The 411 on Home Care – Part 1: Understanding the Trend

During the nearly 40-year history of the long-term care pharmacy industry, the primary venue for service has been the skilled nursing facility. Despite the prevalence of nursing homes and assisted living, Americans have long expressed their preference for remaining at home when possible.

Home care services have been on the rise due to various factors, with one of the major contributors being increasing healthcare costs. The pandemic, however, significantly increased its adoption. With the emergence of new technology and a rise in virtual services today, at-home care has become a more viable alternative for patients with long-term care needs.

Let’s see how this could impact your pharmacy.

Why the Trend Toward Home Health Care?

Nursing homes meet a critical need. Many seniors and people with disabilities require skilled care that can’t be administered in any other setting. Low-income seniors and middle-class Americans rely on the long-term care options provided by these facilities.

LTC pharmacy began following the enactment of the Nursing Home Reform Act of 1987, which established service standards for nursing homes that our pharmacies were created to meet.

Even so, most Americans prefer home health care (HHC) because it doesn’t require the patient to live outside their community. The less-restricted environment of the home allows patients to be cared for in familiar surroundings and be near loved ones and personal possessions. Home care also allows for a higher quality of care with direct medical attention, monitoring, and care routines, potentially improving health outcomes.

Patients are experiencing reduced costs thanks to the shift from a fee-for-service system to a value-based care system. Public and private payers in long-term care prefer home health services over nursing homes because of their significant cost savings compared to institutional care.

This preference has created an urgency for states to transition more LTC beneficiaries into home and community-based care, reducing reliance on nursing homes.

The transition has become very popular, and there are waiting lists for Medicaid recipients to gain access. One of the Biden Administration’s proposed initiatives involved spending $150 billion in federal money to expedite the move to more home- and community-based care.

Coverage for Home Health Care

As with nursing home care, HHC coverage under Medicaid and Medicare is complex and can be challenging to decipher. Home health is a covered benefit under the Medicare program as long as the beneficiary fulfills specific requirements.

All state Medicaid programs cover some form of HHC, but the scope of coverage varies by state. The good news on Medicaid is that most beneficiaries will receive drug benefits under Medicare Part D and not Medicaid.

Another option is Medicare Advantage (MA), often referred to as “Medicare Managed Care” or Medicare Part C. MA provides coverage for all required Medicare Part A, Part B, and usually Part D services.

Unlike traditional Medicare, there is a yearly limit on out-of-pocket costs for services covered by Part A and B for the beneficiary. However, the more interesting feature of MA is one created by CMS during the Trump Administration.

Beginning in 2020, CMS allowed MA plans to offer supplemental benefits that had previously been beyond the scope of medical care, including services intended to foster independence and keep beneficiaries out of institutional settings.

Despite a slow start, MA plans with non-medical supplemental benefits have steadily increased and have driven the popularity of these plans. In 2023, MA enrollment increased to 51 percent – 30.8 million people of eligible Medicare beneficiaries.

Preparing Your Pharmacy for the HHC Trend

Given all the data on patient and payer demand, home health care is a market force that will impact your pharmacy and require a different approach.

As you can imagine, providing pharmacy services to 100 residents in a single location, such as a nursing home, is a far different proposition than providing services to the same number of residents spread over dozens of zip codes. Fortunately, LTC pharmacies have found that competing in the HHC model is possible, opening up new opportunities to expand our mission.

Want to dive deeper into HHC? Check out our podcast episodes below where Lindsey Dymowski and Paul Shelton give insights on providing home health care services.

Also, join us at the 2024 AmplifyLTC Pharmacy Conference, where Lindsey Dymowski and Paul Shelton will speak on Opening Closed Doors to Home Health Care.

Part 2 will explore possible ways to serve this growing market.

Anchor Points

  • For LTC pharmacies, nursing homes remain the primary place of service. Continue to focus your efforts on your current clients.
  • Think long term about where seniors and people with disabilities will receive care in your community over the next five years.
  • Imagine how your business model would need to change to serve non-institutionalized seniors.
Written by:
Paul Baldwin
Baldwin Health Policy Group
Paul Baldwin

Paul’s pharmaceutical industry experience in public and government affairs led to becoming Executive Director of the Long Term Care Pharmacy Alliance, helping lead the industry through the Medicare Modernization Act and creation of the prescription drug benefit. Paul was VP of Public Affairs for Omnicare before founding Baldwin Health Policy Group.

You might also like:

Decorative: top tab