Study: Medicare needs to improve reimbursements for home care to entice more ACO investment

Medicare needs to make more home care services reimbursable for accountable care organizations to entice more providers to offer such care, a new study found. 

The study, released Thursday in the American Journal of Managed Care, comes as the Biden administration has made a renewed effort to improve health equity in value-based care. But the study found major gaps in reimbursements for such services. 

“Many services provided are not billable, and therefore ACO leaders are hesitant to fund expansions without strong evidence of [return on investment],” the study said. “Expanding Medicare ACO home-visit waivers to all risk-bearing ACOs and covering integrated telehealth services would improve the financial viability of these programs.”

The study found that many ACOs provide home-cased care for high-acuity patients and to address social determinants of health. ACOs are also exploring home-based care in response to a push for organizations to take on more financial risk.

Researchers surveyed 151 ACOs over their home-based care programs. They found that 25% of ACOs had a formal program, while 25% offered occasional visits and 17% had programs in development.

“A majority of respondents expressed interest in expanding services but were concerned about their ability to demonstrate a return on investment, which was reported as a major or moderate challenge by three-quarters of respondents,” the study said. 

During the pandemic, the Centers for Medicare & Medicaid Services offered waivers to providers to get reimbursement for certain Hospital at Home services, which offer hospital-level care at home.

The study also looked at the home-based care programs for 40 ACOs that were surveyed. It found that 49 home-based initiatives. The most popular were programs based on primary care (37%) and care coordination (24%). Only 13% of ACOs offered home care programs based on social needs, and 11% offered acute hospital-level services.

“Half of the programs were established in the past three years,” the study said. “This may reflect increasing pressure to develop initiatives that moderate spending growth as more ACOs enter risk contracts.”

Another 40% of survey respondents said they plan to expand into home-based services. 

Measuring investment return was a major problem for 45% of respondents and a moderate challenge for 26%. 

“This is critical because many organizations are reluctant to invest in new programs designed for cost savings rather than revenue generation,” the study said. 

Another hurdle for measuring return on investment is the financial structure for ACOs, which agree to meet certain quality and spending targets and get a share of any savings. ACOs, however, must repay Medicare if they do not meet such targets. 

But while 30% to 50% of all ACOs in the Medicare Shared Savings Program get savings, it takes them nine months after the performance year ends for them to get the money. This can make it difficult for an ACO to fund new programs as it must be done with their own money, the study said. 

“The business case is stronger with prospective monthly payments per beneficiary, which is an option under Medicare’s new ACO Realizing Equity, Access and Community Health (REACH) model (formerly called Direct Contracting),” it said.