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HCA Issues Home Care-Managed Care Financial Findings, State Budget Proposals

For immediate release: February 14, 2017

HCA Issues Home Care-Managed Care Financial Findings, State Budget Proposals

ALBANY — The Home Care Association of New York State (HCA) has issued its annual financial condition report on New York’s home care and managed care systems, along with a set of vital proposals for consideration in the 2017-18 state budget. These budget proposals cover the areas of home care and managed care Medicaid payment, regulations, workforce issues, and infrastructure investment.

The financial condition report is available here and the state advocacy agenda is here. They will be featured in HCA testimony on Thursday, February 16, before a joint legislative hearing on the health and Medicaid portions of the proposed budget.

“New York’s home and community based care sector enters 2017 with major financial, regulatory and programmatic needs and pressures,” said HCA President Joanne Cunningham. “The state’s minimum wage hike alone will have a $2.19 billion cost impact for home care when all is said and done,” she added, referencing the full, multi-year cost of the mandate. “The Governor’s budget includes some funding to cover home care minimum wage impacts, starting in April. However, both the final adopted funding amount and the distribution methods must be adequate to meet the huge need created by both the wage increase and the growing number of elderly and medically-fragile patients requiring care at home.”

She added: “Billions of dollars have flowed to other sectors through new models of care,” like the Delivery System Reform Incentive Payment (DSRIP) program, “and it is urgent for home care to receive proportional investment in its infrastructure to help attain ambitious state outcomes measures, like a 25% reduction in hospital use. Our reports find that providers are not only uncertain about the prospect of funding to cover their participation in these new models, like DSRIP, but many of them feel that the DSRIP project management teams need to do a lot more to involve home care in decision-making about payment and project designs. Separate infrastructure investment in home care is vital for the success of DSRIP and other initiatives.”

“Home care providers are also strapped by regulations formed in a prior era of service delivery,” she said. “These regulations hinder home care’s involvement in the state’s payment models at the same that DSRIP has incentivized non-home-care providers to enter the home care field of practice through ‘unregulated’ channels, contrary to state laws and standards.”

HCA’s Financial Findings

For its financial condition report, entitled NYS Home Care Program and Financial Trends 2017, HCA analyzed state-required reports for all home care agencies and managed care plans. HCA also gathered supplemental information on provider, health plan and worker status through a December 2016/January 2017 survey.

New York’s home care providers now operate substantially under contract with Managed Long Term Care (MLTC) plans who receive premium payments from the state to manage, authorize and pay for the care provided by home care providers, but these payments are underfunded by the state’s methodologies. Some findings are below:

  • State Medicaid underpayments result in 61% of MLTC plans having negative premium incomes in 2015 and 72% of Certified Home Health Agencies (CHHAs) and Long Term Home Health Care Programs (LTHHCPs) having negative operating margins for 2014, with similar CHHA/LTHHCP financial results in 2015.
  • Thirty-one percent of all home care agencies (CHHAs, LTHHCPs and Licensed Home Care Services Agencies, or LHCSAs) have had to use a line of credit or borrow money to pay for operating expenses over the past two years, and another 6% of agencies were unable to establish a line of credit or financing due to various financial factors.

If a managed care plan is not adequately paid to cover the costs of contractor services, the plan faces major operational pressures that flow downstream to home care providers in the form of billing and care-authorization delays for enrollees, as plans and providers manage a dwindling revenue flow. On the issue of managed care claims payment ability, our report finds:

  • On average, only two-thirds (62%) of these claims are paid to home care providers (CHHAs, LTHHCPS and LHCSAs) within the state’s legal prompt-pay timeframe, according to survey results.
  • Home care provider revenue is held up in accounts-receivable for an average of 85.6 days, and approximately 4% of anticipated claim revenue to home care results in bad-debt (meaning providers are not getting paid for 4% of their claims).
  • 20% of cases are affected by a lack of timely authorizations or reauthorizations. More than 37% of agencies report that it takes up to 7 days to receive service authorizations or reauthorizations in cases where the authorizations and reauthorizations are late; an equal number of agencies report that it takes up to two weeks; and 21% said it takes up to four weeks. These delays lead agencies to commit valuable resources for obtaining such authorizations/reauthorizations.

Home care workforce shortages, recruitment and retention are another area of urgent concern shown in our analysis. According to HCA’s survey, a 24% turnover rate is reported for home care aides and a 21% turnover rate for nurses and other professional staff.

Please read our report, NYS Home Care Program and Financial Trends, for additional findings.

HCA Budget Proposals for Home Care Providers and Managed Care Plans

To address home care financial, programmatic and regulatory issues, HCA has advanced budget language in several areas for the Legislature and Governor to consider, as summarized below and in the report, State Budget Action Needed to Support Home Care Access and Assist Priority Public Health Solutions.

HCA Reimbursement Proposals

HCA urges budget language for home care and managed care premium and payment adequacy, predictability, timeliness and stability across all pathways of home and community-based services. “These payments to providers and plans must appropriately cover regulatory, service and labor costs of plans and providers, as required by statute,” Ms. Cunningham said.  The Legislature and Executive must also reconsider proposals to cut MLTC services, along with other adverse MLTC actions proposed in the buidget.

HCA Regulatory Relief and Flexibility Proposals

HCA urges budget language for home care regulatory relief and flexibility to help home care participate in new models of care and to respect the balance of existing home care structures and operations.

HCA Proposals on Workforce Shortages

HCA urges a comprehensive plan in this year’s budget to address home care workforce shortages, which affect access to services, create provider cost burdens, and limit the achievement of system goals to rebalance health care toward cost-effective community settings.

HCA Proposals for Infrastructure Investment

HCA urges home care infrastructure support in this year’s budget, including a stronger commitment of investments in home care specifically. This commitment must go beyond the Governor’s earmark of $30 million in Health Facility Transformation funds in the proposed budget for community care – which includes other settings, not just home care – out of a total $500 million allotment for all sectors.

HCA is calling for a $125 million earmark for home and community care. This is consistent with the state’s index goal of a 25% reduction in hospital services, which requires community care to shoulder a more substantial role in driving down costs, thus necessitating a more robust level of infrastructure investment.

To learn more about these reports, please contact HCA’s Communications Director Roger Noyes at rnoyes@hcanys.org or (518) 810-0665 (office) or (518) 275-6961 (cell).

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