PACE Giant InnovAge Undergoes ‘Significant Transformation’ to Address Regulatory Challenges
More eyes than ever are on the Program of All-Inclusive Care for the Elderly (PACE) model due to its proven senior care track record throughout the COVID-19 emergency. Amid this growing momentum, InnovAge (Nasdaq: INNV), one of the sector’s giants, is trying to rebuild after the regulatory challenges the company faced earlier this year.
In January, Maureen Hewitt stepped down as the company’s CEO, and InnovAge’s board of directors appointed Patrick Blair to the role.
The appointment followed reports that Colorado’s Department of Health Care Policy and Financing and the U.S. Centers for Medicare & Medicaid Services (CMS) stopped reimbursing InnovAge for new clients. An audit found that clients were not receiving all of the PACE required care services, according to reports from the Denver Post.
Blair addressed the “significant transformation” that InnovAge is undertaking in relation to these challenges, during the company’s Q3 earnings call Wednesday.
“I’ve been encouraged by our progress over the last 90 days,” he said. “While it’s certainly requiring a lot from them, it’s clear that our employees have the motivation and ability to overcome the challenges we’re facing. Their efforts are frankly inspiring, and the improvements, while still early, are becoming visible.”
As a company, InnovAge is one of the largest PACE providers in the U.S. The Denver-based company has about 1,800 employees and serves seniors in Colorado, New Mexico, California, Pennsylvania, Virginia, Kentucky and Florida.
Currently, InnovAge is under sanction in its Sacramento center and in its six centers in Colorado. The sanctions are impacting the company’s patient volume.
“As a result of the sanctions, we’re currently unable to grow our census in these markets,” Blair said. “We are following the lead of CMS and state government partners and working with them to ensure they’re satisfied completely with the work we’re doing to address the audit findings. The regulators determine the timeline for the audit process and we’re doing everything we can to satisfy the requirements to lift the sanctions.”
InnovAge’s plan to remediate and transform — which the company has dubbed “One InnovAge” — has three key dimensions.
“First is creating operational excellence as a provider by formalizing a repeatable blueprint to deliver personalized and integrated – yet distributed – care in our centers virtually and in the home,” Blair said. “Second, expanding our payer capabilities to ensure we’re effectively managing the total cost and quality of care, and that our revenue accurately reflects the acuity of the populations we serve. Third, strengthening enterprise functions to enable our centers to reach their full potential through robust talent management, data and analytics, sales and marketing and government relations, underpinned by uniform way of working and success metrics.”
In relation to the first on the list, InnovAge is focused on addressing the deficiencies identified in recent audits in a timely manner, and returning to growth.
“Over the past 90 days, my understanding of each identified deficiency, their root causes, and the critical capabilities needed to become compliant have come into a much sharper focus,” Blair said.
Blair noted that the audits found care coordination and documentation performance gaps.
In order to address this, Blair has established eight initiatives that are intended to support the remediation of these deficiencies and “earn back the trust of all stakeholders.”
This includes filling critical personnel gaps at each of the company’s centers, standardizing the process of its interdisciplinary care teams, strengthening its home care network and reliability, improving the timeliness of scheduling, coordinating care with providers outside of its centers and improving telephonic channel response times.
The initiatives also include improving the efficiency and reliability of transportation for participants, standardizing the company’s wound care program and reducing documentation outside of the company’s EMR.
The company is making good progress and expects to complete its short-term objectives for these initiatives by the end of 2022, according to Blair.
In relation to expanding InnovAge’s payer capabilities, the company is working with a specialized consulting partner to build a comprehensive payer capability roadmap and an actionable portfolio of “quick-hit” and longer-term initiatives.
Plus, part of the company’s plan to empower its centers includes building a “robust talent engine” to attract, retain and develop staff.
Overall, InnovAge brought in total revenues of $177.4 million, up 13.5% compared to $156.3 million during the same period last year. This was the result of an increase in per member, per month rates and census.
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