Need care at home? Medicare as payment source (Part III)

Become a Medicare certified home-health agency (HHA), is a much more rigorous process than merely obtaining a license to operate a HHA from the State of Illinois. Fear not, if you do qualify for the Medicare home-health benefit, there are at least 400 Medicare-certified home health agencies (HHA's) in the Chicago area. Many of the large hospital networks in the Chicago area (i.e. Advocate, North Shore University HealthSystem, etc.) have their own HHA's and it is common for non-profit elder care service providers to operate HHA's as well (here and here and here). The high-number of Medicare-certified HHA's in the area means that competition is fierce for patients! Fierce!

The business case:

For a Medicare HHA to be profitable it must have sufficient number of client visits and those visits must be the "right" mix (meaning that the provider must make a profit on more of the patients then those they lose money on). You may ask, why would a HHA lose money on some clients and not on others? Reasonable question. Without getting into too much detail (for that you can go here) reimbursement to the HHA primarily includes a base amount and a "case-mix" adjustment for the "health condition and care needs of the beneficiary." This adjustment does not always cover the actual costs associated with that client (i.e. all nursing and therapy services, routine and non-routine medical supplies, and home health aide and medical social services).

Profitability is not only dependent upon volume, but also upon accurate tracking and billing of the services provided and quick action if any billed services are denied. Although software simplifies many of these tasks, it requires skilled personnel to implement the necessary processes.

CMS (Center for Medicaid and Medicare Services) subjects HHA's to a long list of regulations. Additionally, the Departments of Justice and HHS  are very aggressive regarding Medicare fraud and abuse. Changes in regulations typically increase operating costs and the recently announced cut to Medicare HHA's  (effective January 1, 20112) by 3.35% is expected to cause increased consolidation in the industry.

Bottom Line:

Chicago area older adults qualifying for the Medicare home-health benefit have an ample supply of HHA's prepared to assist them. However, these HHA's are working harder and receiving lower reimbursement to meet their client's needs.

Next blog entry (Part IV in this series) will focus on the availability of home health and home maker services for Medicaid clients.

Please suggest future topics for me to explore.

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    Bruce Lederman has over 25 years experience in the senior care field as a direct care provider and thought leader. Bruce was CEO and president of his own firm that operated skilled nursing facilities in Illinois. He is a former nursing home administrator and has consulted to numerous elder care providers on planning for strategic growth as well as process improvement. Recently he served as board chair of CJE SeniorLife, a leading non-profit elder care provider in the Chicago area. Bruce is currently employed as chief strategy officer for a company providing skilled nursing services in communities throughout Illinois and Missouri.

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