Payers Increasingly Turning to Home-Based Care to Shoulder COVID-19 Costs

Back in 2018, it felt like the health care sector was on the verge of a massive shift, driven by a desire from payers to better manage their members’ total cost of care with enhanced in-home capabilities.

Much of that feeling came from watching Humana Inc. (NYSE: HUM). The Louisville, Kentucky-based health insurer teamed up with TPG Capital and Welsh, Carson, Anderson & Stowe to acquire Kindred at Home in July of that year, with the trio then completing a deal for Curo Health Services less than two weeks later.

After Humana signaled its intent to “own the home,” many believed its peers would inevitably do the same. When Medicare Advantage (MA) organization Devoted Health launched in 2018, co-founder Ed Park even touted that very specific mission.

“We are on a mission to deliver to our members the kind of care that we all would want for our own family,” Park said at the time. “To do that, we have started from a clean sheet of paper, building a ‘payvidor’ — a combination of a ‘payor’ and ‘provider’ of health care services — that in addition to partnering with the most trusted doctors and hospitals, will be a provider of care services in the home designed to help keep our members healthy.”

In some ways, this strategy felt like health care’s version of Manifest Destiny. Payers were destined to aggressively expand into providers’ territory, especially around the home.

Fast-forward to 2021: That trend never really played out in full force.

Plenty of payers have spent millions of dollars investing in at-home care services since 2018, but not at the levels that many experts anticipated. Similarly, some of the large national insurers have made a handful of key acquisitions, though arguably none with the size or significance of Kindred at Home and Curo Health Services.

The COVID-19 pandemic is changing that, however, and payers once again have their sights set on the home.

Looking for a bottom-line boost

Health insurers posted astronomical profits early on in 2020, as many of their members were delaying care due to the public health emergency. But as coronavirus-related costs and hospitalization figures started to rise, many of those same insurers saw their financials dip.

While Humana remained firmly in the black for 2020 overall, it reported a roughly $274 million loss in the fourth quarter, for example. Centene Corporation (NYSE: CNC) posted a loss of about $12 million, largely attributable to higher-than-expected costs related to COVID-19 testing and treatment.

“Early in 2020, we told you the year would be choppy,” Centene CEO Michael Neidorff said during the company’s Q4 earnings call. “And it was.”

Of all the national insurers, Cigna (NYSE: CI) was the most profitable in the fourth quarter, bringing in $4.1 billion in earnings for the quarter. Still, its profit numbers fell short of Wall Street expectations.

CVS Health (NYSE: CVS) ended the fourth quarter of 2020 with $973 million in profit, down roughly 44% compared to $1.7 billion in Q4 2019. Anthem Inc. (NYSE: ANTM) ended the fourth quarter with profits of $551 million, similarly down 41% from $934 million in Q4 2019.

On its end, UnitedHealth Group (NYSE: UNH) reported a profit of $2.2 billion in the fourth quarter of last year. That was down by about 38% compared to $3.5 billion in the same period in 2019.

“We remain in a time of unprecedented challenges for individuals, employers and the health system broadly, particularly for front-line clinicians, including our own,” UnitedHealth Group CEO David Wichmann said during a Q4 earnings call. “Health systems across the world have been — and continue to be — stressed.”

Lots of things factor into these companies’ bottom lines, but hospitalizations are usually one of the top costs for insurers. That’s certainly been true during the COVID-19 crisis, statistics from Avalere Health suggest.

Overall, in-patient COVID-19 hospitalizations could cost the U.S. health care system between $9.6 billion and $16.9 billion in 2020, according to Avalere. The Washington, D.C.-based consulting firm projects commercial payers to shoulder the bulk of that load, footing between $5.6 billion and $9.9 billion of the bill.

One of the best ways to avoid skyrocketing hospital costs is to invest big in home-based care.

An ‘essential’ part of health care’s future

Many of the national insurers have publicly outlined their plans to double down on the home.

Unsurprisingly, Humana has been the busiest, most recently teaming up with DispatchHealth to offer advanced hospital-level care in the home. Its home-focused moves since the start of last year also include a $100 million investment in physician house call group Heal.

Cigna hasn’t been as active, but it too has talked about the importance of the home.

“There were … a number of accelerating trends that will further drive fundamental changes in health care [in 2020],” CEO David Cordani said during Cigna’s Q4 earnings call. “We see care access rapidly changing as a result of consumer behavior, and technology and data innovation leading to growing use of virtual visits and coordinated home-based care all aided by advancements in remote monitoring as well.”

