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Q&A: Technology, PPS, mergers, and shortages are expected

The past few years have seen more shrinking of home health than growth. Today’s industry leaders say that could turn around in the future. Of course, predicting the future of the U.S. health care system can be as uncertain as predicting the weather, with constantly changing policies on reimbursement, patient privacy and satisfaction, and managed care, just to name a few.

To learn more about where the system and the home health industry is headed, Hospital Home Health spoke with a panel of health care leaders: Gregory P. Solecki, vice president of Henry Ford Home Health Care in Detroit; Elizabeth E. Hogue, JD, a health care attorney in Burtonsville, MD; John C. Gilliland, a health care attorney with Locke Reynolds in Indianapolis; and Diann Martin, RN, DNSc., LM, with Cantone and Associates, Orland Park, IL. Will home care look the same in terms of its services? Will there be more specialization? What should we expect with reimbursement? Here’s what they had to say.

HHH: In the next five, 10, or even 20 years, do you see the home care industry as being basically the same in terms of the services you provide? If not, how do you see it differing?

Solecki: I think the home health industry still has a lot of untapped pride, potential, and talent. We are not afraid to do the new and difficult, especially if it makes a difference to our customers. Things like high-tech care in the home are challenges to most of us in the industry, and we embrace that challenge. However, the current and projected future staffing outlook coupled with the enormous paper burden imposed upon home care clinicians adds a degree of difficulty that might be insurmountable.

I still think there is much to do in the area of in-home case management. It seems to make sense that case management is facilitated when the case manager is in the patient’s home doing one-on-one teaching of patients, family members, and significant others.

Also, I think those who can support high-tech specialties through the standardization of processes that ensure high clinical outcomes and patient satisfaction — while at the same time reducing costs — will have a competitive advantage in the marketplace. Of course, this is all dependent on our ability to recruit and retain staff.

Hogue: I think that the services provided by agencies will change dramatically. Statistics already indicate that higher percentages of expenditures for home care services are coming from self-pay/private-pay, and Medicaid programs. Amounts expended by the Medicare program as a percentage of the entire amount paid for home care services are dropping fairly substantially each year. This seems to indicate a shift from skilled services to nonskilled services such as homemakers, companions, etc. This trend is likely to continue from my point of view.

I also think that agencies ultimately will become providers of community services that are not necessarily provided in patients’ homes. For example, I think that agencies eventually will establish ambulatory clinics for chronic health conditions such as diabetes. They will utilize primarily nonphysician practitioners to meet the needs of patients who might not require and/or meet the current eligibility requirements of the Medicare home care program, but who, nonetheless, require ongoing assistance with their chronic conditions.

Gilliland: I think the home care population will continue to greatly broaden to include much more of the attendant/personal care type of services. There will be increasing demand for that type of service. Most of it will be private pay because the demand will be so great that third-party payers — both public and private — will be unwilling to meet the costs except, perhaps, for especially vocal constituencies such as the disabled community. That all leads to public payers playing a smaller role than they do today. Of course, Medicare and Medicaid will be important but that will not be the business most home health agencies will want; it will pay too little for the regulatory hassles involved.

Martin: I see an increase in the use of technology — patients will get more remotely delivered care via video, interactive Internet, remote monitoring, and "smart" technology. In a nutshell, we will visit less but monitor more. I also think there will be an increased need for coordinated, long-term care programs rendering the home care benefit as a round peg in a square hole.

Patients’ clinical needs will go on and on but the care we can provide is so limited legislatively, we need to push for long-term care coverage. Then, too, I believe we will see an ever-increasing complexity of home care as surgery increasingly moves to ambulatory venues and hospitals become intensive care units. As this happens, the majority of care will be going on in the community.

HHH: How do you see the reimbursement issue shaping up? Do you think it will get better, and if so, do you foresee it getting worse before it gets better?

Solecki: Actually, I am pretty pleased with reimbursement. I don’t think the reimbursement rate is the problem . . . getting the reimbursement is the problem. Home health care billing processes are so cumbersome and time-consuming and the rules that apply to different payers are so numerous and diverse that it is increasingly more difficult to simply get paid for what we do. This is not only financially threatening, it is frustrating to leadership, staff, and patients. I’m afraid that more money thrown at the paper burden will just continue to price us out of the market. I would prefer that more money be directed at simplifying administrative processes.

Hogue: Based upon the anecdotal comments I receive all over the country, it seems that the prospective payment system (PPS) is working very well. Although there have certainly been some glitches, agencies are being paid by and large, and cash flow is not an issue. I think that the Health Care Financing Administration wants agencies to be profitable so that the industry will stabilize and be stronger, and I expect this goal to continue to be reflected in reimbursement systems.

Gilliland: As a consequence of the changes in the field overall, I feel Medicare and Medicaid will increasingly have difficulty finding agencies willing to be part of either program. It may be that only some large chains and hospital-based agencies who provide those services participate. For the chains, they will feel they can be profitable in those markets due to their size, but I doubt that will be the case. We will see continuing efforts to make it profitable but all will fail.

For hospital-based, they will try to provide Medicare and Medicaid services because it is part of their missions. But unless they have strong private-pay operations, I doubt they will be able to do so. Neither Medicare nor Medicaid will be attractive financially unless and until most providers cease to participate in those programs. Reimbursement is entirely budget-driven. The government will pay as little as possible until the care cannot be provided at the rates offered. The problem for Medicare and Medicaid will be a huge demand for services without enough money to pay for it all.

