Beat your competition: Prepare for Medicare HMOs
Medicare HMOs in your market? They're coming!
You may not be in a market that has Medicare HMOs now, but you will be soon, so this is the best time to learn from other providers' experiences with managed care Medicare.
Medicare HMO contracts aren't lucrative, hospital-based home care company executives tell Hospital Home Health, but you have to jump on them anyway. If you don't, you will lose your market share, as the majority of home health patients are elderly and on Medicare. (Enrollment in Medicare HMOs is soaring. See fact box, p. 21.)
"If your competitor has a capitated contract with Humana or some other Medicare HMO, you lose that business. It's that simple," says Chuck Dow, MBA, the manager of managed care contracts for Scottsdale (AZ) Memorial Hospital. Dow is responsible for obtaining and maintaining the managed care contracts for Scottsdale Memorial Hospital Home Health System.
Other than maintaining your market share, there aren't really any advantages to these contracts, at least not yet. As the market evolves, this may change. These are some of the disadvantages hospital-based home care companies say they have found with Medicare HMO contracts:
* Your financial risk increases.
You undertake some financial risk that you don't have with regular Medicare patients, Dow says. For example, he has had to take on managed care Medicare contracts without demographic information about the people covered by the contract, so his ability to forecast the risk he is taking on is limited.
"Sometimes you just have to take a contract and try real hard to control utilization on the back end,"Dow says.
But it's still not worth it to say no to these contracts when you don't have demographic information about the patients included in the contracts, because hospital-based home care companies cannot afford to lose their business, Dow says.
* Your need to control utilization increases.
Providers have to control their utilization under managed care Medicare contracts, and this can be difficult when you and your staff are used to being able to provide all the care you think is necessary and still get reimbursed for it. This can be especially difficult if you don't know what your direct costs of care are and don't know how much care you can afford to provide under these Medicare HMO contracts.
"I need a better understanding of my internal cost structure to do these contracts successfully," Dow says.
Too much time spent on the phone
* Administrative costs go up.
As with other managed care contracts, you have increased paperwork and other time-consuming administrative work.
"There's no time saved by having the managed care company do the paperwork for Medicare. You still have extra reports you have to do for the HMOs," says Lisa Mead, BSN, MS, MHA, the director of Scottsdale Memorial Hospital Home Health Care. Mead's company just began serving patients covered by Medicare HMOs.
Mead says she has to produce utilization and outcome reports for Medicare HMO patients regularly, including reports on numbers of visits made and types of services offered.
Another provider says it is frustrating to spend hours calling the HMOs' case managers to get authorizations for care, especially when requests for authorization are often denied. (Medicare patients may enter an HMO without informing you, leading you to submit claims to Medicare that will be denied. Providers tell how they handle this problem, p. 20.)
Time equals money
As with commercial insurance, all of the telephone conversations your nurses have back and forth with case managers to get authorization for care take tremendous amounts of time, says Dee Kelly, RN, vice president of managed care for the Visiting Nurse Service of New York, NY.
The time spent on this is also expensive for the HMOs, as it is labor-intensive work, so there is some incentive for these managed care companies to try to shorten the time spent on reviewing authorizations for care.
For example, the VNS of New York and the Medicare HMOs with which it works are trying to reduce that cost by investigating several solutions to this problem, Kelly says. One is a voice mail telephone system that will allow the conversations necessary for authorizations to be held asynchronously. Another solution is to set up an electronic mail system to make authorizations go more quickly. Also, the VNS of New York and the Medicare HMOs are trying to interface their computer systems so that the authorization process can be sped up. The time consuming authorization process might be circumvented almost entirely if HMOs had packaged care plans for their providers to follow, eliminating the need for authorizations except in the case of a patient's deviation from the care plan, Kelly says.
"Of course capitation ends this problem, because you're on your own with utilization," Kelly says.
4 steps to take
As these disadvantages don't outweigh the benefits of keeping your Medicare business, you will need to know what potential problems you will face with Medicare HMO contracts. These are some of the actions you must take when you move forward to take on contracts with Medicare HMOs:
* Focus on patient education, as few visits are allowed.