Meanwhile, CVS Health has spent the past few years building a “home health hub.” Part of that mission included partnering with Aloe Care to launch “Symphony,” a medical-alert system that is designed to keep seniors safe and connected at home.

“You can almost imagine how the future of these home health hubs for seniors really integrates with mechanisms that address social determinants of health,” Adam Pellegrini, SVP of enterprise virtual care and consumer health at CVS Health, previously told Home Health Care News.

CVS Health additionally invested more than $114 million in affordable housing last year.

UnitedHealth Group could be on the brink of making the biggest home-based care splash in the near term. Citing “sources familiar with the situation,” M&A intelligence service Mergermarket reported in February that UnitedHealth’s Optum has plans to acquire comprehensive in-home care organization Landmark for an enterprise value of $3.5 billion.

Adding Landmark would assuredly complement Optum’s “Housecalls” program and existing “Optum At-Home” infrastructure. The company’s advanced practice clinicians plan to conduct 2 million in-home visits in 2021.

Like Cordani, Wichmann touched on the value of the home during UnitedHealth’s Q4 earnings call.

“Seniors choose our offerings because of the value they receive, better health outcomes and experiences at lower costs,” he said. “We have also been enhancing our offerings to better meet expectations about how people want to live their lives, focusing on more digital and physical care resources in the home, expanding our one-on-one concierge navigation services, and enabling the home as the safest and more effective setting of care.”

These remarks and seemingly countless others just like them echo that 2018 sense of Manifest Destiny.

It may be a bit later than expected, but 2021 could very well be the year of the “payvidor.”

“Offering a foundational ability to care for people in their homes is essential to developing a health system that is more consumer centric, higher quality and lower cost,” Wichmann said.

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UnitedHealth’s Optum Reportedly Strikes Deal for Landmark Health

Optum, a part of UnitedHealth Group (NYSE: UNH), has reportedly reached a deal to acquire in-home medical group Landmark Health.

Rumors of such a deal between UnitedHealth and Landmark come from M&A intelligence service Mergermarket, which cited “four sources familiar with the situation.” Landmark declined a request for comment from Home Health Care News, which was unable to independently confirm Mergermarket’s report.

UnitedHealth and Optum did not respond to HHCN’s request for comment.

The Huntington Beach, California-based Landmark is a comprehensive, in-home medical care company focused on the sickest and frailest populations. Overall, Landmark’s physician-led teams currently care for tens of thousands of patients in 17 states, working alongside individuals’ existing health care providers.

Founded in 2014, Landmark is also one of 51 entities that have signed up for the new “global” and “professional” direct-contracting models from the U.S. Centers for Medicare & Medicaid Services (CMS). While the company has traditionally had to operate in the Medicare Advantage landscape, direct contracting gives it access to fee-for-service Medicare beneficiaries for the very first time, drastically expanding its potential reach.

Other direct-contracting entities include in-home care organizations such as Lifesprk, Oak Street Health, VillageMD and several others.

“We see this as something that allows legacy health systems and medical groups, as well as newer entrants like Landmark, to be able to bring new innovative models of care to the market,” Chris Johnson, vice president of corporate strategy and development for Landmark, told HHCN in December. “We see it as something that will measure us and reward us on our ability to improve outcomes and reduce the overall cost of care for patient populations, without being beholden to the traditional fee-for-service payment system.”

Acquiring a company like Landmark makes strategic sense for UnitedHealth and its population health-focused Optum, especially as more and more health care services are shifted into the home as a result of the COVID-19 pandemic.

UnitedHealth Group CEO David Wichmann elaborated on the importance of “the home” during a Jan. 20 conference call to discuss fourth quarter financial results.

“As the pandemic disrupted care patterns, we all saw the increased need to enhance in-home and alternative settings of care, offering patients [the ability] to receive safe, effective and efficient care outside of traditional venues,” Wichmann said. “However, the need for in-home care will continue to grow well beyond the current environment.”

Roughly “80% of what impacts a person’s health” happens outside of traditional health care settings, the CEO noted.

Optum’s rumored deal values Landmark at about $3.5 billion, according to Mergermarket, which claimed the transaction “is still undergoing regulatory review.”

On a high level, any kind of deal between Landmark and UnitedHealth would advance the narrative of payers increasingly turning into providers. Humana Inc. (NYSE: HUM) has been one of the biggest examples of that trend, reflected in its billion-dollar moves to add Kindred at Home and Curo Health Services just a few years ago.

Apart from Mergermarket, no other news outlets have reported on any UnitedHealth-Landmark acquisition rumors.

