (MA) plans often offer far lower rates compared to fee-for-service (FFS) Medicare. During an investor presentation last week, for instance, Encompass Health Corporation (NYSE: EHC) CEO Mark Tarr specified that MA rates are at a 40% “discount” compared to FFS, a level that’s unsustainable in today’s operating environment.

In the near term, providers can keep leaning into their higher-margin FFS strategies. As MA enrollment rises year over year, though, they’ll eventually have to take on more managed care business.

For the 2022 coverage year, MA plans signed up another 2.3 million beneficiaries, with the program making up 45% of all Medicare enrollment, according to an analysis from The Chartis Group. In addition to MA sign-ups rising, enrollment in traditional Medicare shrank.

“The magnitude of this shift is stark,” the analysis explained. “While Medicare Advantage enrollment has been robust, original Medicare contraction has been accelerating.”

MA experts have previously told me that outcomes data is the key for providers negotiating with payer partners.

Broadly, HHVBP “scores” home health agencies through a complex rubric using OASIS items, claims data and HHCAHPS surveys, ultimately calculating a “total performance score” (TPS). This system, which weighs hospitalization rates heavily, will give providers new information to share with MA organizations.

For many, it will also likely lead to a stronger value proposition:

– For each of the first five years of HHVBP (2016-2020), the TPS values for agencies in HHVBP states were higher overall relative to the TPS calculated for agencies in the 41 non-model states.

– During that period, participants collectively saw a decrease in unplanned hospitalization rates among all home health episodes. In part, this decrease was linked to more skilled nursing visits early on in episodes, or “front-loading.”

– In regard to OASIS, there were six measures that showed improvement over time. Home health agencies in HHVBP saw improvement in medication and pain management, with improvements in mobility, self-care, dyspnea and community-discharge scores as well.

For context, 1,907 home health agencies participated in HHVBP in 2020, carrying out 2.08 million episodes of care.

HHVBP will produce more data to share with payers and boost agency performance, but I doubt it will give the home health industry more leverage overnight. Many of the positive HHVBP impacts highlighted in the Arbor Research Collaborative for Health-L&M Policy Research report were minor – or almost negligible, in some cases.

Instead, I believe it will create good habits and better position the industry for future discussions.

Post-acute care savings

The HHVBP evaluation report confirmed that inpatient and SNF utilization among home health patients decreased from 2016 to 2020. During that period, there was a 2.8% decline in average Medicare spending per day for inpatient services and a 4% decline in average spending for SNF services.

That translated to an estimated $546.8 million and $201.2 million in HHVBP-driven savings, respectively. Combined with other factors, HHVBP is estimated to have saved Medicare $949.2 million in total.

HHVBP resulted in a 0.34 percentage-point decline in the use of SNFs among home health beneficiaries, which corresponds to a 6.9% decrease in average measure values relative to pre-HHVBP implementation.

“The declines in overall Medicare spending due to HHVBP continue to be largely driven by reductions in spending for inpatient and SNF services among home health beneficiaries,” the report authors wrote.

HHVBP’s connection to lowering SNF utilization among home health users is another compelling data point for managed care to consider. Yet it’s likewise a statistic that could catch the eyes of policymakers looking to reshape the post-acute and long-term care landscapes, not to mention SNF operators themselves.

If the nine-state HHVBP demo led to $201.2 million in Medicare savings over a five-year period, a 50-state model could shift hundreds of millions – or billions – away from facility-based care in years to come.

Equity, access questions mount

The current U.S. Centers for Medicare & Medicaid Services (CMS) is committed to advancing health equity and access.

“Advancing health equity is the core work of the [CMS],” Administrator Chiquita Brooks-LaSure said in April. “We can’t achieve our health system goals until everyone can attain the highest level of health.”

In some ways, HHVBP could conflict with that mission.

“Essentially [HHVBP] looks at criteria that incorporate improvement in a person’s condition,” Kathleen Holt, associate director of the Center for Medicare Advocacy, told HHCN last year. “We went back to CMS and said, ‘You’re not measuring everybody.’ When you have a program that is built on a bell curve, where you essentially have winners and losers, … you end up with a program that incentivizes agencies to serve the people who will be measured.”

Several executives from mission-driven home health providers have independently echoed similar concerns in my conversations with them.

“The [HHVBP] model needs to recognize that some home health agencies simply care for much sicker and more complex populations than others,” Dan Savitt, CEO of VNS Health, formerly Visiting Nurse Service of New York (VNSNY), said during a TALKS appearance. “That should be a factor in the risk-adjustment models, so agencies can compare fairly and ensure that incentives are aligned to care for patients with complex health and social determinant needs.”

So while there is potential for the quality incentives under HHVBP to encourage greater gains among populations who initially had worse outcomes and thereby improve health equity, a potential unintended consequence of the model is that it may lead to greater health inequities if the benefits of quality improvement are limited for historically underserved populations.

“We continued to find a pattern of differential impacts of the model based on Medicaid coverage and, in new analyses for this report, also based on patient race and ethnicity,” the authors wrote.

For example, the report documented a 2.9% decline in unplanned acute care hospitalizations and more than a 3% gain in composite change scores for both self-care and mobility due to HHVBP among non-Medicaid patients. It did not, however, observe those impacts among Medicaid patients.

“These differential impacts on changes in functioning were associated with modest growth in disparities in these outcomes for Medicaid patients under the model,” the report continued.

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