MHA Corner Podcast

Intro:

Welcome to the MHA Corner Podcast, where we discuss news and developments in the post-acute space. Today we sit down with our Chairman and Co-founder, Tom Maxwell and Chief Operating Officer, Jay Duty for their key takeaways and considerations for the 2024 Medicare physician fee schedule. Final rule the pair outlines best practices and implementations for strategic success as we approach 2024.

Tom:

Thank you for joining us today. I'm Tom Maxwell, the Chairman and Co-founder of Maxwell Healthcare Associates. I also serve as a Non-Executive Chairman of the Board for Medalogix and an investor in multiple home care and hospice agencies. So, thank you guys for giving us a moment today.

Jay:

Thanks for joining us. Jay Duty, the Chief Operating Officer here at Maxwell. We're excited to tell you a little bit about the final rule. I know a lot of people have read up on that, but obviously we got the rule with 60 days to go before the end of the year, as expected, with some changes there for obviously the Medicare home health benefit affecting payment structures, quality programs.

Obviously, they'll go into effect on January 21, 2024. Let me just give you a little bit of a rundown of kind of some of the key items there. Then we'll talk about kind of the impact that it'll have for the industry and then how to kind of work through that. So, for the calendar year of 2024, some key provisions in there were obviously that CMS has done, keeping that budget neutral has been very important while still putting in a new model of home health.

For 2024, there were approximately about three and a half million dollars in what are called temporary adjustments that were actually not included in the final rule. So, one of the big anticipations everybody was watching to see was to see if there were these adjustments, how those were going to affect there too. There are some permanent rate cuts in there, which we'll get into kind of the details there in a moment.

But what I think these signals to us that while there was not a full permanent adjustment in the calendar year of 2024, there are total dollars that are subject to future temporary adjustments, and they'll likely increase.

Ongoing changes in adjustments in the Medicare home health payment rate system still will remain budget neutral, but there were actually substantial reductions in the home health benefit. So, the downward permanent adjustment and keep in mind that's the permanent adjustment, not a temporary adjustment, was a downward trend at negative 5.65% to the 30-day payment rate. Of course, CMS countered that with measures that resulted in an estimated 0.8% overall increase in calendar year 2024. So, that was followed by an annual payment update of 3%. So just to kind of recap, that down 5.65% and then up 3%. So, the net of that effect is a 0.8% overall increase.

And while that's an increase for now, which I think is good for the industry, keep in mind those downward cuts were permanent. So, that means they'll go on from here on out too. So, while it might sound like a good guy to start, obviously there's some adjustments that were made permanently that affect the industry to the negative. What this also shows is that negative adjustment, there's probably going to be future payment cuts based on trying to go back and adjust for the temporary adjustment in the future. So, the overall impact somewhere around $140,000,000 to the good (0.8%), which is a good sign for the industry. 

 A few other items, kind of some quick hits here were recalibrating the case mix weights in PDGM, updating LUPA thresholds for 2024 utilizing the calendar year 2022 data, so that was updated for 24 using 2022 data. The wage index was based on the 2020 hospital cost reporting system, so that was updated for 2024, but using 2020 cost report data. The shifts included rebasing the market basket cost weights from 2016. Those were now adjusted to the 2021 market baskets based on Medicare cost reporting as well. Those were submitted by home health providers and submitting their data too. 

Other updates, the policies for Home Health Value-Based Purchasing were introduced in 2022, and they took a few measures out this year, as well as changing some of the measure sets. CMS finalized some of its policies related to the quality reporting program around the Oasis data and public reporting of those measures and taking away some measures there too. 

In the proposed rule, CMS sought input on access to home health aide services. The final rule included a discussion of the comments received, emphasizing that stakeholder input will guide those future policies. So, no major changes to that, but there was an acknowledgement by CMS that they'd like to move forward with the comments that they received. The industry did express their concern with the proposed rule, and some of the effects I think we're seeing in what came out in the final rule too.

So that's a little bit of the update. So obviously permanent adjustment down, but a positive adjustment up netting in that 0.8%. So good for the industry for now, but I think there are some kind of hidden good guys or hidden bad guys in there from a long-term standpoint. But the industry, I think, will react positively to that news, especially at first flush.