However, a legal complaint filed against Landmark by a former executive in late 2020 does make mention of an “imminent” sale.

Additional reporting by Robert Holly.

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Landmark, Southwestern Health Resources Launch New Value-Based Care Partnership

Landmark Health and Southwestern Health Resources (SWHR) have formed a new value-based care partnership designed to serve older adults with complex medical needs. As part of the collaboration, Landmark and SWHR will offer “interdisciplinary medical care” in the home setting.

Founded in 2014, the Huntington Beach, California-based Landmark is a multidisciplinary mobile medical group that delivers comprehensive in-home medical care to “the sickest and frailest” patient populations. The company’s physician-led teams work alongside patients’ existing health care providers in 17 states and dozens of metropolitan areas.

Meanwhile, SWHR is a clinically integrated network of 29 hospitals and over 5,500 providers. The network coordinates care for hundreds of thousands of patients across 17 counties in North Texas.

By teaming up with Landmark in the new value-based care partnership, SWHR will be able to provide longitudinal, interdisciplinary medical care to about 10,000 patients. The Texas-based organization is no stranger to value-based models, as it runs one of the most successful Next Generation ACO programs in the country.

“Their accountable care organization (ACO) is one of the best, if not the best, performing ACOs in the country,” Dr. Michael Le, Landmark’s co-founder and chief medical officer, told Home Health Care News.

Over the last three years for shared savings, SWHR’s Next Gen ACO reduced Medicare expenses by more than $120 million. Beyond those numbers, though, Landmark saw a partner in SWHR because of the organization’s reputation and alignment in values.

“They have a strong and similarly mission-driven clinical culture that really focuses on putting patient care first,” Le said.

While Landmark isn’t itself an ACO, it is one of the 51 direct-contracting entities (DCEs) approved by the U.S. Centers for Medicare & Medicaid Services (CMS) for 2021.

Through the Landmark-SWHR partnership, high-risk patients will be assigned a physician or nurse practitioner. Depending on patients’ health needs, they may also be assigned a psychiatrist, social worker, pharmacist or dietician.

“It’s very high-touch,” Le said. “Patients probably are being touched, on average, two times a month or even more, especially for the most acute or highest-risk patients.”

As part of the initiative, Landmark uses a points-based algorithm that measures chronic conditions. Participating patients who are treated typically have anywhere between six to eight “chronic condition points.”

The initiative is interventional and procedural in nature, Le said. This means Landmark and SWHR can draw blood, provide IVs and do wound care in the home setting — and that’s just the start.

“[We provide] a lot of services that normally would be done in an ER or urgent care to treat and stabilize patients in the comfort of their homes,” Le said. “This is available to patients 24/7.”

While Le believes there are similarities between this initiative and hospital-at-home programs, which are seeing a recent surge in popularity, he noted that there are some key differences.

“It is similar to hospital-at-home, in that there are a lot of procedures that can be done in the home,” he said. “Now in contrast to hospital-at-home, our patients don’t need to meet criteria for in-patient admission. We’re trying to get upstream a little bit by catching these patients before they would get to a point where they would formally meet criteria and need hospitalization.”

Another key difference: Landmark and SWHR’s initiative doesn’t center on remote patient monitoring.

“Landmark will reach those patients who need greater support with in-home medical visits – these can augment the already excellent care our community of physicians provide,” Dr. Sanjay Doddamani, chief physician executive and COO of SWHR, said in a statement. “This kind of innovative care delivery extends our mission to ensure that people living with chronic conditions have an opportunity to receive the best medical care in the comfort of their homes.”

For Landmark, this recent initiative falls in line with its overall mission of filling in care gaps that are created when patients are unable to receive traditional health care.

“At the very sickest end of the population, there are so many patients who are falling through the cracks, just because of mobility challenges, just because of the short time that is available in an office-based appointment,” Le said. “Our mission is to bring as much of this care as possible to our [patients] because there is so much need out there.”

Caring for patients in the home has taken on even more importance during the COVID-19 pandemic.

At a time when the risk of infection is high, it’s imperative to keep patients safe and in their homes, according to Le.

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Landmark Health Gearing Up for Direct-Contracting Participation

In April 2019, the U.S. Centers for Medicare & Medicaid Services (CMS) rolled out a new suite of direct-contracting payment models, with the goal of accelerating the shift to value-based care.

Since then, exactly 51 direct-contracting entities (DCEs) have signed up for either the ”global” or “professional” options. Among them is Huntington Beach, California-based Landmark Health, an in-home medical care provider that cares for tens of thousands of complex patients each year.