As is the case now, rather than confronting the real problem of demand and an aging society, government will continue to try to blame fraud for the cost of health care and will try to deal with the exploding costs by continuing to reduce reimbursement. As a society, we will still not have come to grips with the real problems.

HHH: Do you foresee any greater changes in terms of what will be reimbursed and what won’t?

Solecki: In terms of patient need, I would love to see more reimbursement for "lower levels" of care, for personal care — for the areas that really make a meaningful difference in the patient’s ability to remain in his or her home. I doubt we will see this anytime soon. And, again, will we be able to staff such a dream?

HHH: How do you foresee the home care patient population changing, or do you? As a whole will the numbers grow? Will the population get older?

Solecki: We all know the baby boomers are aging. This will present the biggest health care challenge our country has ever faced: more elderly, living with chronic conditions for longer periods of time with fewer people to care for them. (See table, below.) We all should have had much larger families!

Hogue: The primary change in the home care population from my point of view, in addition to a large increase in the numbers of patients who want home care services, will be that there will be much greater recognition and willingness on the part of patients to pay for care themselves.

Martin: By 2020, more than 25% of the U.S. population will be over 65 years old, and the entire nation will look like Florida demographically. (See table, below.) The fastest growing segment of the U.S. population is the over-85 group and these people, on average, have three activities of daily living (ADL) limitations. We currently don’t have enough facilities to put them in or caregivers to care for them, so home care has to grow to meet these demands.

HHH: Do you foresee more specialties cropping up? More acquisitions/mergers?

Solecki: I think that specialists in other spots of the continuum would love to see our support of their patients in the home. We just need the staff. I’m not sure about acquisitions and mergers. It’s difficult to buy staff and customer loyalty. Buying another home health agency doesn’t necessarily ensure a larger patient or referral base unless the base feeds an exclusive provider agreement with a third party. I think we will see more concentration on "survival of the fittest" in terms of tackling the administrative burdens before we will see a significant increase in mergers and acquisitions. This is a tough industry with major challenges and little return on investment right now.

Hogue: I think there will be more specialization in home care. I doubt that we will see a significant increase in mergers or acquisitions.

Gilliland: The growth in home care services will be in the nonskilled nursing, private-pay area. That is the only area in which agencies will be able to make a profit. There will be increasing consolidation through mergers of existing agencies. Ten years from now, home care will be composed of a few, large national chains, a few hospital-based agencies and smaller, boutique proprietary agencies. The smaller proprietary agencies will be those that provide high-quality, specialized private-pay services; they will not provide Medicare or Medicaid services.

HHH: What do you see as the legal issues facing home care in the near and distant future?

Solecki: The big issues I see are restriction of care and/or inability to care issues. Clinicians are pretty overtaxed right now. Our industry’s ability to meet the demand is being put to the test. This challenge could, inadvertently, be viewed by some as a lack of motivation rather than a lack of resources.

Hogue: A key legal issue for home care pro-viders is whether they are obligated to accept every patient referred to them and whether they are obligated to continue services to patients after admitting them. Agencies need to establish criteria regarding general appropriateness for home care services that go beyond the eligibility criteria of various payer sources. These criteria might include a requirement that patients either be able to self-care or have a paid or voluntary primary caregiver who can meet their needs in between visits from home care providers.

Gilliland: The biggest legal issue in the short term for agencies will be to comply with issues of patient privacy such as the [Health Insurance Portability and Accountability Act] HIPAA privacy regulations and similar state laws. (See "LegalEase," in this issue, for further discussion of HIPAA compliance.) In the longer term, the issues will be that of privacy protection and compliance with various employment laws such as wage and hours and OSHA. Employment regulatory agencies are "discovering" home care and enforcement will increase. For agencies that continue to participate in Medicare and/or Medicaid, fraud and abuse enforcement will increase.

HHH: What do you think might happen to the national health care situation in the coming years?

Gilliland: A considered speculation: Over the next 20 years, the demand for inpatient acute care services will decrease dramatically with most patients opting for outpatient procedures, care at home, and even the procedures at home. Hospital systems that continue to rely on "bricks and mortar" rather than adapting to the care at home model will go bankrupt. Of course, none of it will be affordable.

Public demand for services will outstrip what the public/government is willing to pay. In desperation, the federal government will try nationalizing health care . . . which won’t help either. Services will be provided through either the nationalized health care system or, for those who can afford it, through private payment arrangements. Only those who can pay privately will have complete access to care.

Hogue: Within five years, I hope to see a truly reformed health care delivery system. In a reformed system as I envision it, the emphasis will be upon community-based, primary, preventive care. Nonphysician practitioners will play a key role in providing this care.

So where will home care be in 10 years? No one can know for sure, but as Gilliland notes, "Having said all this, I will undoubtedly be completely wrong! As I think about the future of the industry, the thing that keeps going through my mind was that who in 1990 would have been able to predict all that occurred for home care during the 1990s? I doubt anyone could have."

[For more information, contact:

• John C. Gilliland, Locke Reynolds LLP, Counselors at Law, 1000 Capital Center South, 201 N. Illinois St., Indianapolis, IN 46204. Telephone: (317) 237-3214.

• Elizabeth E. Hogue, Esq., 15118 Liberty Grove, Burtonsville, MD 20866. Telephone: (301) 421-0143.

• Gregory Solecki, Vice President, Henry Ford Home Health Care, One Ford Place, 4C, Detroit, MI 48202. Telephone: (313) 874-6500.]