Tom:

Yeah, Jay, let me make a couple of comments there as well. It’s real interesting to me that so I've been doing this for a long time, since 2005, and every year around this time, usually it's Halloween night, or the night after Halloween, we get a rate cut. Final rule, not the proposed rule.

And every year the government starts talking about some things, and then you look a couple of years later and now it's implemented. And so this aid service one, I think is really interesting because what we've seen across the industry is more and more home health agencies are providing less and less aid visits. And so, the government's looking at this and saying, how do I start streamlining or how do I collect data around this so that they can make changes to payment rates later on. And so as aid services have gone down, you'll see in the future rules probably changes there, just like you saw on the LPNs and RNS, PTAs and PTs. So over time, the government collected data on that and then made policy changes in the future.

A couple of other things. The wage index is super important. It all depends on where you live. So, they're using the 2020 hospital cost report data to adjust wage indexes. So, California, Texas, Miami-Dade County, these areas are going to have different changes. So, although the overall rate cut was somewhat flat, if you're in some of these specific areas, you could have a larger cut. I do recall a couple of years ago in New Jersey where they really did the market basket and the wage index changes. And some of those branches in some of those communities were getting like a 5, 6, 7, 8 percent cut.

And so, it's a lot bigger. So, make sure as you start looking at this, if you're on Homecare Homebase or one of your other EMRs, they're going to probably do an analysis for you. But make sure you're paying attention to that wage index because it could be a lot sharper cuts compared to where you're at. Remember, that's all based on the statistical it's called a CBSA threshold. So, it's kind of like your zip code, but in a tighter market than the zip code. So, pay attention to that closely.

And then on the LUPA side of things, I think this is important. So, they finalized a proposal recalibrated the PDGM of case mix weight. So, what that means is episodes that historically weren't a LUPA or will now be a LUPA, Low Utilization Payment Adjustment (LUPA). And so, we're starting to see more and more of these. So, if you took your 2023 data and if every patient that you admitted was the same and you looked at it in 2024, more than likely you're going to have more LUPAs in 2024 than you would in 23 because of the case mix weight adjustments that happen.

They do this every year. And it's pretty bizarre now that we're into PDGM. Remember, back in the day, four or more visits was not a LUPA and four or less was a LUPA. This has completely changed. So, you have to have tools, you have to have things built into your processes in order to manage and monitor these or you will see a reduction in your payment.

And as we start really diving deep into and Jay and I are going to talk about a few different things that we're working on and what we think is going to be. I spent the last year working on lupus and research and those kind of things in our other businesses. One of the things we're really focused in on is how we have two different kinds of LUPAs there's. A patient goes into the hospital, we should prevent that. Hopefully if we can, we can. Or you have these cathed patients, which are always a LUPA, right? Most of the time are LUPAs. And so those are patients we call those patient control LUPAs. What we think you need to do is focus on the agency impact of LUPAs. Why was this patient a LUPA? Medicare thought we were paying you this amount of money, or we're going to pay us this amount of money. And we did less visits, so we created our own LUPA. And so, agency impacted LUPAs need to be at zero, right? These are ones where we had a failure in the patient care. We had a miss visit, we moved across.

The other thing I want you to spend time looking at is the Medicare methodology for LUPAs is based on a 30-day cycle. So, if your patient if day one was this year, for an example, November 1 was the first day of your episode, that was on a Wednesday. So, the 30-day period ends on a Thursday. So, you could move the visit from Wednesday, Thursday, to Friday, Saturday, and you'd be in the second period. Although Medicare allows you to move those visits anywhere during the week in order to accommodate the patient's needs.

If you moved one visit from the first 30-day period to day 31 or December 1, you would essentially create yourself a loop in that first period. And so, it's going to be super important for you to pay attention to these things. And there's tools out there that allow you to do that. But really focus on reducing missed visits, focusing on reducing agency impacted LUPAs. The national benchmark is around 8% for all LUPAs. I think there's no reason why you can't get down to 3 or 4% of agency impacted LUPAs. You have to make these go away. You must focus on your patient care because if you think you're only getting a 0.8 increase, if 5% of your business is LUPAs, you actually just took a 5% decrease. And so, you have to get rid of it.