As with commercial managed care contracts, Medicare HMO contracts are fairly skimpy, hospital-based home care company executives say. For example, one Phoenix, AZ, provider reports that Medicare HMOs allow at most three visits for chronic obstructive pulmonary disease (COPD) patients, and no therapy visits. Congestive heart failure (CHF) patients are allowed between three to five visits by these HMOs.
However, most providers say they are still giving high quality care, as the care given is better planned, and nurses focus more on instructing the patient or caregiver about disease management. You have to focus your visits and do your teaching in less time, says Rosemary Donovan, RN, the acting director of St. Mary's Hospital Home Health Care in San Francisco, CA. Donovan's company recently serviced one Medicare HMO contract, but currently does not hold any managed care Medicare contracts.
"You teach the patient when to see the doctor again, and then you're out of there. That's all you can do," one provider says.
Other hospital-based home care companies say they don't think the number of visits HMOs allow is enough to give proper care, and that rehospitalizations are likely to increase as a result.
"They did not give us the number of visits needed for the acuity of the patients we had," says Donovan.
In some cases, St. Mary's Hospital Home Health Care did some unreimbursed visits, and in other cases patients had to be rehospitalized, Donovan says. "It's hard to say whether an extra visit could have prevented the rehospitalization," Donovan says.
She found these situations to be frustrating. "It's just poor utilization of resources. Why rehospitalize a patient at $1,000 per day when additional home care is cheaper?" she asks.
There isn't much that home care providers can do about this type of problem. "You have to take care of patients as best you can within the parameters the HMO will allow. But if you think this is dangerous, then this is a reality you have to live with. You have to decide whether you'll do unreimbursed visits," Donovan says.
Document your denials
* Document all authorizations and denials for care.
When an HMO refused to authorize a visit for a patient, Donovan handled the problem by informing her medical director about the refusal of authorizations. Her medical director asked the HMO to reconsider, but the visits still were not authorized.
"It didn't help, but we had to do that just to document that we did everything we could," Donovan explains.
Similarly, providers should be sure to get written confirmation of authorizations.
Sometimes Donovan's company received verbal authorizations for care that needed to be done urgently, but the Medicare HMO then failed to send a follow-up fax confirming the verbal authorization. This can lead to denials for reimbursement if the HMO doesn't retain a record of the verbal authorization, Donovan says.
"We really had to push the HMO to send us faxes confirming verbal authorizations on the same day that the authorization was given," Donovan says.
* Ask the HMO to provide precise definitions of the services covered by the contract.
Different HMOs can interpret what's covered in contracts differently, home care providers report. For example, some HMOs see home health aides as being custodial care, which isn't covered unless this service is included in the patient's care plan, says the VNS of New York's Kelly.
"We learned pretty quickly that we always have to get prior authorization for everything," Kelly says.
* Know the authorization process before you start caring for patients.
You may find that your company's system will get in the way of authorizations, says Laura Burgess, BSN, PHM, the clinical manager at St. Francis Memorial Hospital Home Health Care in San Francisco, CA. She had to change some of her company's procedures to meet Medicare HMOs' procedures. For example, she had to begin faxing clinical updates to the HMO to be able to get visits authorized.
* Managers must teach staff to be case managers.
"We had to explain to our nurses that you can't do all the visits you want for Medicare HMO patients, and that was hard," Burgess says.
Burgess says she did this in regular staff meetings, and she reinforces this by reminding the staff that the home care market is changing and that they have to adapt to it.
* Talk to your Medicare intermediary to learn which managed care companies have Medicare HMOs.
All of the providers Hospital Home Health interviewed for this article said that so far, managed care companies had come to them offering contracts with their Medicare HMOs. But that doesn't mean you should wait for HMOs to come to you.
To ensure you get the jump on your competition with Medicare HMOs, you should actively seek these contracts, sources say. One way to do this is to ask your regional Medicare intermediary which managed-care companies have started Medicare HMOs in your area. Another way is to call the managed care organizations that work in your market and ask if they have started a Medicare HMO, or if they will be soon. (See the November and December 1995 issues of Hospital Home Health for hospital-based home care managers' best advice on finding and negotiating winning managed-care contracts.) *
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