As Medicare Advantage (MA) continues to grow, nonprofit home health care providers are facing unsustainable reimbursement rates, forcing some to discontinue certain care plans. Care Central VNA & Hospice CEO Holly Chaffee highlighted the financial strain in a recent article by Home Health Care News.

"A few payers reimburse us at the Medicare fee-for-service rates, but some do not cover our costs. We no longer have Medicare excess to offset the losses from those plans. It’s challenging to stay afloat when MA plans are not covering the costs of your patients." Many nonprofits, without the resources to negotiate with payers like larger for-profit companies, are being forced to reevaluate payer relationships and explore new operational strategies to remain viable.

In some cases, agencies have been forced to terminate contracts with MA plans due to low reimbursement rates. Chaffee explained, "We are in a network of freestanding VNAs, and this network does our contract negotiation. We have gotten to the point where we are terminating care for patients under certain plans because we can no longer sustain the losses that we are having because [payers] are not reimbursing us appropriately or effectively covering our costs."

The situation is dire for many providers, with Chaffee stressing that federal intervention is needed: "The federal government needs to step in with these insurance companies, even state by state, and tell them to cover [our] costs. They need to pay at least what Medicare is paying. If they don’t do that, we won’t be sustainable. We’re not asking to make a big profit; we’re asking to help us meet our margins so that we can continue to do business."

Chaffee also expressed concern about the future for providers who only accept Medicare: "In Massachusetts, 60% is Medicare Advantage; it’s no longer a 50/50 thing. If they’re only going to take Medicare, they’re the ones who are going to have a problem because Medicare is going to go away eventually."

Nonprofits are finding creative ways to cope with financial pressures, including adopting artificial intelligence (AI) to streamline operations and engaging with community partners to secure philanthropic support. For Chaffee, community relationships remain vital: "Our community-based relationships are critical. When we partner with health systems, they often want us to take all their patients, which makes community relationships challenging because the relationship is now more driven by payment and institutional structures designed to restrict care than by true partnership."