So put processes, put policies in way to avoid these and make sure that you're focused very closely on them. Because it's amazing to me, everybody complains about a 3% rate cut or only getting 0.8, but then we sit there and throw away money at 5% LUPAs. So, 5% of your patients are LUPAs. It's 5% of your revenue is going to be LUPAs. And so we're throwing away a ton of money there. So put things in there.

Jay, let's talk a little bit about our centralization processes that we're doing. And I want to spend a little bit of time talking about the centralization of intake because I think that's a phenomenon where I think as we were discussing this morning, Jay, around the it's kind of changed since COVID happened.

Jay:

So, I'll let you take it from there and then I'll jump in there. Yeah, I think people more and more now, even some that haven't necessarily considered that or kind of streamlining that process, you're going to have to do it with less, with more, right. So, you've got the final rule with a little bit of an uptick, but you need to optimize for what you have today. And that's not just moving bodies around, it's like, how much do I get more efficient in those processes? So, things like centralizing intake potentially using technology to do that there making sure your processes are really tight whenever it comes in as a referral and not using the precious cost of labor to spend time kind of going back and forth about admissions, but making sure that those resources are focused on admitting patients, getting nurses and therapists into the field to see patients and being much more efficient with that.

So, where can you take these decentralized branches that have kind of their own take on how, when with minimal efficiency of admitting those patients in a branch? How do you bring that to more centralized function where there's a little more control, the process is a little more fine-tuned, it's less person dependent, more process dependent and just making sure overall it's efficient.

Tom:

Yeah, just to add a little bit more to that, to Jay. So, some of the things that we saw during COVID. The COVID pandemic crisis that we had, what we found is more of these hospital systems were implementing new products like CarePort, like CareSpan, like hospital management. There's seven or eight or ten of these portals. And what we found is, remember, all the people that were working in the hospital that weren't touching patients or part of patient care got taken out of the hospital. So, they removed them from there. They let him work from home, they let him work in centralized facilities. The last thing he wanted was somebody that was not caregiver focused and was showing the hospital and could possibly spread the disease. And so, all these people began to work from home or work in regional areas.

And so what we found is if they're all working from home, they didn't come back either. Most places they didn't come back. So now you have all the people that are doing your discharge planning and they've all adopted new technology and they're not at the hospital anymore. So now we're steering patients. Most appropriate place. Well, let's say you had 50 branches. Do you have 50 intake people now? Historically, that's what we have. We had an intake person or someone that played that role. Maybe they had multiple jobs inside the organization, but they ran intake well.

Today they're all on portals. So now do I train 50 people how to use a portal, or do I train one or two or three or four? How to use the portals and manage that portal? That's an area that Jay and I are spending a ton of time on. And usually what happens is that this is Johnny's cousin's brother's nephew, who just graduated college. He's now the portal operator. Well, this person is essentially managing your cash register. And so, you must be really good at the portals, which is why I think the centralization process is there. 

And then with the whole focused care, which is around the face to face and home health, there's a lot of challenges around what's the right diagnosis code, where am I? And who's getting the documentation, who's getting the history and physical, and who's reading the 300-page or 100-page history of physical and making sure that's that if you're doing that at 50 locations, you have one person. That's kind of a side job for them. It's not going to be near as focused as if it's a centralized team.

So, we're seeing across the industry, everybody's going down the centralization path intake. We're also seeing centralization accumulating quality. I would say the new phenomenon is as much centralization as it is regionalized. So, putting multiple teams together in different regions across the larger home health enterprises, and so we're seeing a lot of regionalization and then focusing, and I like to compare it to a baseball team. You have a bunch of pitchers, you have a bunch of catchers, you have a bunch of first basemen and second baseman, and we have a few utility players that play everywhere. But if you're really going to be the best team, you're going to have a group of pitchers, and that's all they're going to do is pitch, and you're going to have a group of catchers, and they're going to catch, and then you're going to have a first basement, second basement, third basement. Not everybody can play every role anymore. And so, focusing your training, focusing your centralization, and really putting as many of those things on that team that are focused around intake or focused around scheduling or focused around QA, and quality is super important. 

And we have to figure out to cut costs out of business. Medicare is trying to cut costs out of us. We have to figure out how to cut costs out of the business. So, I think we're spending a lot of time doing this now through the Maxwell teams and really looking at workflow. If you're not focused on nana care and nurse care, then how do we eliminate the things that you're focused on right in the branch? At the branch level, we have to have the clinical field staff supervisors, the branch leaders, whatever you want to call that person that's responsible for they need to spend all their time focused on nana care and nurse care and making sure we're caring for the people that take care of our patients versus computer operators.

