Small Home Health Agencies Fighting to Stay Afloat Amid COVID-19 Crisis, Regulatory Uncertainty

By Robert Holly | April 19, 2020

Home health providers are currently waiting in the calm before the storm, bracing themselves for the COVID-19 surge that has already affected hospitals, skilled nursing facilities (SNFs) and other settings.

Unfortunately, industry experts say, they’re readying their operations without the necessary support from policymakers, who have seemingly been slow to fully embrace in-home care as a key pillar in the U.S.’s coronavirus mitigation strategy. The Centers for Medicare & Medicaid Services (CMS) and Congress have lifted homebound requirements, suspended the Review Choice Demonstration, streamlined certification paperwork, and rolled out various financial-relief mechanisms, but additional support is needed — and fast.

“The influx of patients we’re expecting has the potential to seriously affect all aspects of our operations, slowing billing and other administrative tasks as we prioritize patient care,” Jerry Shackelford, a registered nurse, and owner of The AZMO Group LLC, told Home Health Care News in late March. “The COVID-19 pandemic is going to redefine the provision of health care in the United States, and its impact is going to have a long-lasting effect on how care is delivered in the future. But, for us, cash flow is a major issue.”

In particular, the COVID-19 storm is likely to hit smaller, newer home health organizations the hardest. That includes Havasu City, Arizona-based The Azmo Group, the parent company of Medicare-certified Foundation Home Health, and private-pay Idreama Care Management.

Launched in early 2019, The AZMO Group’s home health businesses currently have a census of about 75 patients and average annual revenue of about $1.5 million.

“If we get a sudden influx of patients — let’s say 50 patients in a week, people who immediately need our help — it takes a couple of hours to do an admission after all the paperwork,” said Shackelford, who serves as COO of his company. “That means I either have to increase staff significantly or know my paperwork and billing is going to be delayed. Either way, there’s a monetary impact for me trying to see more patients.”

By the numbers

Mike Dordick — president of health care consulting firm McBee Associates Inc. — likewise underscored just how mercurial the current financial situation is for home health providers at this point in time.

Apart from the COVID-19 virus, all Medicare-certified home health providers are dealing with the transition to the Patient-Driven Groupings Model (PDGM), a payment overhaul that, by design, has significantly affected industry cash-flow patterns. Among its changes, the model includes new 30-day billing periods and a more complex, confusing method for Low Utilization Payment Adjustment (LUPA) claims.

Along with PDGM, CMS also opted to start phasing out home health pre-payments — or Requests for Anticipated Payment (RAPs) — in 2020. Historically, providers have used RAPs to stabilize cash flow by getting a portion of their Medicare payment upfront.

“It was already going to be critical for agencies to increase their cash on hand by trying to optimize receivable collections and work through all that,” Dordick told HHCN. “Hopefully, organizations did that toward the end of the year. This COVID-19 scenario just pushes everything further along.”

To alleviate cash flow challenges, CMS started doling out $30 billion in emergency payments to home health agencies and other Medicare providers on April 10.

Additionally, on March 28, the agency announced it was expanding its accelerated and advanced payment program, allowing Medicare providers to request 100% of their expected reimbursement amount for a three-month period in the form of a loan that they’ll have to pay back.

“The last time we saw an advanced payment scenario like this was in the Interim Payment System in the late 90s,” Dordick said. “It will definitely help providers, but my advice for them is — if you’re going to go ahead and take one of these advances — make sure you’re tracking everything very carefully. It could become a nightmare for you if you have to go through and reconcile.”

Meanwhile, some providers also still have access to RAPs, even if they are watered down somewhat in 2020. RAPs previously allowed agencies to receive 60% of their anticipated payment upfront, but CMS dropped that 20% for existing home health agencies for the calendar year 2020.

The AZMO Group is not one of those providers.

CMS blocked all new home health agencies from receiving home health pre-payments as part of its phase-out plan.

“The RAP is a huge thing for us,” Shackelford said. “With our official certification date, we missed being RAP eligible for 2020 by 10 days. We want to take care of COVID-19 patients, or individuals who are at-risk, to help keep people out of the hospital — but to do that, we need more support.”

A storm coming

Shackelford founded the AZMO Group after spearheading home health turnaround efforts for two decades.

“I’d go to struggling agencies, fix them, then move onto the next one,” he said. “I’ve probably done home health care in 10 different states over the last 18 or so years. I finally decided I might as well start something up myself.”

As part of the model, The AZMO Group routinely works with Havasu City’s sole hospital, a few physician offices and a handful of urgent care centers. The company also works closely with an accountable care organization (ACO) based out of the area.

In fact, that ACO relationship is why The AZMO Group branched out from its initial offerings of care management services and non-medical home care by launching Foundation Home Health.

“The thought process was to create a post-acute care network that was in-house, as much as we could do that,” Shackelford said. “The goal was to move members of the ACO around in the post-acute environment, keeping them out of the ER and hospital.”

The COVID-19 virus is now jeopardizing that goal.

When HHCN connected with Shackelford on March 24, The AZMO Group hadn’t started caring for COVID-19-positive patients or individuals with suspected cases. It received its first referral for a high-risk patient with a suspected case the very next day.

Mohave County, where Havasu City is located, saw its first confirmed case of the coronavirus around that time as well. The semi-isolated,desert county, which has a population that skews older, experienced its first COVID-19 death on April 4.

As of April 15, more than 50 confirmed cases have been reported in Mohave County.

Turning to telehealth

Beyond the fact the company will have to “scratch and claw financially” to stay afloat amid the coronavirus emergency, The AZMO Group is also facing a shortage of personal protective equipment (PPE), Shackelford said.

It’s a problem nearly all home health agencies are struggling with, as the government hasn’t prioritized in-home care providers on PPE priority lists and price gouging has continued on the private market.

“I can’t get masks. I can’t get gowns. And when people hear that I’m home health, they don’t even want to put me on a list for this stuff,” said Shackelford, who still goes on in-home visits himself. “But I’m going to be the one going out to see people who probably have the virus.”

One common-sense solution to help with PPE shortages and cash flow challenges: telehealth.

So far, CMS has kicked in the telehealth door for physicians and certain health care practitioners, but it has only cracked it open for home health providers.

Today, home health providers cannot receive direct reimbursement for in-home visits delivered via technology. Similarly, telehealth visits do not count toward LUPA thresholds.

By changing that, CMS would help home health agencies preserve precious PPE, in turn saving them money by not having to pay seven-fold prices for masks, hand sanitizer, gowns and goggles. Additionally, telehealth would lessen the coronavirus’s cash-flow impact by allowing agencies to handle an influx of cases without aggressively ramping up staffing levels.

Further encouraging telehealth in home health care by pursuing direct reimbursement would also go a long way in terms of keeping front-line workers safe.

For now, CMS says it’s hands are tied by Medicare statues. But providers who are implementing telehealth strategies should do their best to track costs and services furnished, as rules may change moving forward, according to Dordick.

“I think more people need to talk about the tracking of expenses and different visit types that may not be reimbursable today, because we don’t know what’s going to come out with new regulations or policies related to COVID-19,” he said. “That means visits such as telehealth, visits such as phone visits. My advice to every agency I’m talking to is make sure you have ways to track that, whether that’s setting up new service codes in your EMR or whatever you need to do.”