“We, as an organization, have been interested in a model like this for traditional Medicare beneficiaries for a long time,” Chris Johnson, vice president of corporate strategy and development for Landmark, told Home Health Care News.

Founded in 2014, Landmark has built its business model on delivering comprehensive in-home medical care to chronically ill older adults. Today, its physician-led multidisciplinary teams work alongside patients’ existing health care providers in 16 states and dozens of metropolitan areas.

Traditionally, Landmark has operated within the Medicare Advantage (MA) landscape, helping health plans bend the cost curve by reducing avoidable ER visits and hospitalizations. But thanks to the new direct-contracting model from CMS and its CMS Innovation Center, the company will soon be able to expand its reach to also care for fee-for-service Medicare beneficiaries.

And that will fundamentally transform Landmark, according to Johnson.

“We see this as something that allows legacy health systems and medical groups, as well as newer entrants like Landmark, to be able to bring new innovative models of care to the market,” he said. “We see it as something that will measure us and reward us on our ability to improve outcomes and reduce the overall cost of care for patient populations, without being beholden to the traditional fee-for-service payment system.”

Landmark officially announced its participation in the direct-contracting model on Nov. 23. Other DCEs, according to CMS records, include home-based care pioneers like Lifesprk, Oak Street Health, VillageMD and more.

“We’ve always been very interested in exploring ways that we can move from serving what today is traditionally a Medicare Advantage population into traditional Medicare as well,” Johnson emphasized.

‘A really big contract’

Since launching, Landmark has gained backing from General Atlantic and Oxeon Partners. It has similarly secured several prominent partnerships, including ones with Aetna, Blue Shield of California and Harvard Pilgrim Health Care.

The care provider’s foray into the direct-contracting model shouldn’t come as a surprise to those who are familiar with the company. In fact, innovation and alternative payment models are actually part of Landmark’s DNA.

Before current CEO Nick Loporcaro took over as CEO in September 2018, Landmark was led by founder Adam Boehler. In April of that year, Boehler left Landmark to run the CMS Innovation Center, a tenure that ultimately ended this year.

Overall, the implementation period for the global and professional direct-contracting options runs from Oct. 1 of this year through March 31, 2021.

Of CMS’s direct-contracting pathways, the professional option offers a lower risk-sharing arrangement, with participants being exposed to 50% upside and downside risk. It comes with “primary care capitation,” a capitated, risk-adjusted monthly payment for enhanced primary care services.

Meanwhile, the global option offers the highest risk-sharing arrangement, with participants on the hook for 100% savings and losses. It comes with two payment options: Primary care capitation or “total care capitation,” a capitated, risk-adjusted monthly payment for all services provided by participants plus the preferred providers they work with.

“You have full upside and downside risk for the total cost of care of the beneficiaries that you’re seeing,” Johnson said.

In some ways, direct-contracting is similar to how MA plans operate.

Broadly, CMS sets a base rate at the county level for different patient populations. Each DCE then has to work against the base rate, figuring out where they can improve patient care and curb overall spending.

“We almost think of this as just adding a new contract,” Johnson said. “It’s just that this is a really big contract.”

Getting excited

Landmark will start caring for patients under the direct-contracting model in April. When that time comes, it will have an opportunity to profoundly expand its business.

Currently, Landmark has about 12 million Medicare beneficiaries across its national footprint. Of those, more than 7 million are in traditional Medicare — people Landmark wouldn’t be able to reach without direct contracting.

“The reason we get really excited about it is, you know, part of our mission is to transform the care in the communities that we serve,” Johnson said. “As things stand today, we’ve really been limited. We’ve thought about ways that we could participate with traditional Medicare, but we just couldn’t make our business model work in the fee-for-service world.”

On top of the global and professional options, CMS also recently unveiled plans for a geographic direct-contracting model. With the initial performance period slated for January, the geographic option would pay participants for lowering total cost of care for Medicare beneficiaries in a given marketplace.

“The Geographic Direct-Contracting Model is part of the Innovation Center’s suite of Direct-Contracting models and is one of the Center’s largest bets to date on value-based care,” current CMS Innovation Center Director Brad Smith said in a statement.

CMS is considering 15 geographic regions in which to test the model, though ultimately the agency will select only a maximum of 10. The areas under review include: Atlanta, Dallas, Denver, Detroit, Houston, Los Angeles, Miami, Minneapolis, Orlando, Phoenix, Philadelphia, Pittsburgh, Riverside, San Diego and Tampa.

Each of these areas includes 150,000 to 700,000 beneficiaries.

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