And I think historically, those roles have just become computer operators. And then on top of that, yougot the government rushing us, right? Remember two years ago in the rule, they came out with the notice of admission where you have five days to complete your admission. So now we have a nurse that's going out in the field. They're doing a start care. They're rushing to get their documentation done. They sync it back in on Friday night, and you have two days to get all that work done on Monday morning. And we all know that Monday mornings are really tough in-home health, you're dealing with all the stuff over the weekend.

And so now I have a clinician. It's a branch leader, clinical supervisor. It's rushing as fast as they can in order to complete documentation. So, we're not going to get a good care plan. We're not going to get a good, thorough review of that care plan because we're rushing. Because if we don't get it done by 05:00 on the fifth day, then now we're starting to take a penalty at $60 a day. So again, focus on that. There's no reason we should be giving away that money. So how do we make sure that we're doing nurse care, nana care every single time? If you want to get a bigger rate cut, continue to have LUPAs, continue to have notice of admissions, continue to have lack of fall through on your patient care, lots of missed visits cause a lot of problems. 

Jay, let's also talk about some of the new tools we're building that are going to help mitigate these cuts.

Jay:

I think to Tom's point, the neural pathways got rewired during COVID of how those patients come into the agency. And so, you have to also look at, okay, once it does come into the agency, we do a good job of centralizing intake, optimizing that process, getting them to admission. The precious resource of staffing still becomes an issue or remains an issue in the industry. There just simply aren't enough nurses and therapists ready to go see these patients in the home.

And so, you've got to be really responsible with that resource. And one of the fixes for that and one of the things that really thwarts that is having missed visits. So, caregiver gets out, gets to the home, they go to see Nana at the home, and then all of a sudden not able to complete that visit, they have to put their keys back in their car, burn some windshield time, going back to their next visit with no productive time at all and one of the challenges there is. So how do you reduce those? Right? We can work with our patients. And so we developed NOTIFYnana to be able to give an alert to that patient that we're going to be coming. So, giving them a way to feedback to us. Does this time work for you? We'd love to come visit you. Tomorrow was that time that we scheduled there. So, the day before, they're getting alerted to that. They're getting alerted. The day of that, we're going to be there as well. And being able to give us that feedback so that we reduce those missed visits and spend time being productive with those caregivers that are such a precious resource of staffing.

And then being able to make sure that our Nana was satisfied with that visit. So, the survey tool, making sure they can communicate back with us how that visit went, and if we need to get back out there and follow up with that patient too. So increases patient care, also reduces missed visits, too. We can customize per agency what those communications are to the patients to help. Kind of complement the workflow and make. Sure, we're getting out there timely, that we're getting the feedback from the patients so that we're not having downtime and missed visits. 

Tom:

Yeah. The only thing I would add to that, Jay, it's a really good way of describing it.

The survey text is super important. Like, Nana, how was your visit today? What's going on? On a scale of one to ten? We did that around the HCAHPS number. So, want to follow the HCAHPS rules, but then being able to address the issues right away versus wait 30 or 60 days. If I know that they really didn't like our age or that they wanted a female caregiver, and we were sending them a male caregiver. And so, we frustrated that patient. So that's where we spent a lot of time on NOTIFYnana. We can do that. It's no different than the water heater guy or the appliance repairman or the guy that mows your yard or scoops up after your dog or whatever.

They're all sending you texts now. And these Nanas, the challenge I always get is, does Nana really want text messages? And what we found is Nana really does. If you go talk to your parents or my parents, they all text more than anything. And so they want that communication. It's also the number one thing it's hit on the HCAHPS scoring is the communication between the patient and the agency. And we believe this is going to help us taking you from that to nanaCONNECT. So, if we're going to do less visits, we have to, because the government's going to pay us less money, we need to make sure we're checking in on Nana every single day.

So, I came up with this idea of nanaCONNECT. nanaCONNECT is essentially a low-cost remote patient monitoring system. So, if you think about most of the remote patient monitoring systems that are in the industry, that's a scale. It's a blood pressure cuff, it's a pulse oximeter, it's a temperature gauge. And we are waking Nana up with a device and saying, Nana, give us your vital signs. We need to check that. Honestly, most vital signs are super important. That's why they're called vital signs. But most Nanas, what we care most about is how you feel today. So, if Nana's historical blood pressure is low, then it's going to send an alarm.

We're going to be calling Nana, wasting time. If she tells me she feels bad, then I need to call her. And so being able to check in on Nana every single day, every single morning, every single night, and say, nana, how do you feel today compared to yesterday? Or how do you feel this evening compared to this morning? And if Nana gives you a one or a two, it kicks off an alert and somebody picks up the phone and calls Nana again. My job there is to avoid a hospitalization. My job there is to check in on Nana, make sure she's taken care of. And our job there is to respond to Nana when she needs our help. And so for really low cost, for less than one month of remote patient monitoring, cost you around $120. We can probably take care of 20 patients for that same fee. So, what we found is lots of people have remote patient monitoring, but they dabble in it, and they roll out a few hundred devices versus monitoring all their patients.

And so if they set a program up like nanaCONNECT, where we're checking on the patient every day, we include that in the patient's care plan. We let the patient know that anytime you need us, you just respond here and build monitoring tools to allow us to monitor those. Then we can check on Nana every day. Maybe we can just do a virtual visit. Maybe we increase her pain medications. Maybe we tell her to change her diet. Maybe she's just bored and sad and lonely, going to call 911 because nobody's reached out to her. So, you're there to connect with Nana on an ongoing basis.

And just by simply monitoring those check in messages with a simple number 1 to 5, we know if we need to take care of Nana. So that's what nanaCONNECT all about. We just deployed it, have a few agencies starting to use it. We're really excited about where it's going. We can also roll all that data up by different payers, we can roll that data up by different referral sources, and we can roll it up by payers, referral sources, and clinicians. We can give a score on that clinician, too, and say, how well is that clinician taking care of you on your survey text? And so now I have an employee engagement platform as well so lots of neat features you're jumping out of.

Jay:

Yeah, that's real, that's real time data, too. I think that's a tool that's not there today. You've got to wait for some of the reporting capabilities to catch up, but that gives you the intervention is what's important, right? If I know RPN may give me some data and I'm monitoring some biometric feedback, what you really need is to. Know, do I need to get out. There and take care of Nana? And by the way, Nana is Tom's Nana. So that's part of the reason that that's the name there. So, he's got a picture of her behind him there today. But that's important. I got to be careful with that resource, right, and making sure we utilize that and cut down on missed visits.

The other thing is obviously making sure those clinicians are productive in the background. And so Caregiver Accelerator is a really exciting tool that we've rolled out now to do just that. It gives you a snapshot of multiple reports in the EMR to show you, do I need to send this patient, do I need to assign this nurse versus that nurse, this therapist versus that therapist? Maybe one nurse is over productive for the week and so you've got another underproductive nurse that you want to send that to. But based on kind of the metrics that agencies set there, they can really quickly, that scheduler can have a really quick view of something where today they're kind of pulling multiple reports or perhaps even managing by anecdote just because something they feel like they know who needs to get visits.

This really gives them a snapshot to look at that pulling, what that availability for that clinician is if they're productive or not. To make it just really easy for a scheduling module today that I think is a little bit more complicated today. So, if you're taking care of those missed visits using NOTIFYnana, and then you've got to figure out which clinician. Is going out there. I think going forward, even with a permanent adjustment, even with a little bit of a bump in the payment rate this year, you've got to still be very succinct with the resources you have. And so wasting their time and them not being productive is just a killer for that too. So, it's going to allow people to see more patients, especially if you get those productive clinicians.

Really cool tool that people that have agencies that are using it today just fawn over it. That just a missing piece that they don't really have visualization to today. And you can also go back and look at different categories of patients that you might be able to do some analytics to say how are we treating these patients or how are we missing these patients or how are we staffing these patients. They're in a really easy dashboard. So, Tom, I'm sure has more to add about that. But it's a really great tool and you got to make those caregivers really productive.

Tom:

Yeah, I think the one thing I would add is if I don't hit productivity on Monday and Tuesday, I got to hustle Wednesday and Thursday and Friday to get to my 28 points. That's the norm. 27, 28, 30 points depending on how much you're given per productivity point. And that's always the challenge, right? How do I staff appropriately to get everybody there? 

Hey, just to bring us back to the payment methodology. So, one more mitigation strategy that I think we have to deal with in the industry today and that's the Medicare Advantage payers and the commercial insurance payers. So, Medicare gave us a little bit of an increase in rate, if you call it increase. But the other side of this thing is we've been spending a lot of time around payer profitability and analysis of our payers. So, Maxwell built a report, the Payer Profitability Report, we design of this report was to look at how many of each patient type am I getting by payer and then what's my average census, what's the periods and then what am I getting paid for my negotiated rate? So that's easy, right? Everybody can figure that out. But then I start looking at the bad debt that I had to write off for historical not having auth and those kind of things and then really get into the visit count and the cost of those visits. So how much does an LPN cost me, an RN cost me?

And then we studied the back office and so we use the office cost to look at the number of times or the number of clicks or minutes that you're spending on a particular patient in a particular period to get the Auth, reauth eligibility orders, all those things. We multiply that by a number that's related to that position. So schedulers are this know, intake people are these dollars and we come to a calculation and then we put in the marketing costs associated with the PDGM or Medicare if you pay marketing bonuses for those kind of patients. And then we take that down all the way down to the very profitability and growth margin.

And so what we found is people think they've negotiated a really good contract with a payer. And so you've negotiated this great contract with X Payer and you think you're actually profitable and you negotiated like $128 or $200 visit per visit rate. But then you have so much bad debt you're cutting off, and then you're spending so much time in the back office that you're actually losing money for every one of those patients that you take. And so, if you can't figure out how to optimize or go faster, better, quicker, why would you pay a commercial insurance provider to take care of their patient? And it's essentially what's going on. I've seen some that were negative 5% or 6% all the way up to some that are negative 200% just because of the amount of time it takes, the number of touches in the back office that we're dealing with in order to get a patient through the process.

And so, the Payor Profitability Reports are super popular right now, and people are using it to one, figure out which pairs they're not going to take anymore or renegotiate their contract. And so if you go to them with data and say, hey, I took 41 of your patients that look like this, and my gross margin on these are upside down, I can't continue to take your patients, no money, no mission, and I can't continue to take your patience if I'm not even going to break even. But not having this insights and not being able to dive deep into the data and understand effort that it takes to get an authorization or get eligibility or get the order signed is a real challenge. And so it's one of the things that we spent a lot of time building, and super excited customers are jumping all over it. So look forward to getting a demo of that if you want to.

Jay:

Yeah, they really react to that because I think typically agencies have looked at, okay, I know what my rate is, I know my cost per visit is. So as long as that math works out, I've got some margin there. But really there's a lot of hidden costs in those that we look at. The cost per visit on a Medicare platform, not necessarily those extra hidden costs there, too. So, a lot of reaction whenever we present that data, they really feel like it's actionable and something they need to make decisions on whether or not they even take that pay at all or renegotiate or just really kind of have an understanding for what it's costing their enterprise when they do. So, lots of good insights there.

Tom:

I think the 2024 rate cuts and the changes in the industry, we think there's an opportunity to really save a lot of money and time around the bereavement process, although it's not an area where it's not a lot of dollars to agencies, but they do spend, and it's all total cost. It's all right out of the bottom line. It's part of the requirement. But I don't know why we still mail letters and still fold letters. So, watch the Maxwell Team come out in the next few months with a more automated bereavement process. So that's a little teaser for you.

Jay:

Got to be a better way to connect directly, right? I mean, the point is making sure that patient families are connected to those services. So, getting a letter doesn't necessarily cause me to do something actionable, but if I can have a real-time automation that I can react to, makes a ton of sense.

Thanks for joining us today. I think there's a lot of things going on in the industry. This is going to be something that people react to. Want to make sure you all tap into our resources at Maxwell, at maxwellhca.com. Would love to talk to you and schedule a demo of our products or help just optimize centralize anything that you've got going on there and really have some strategic alignment in your services. So, reach out to us at info@maxwellhca.com.

Outro:

Thanks for listening to the MHA Corner Podcast. If you'd like to learn more about Maxwell Healthcare Associates and our Strategic Solutions, contact us at sales@maxwellhca.com or visit us at www.maxwellhca.com.