Home care agency sweating 25% MassHealth cut
March 6, 2017
SHOP TALK
Home care agency sweating 25% MassHealth cut
PHOTO/BRAD KANE
James & Milka Njoroge Co-founders, Century Homecare, LLC
In 2012, James & Milka Njoroge founded Worcester home healthcare agency Century Homecare with one employee, on the strength of the technological advantage they had through their other business, nine-year-old Elgon Information Systems, which provides software to home care providers. Today, the husband-and-wife team employ 400 people at Century, but they are worried about planned changes to the MassHealth reimbursement rates.
What changes is MassHealth proposing?
James: They decided in January to cut the rates they pay us by 6 percent, and then they are going to cut it again by 25 percent on July 1.
I don't know if they are going to change it, but if someone came along and took away 25 percent of your bottom line – because we are not going to change what we pay our nurses – that is a huge challenge. It is going to cause a lot of disruption in the industry; some agencies may have to close; some agencies may not be able to provide care.
What will be the main impact?
Milka: What may end up being impacted most is really the patients. If MassHealth is saying for this category of patients – for those receiving services for more than six months – we will reduce your pay to $52 a visit, then we must decide if we can afford to care for them.
Most of these patients are mental health patients. The reason they are on services for so long is they need a nurse almost every day for things like making sure they are taking their medications. If they don't take their medications, they will have a crisis or end up in the emergency room.
What is the difference between acute and chronic home health patients?
Milka: The acute care patients we get, what MassHealth is saying is they need the most care in the 30 days after they leave the hospital. This is true because maybe they had a knee replacement and they need that concentrated care.
But there is that whole group of patients who need that chronic – almost really maintenance – care that is so crucial. It is not a lower level of care, which is what MassHealth is saying: They have been on the service for so long they need less care, and therefore we can pay you guys less.
What we are arguing is it is a different category of patients. The person with the knee replacement is going to heal within 30 days. A person who has schizophrenia, that is not going to change in six months. That is a lifelong condition that needs to be managed on a day-to-day basis. If they don't get three doses of their psychiatric medication every day, they have a crisis.
How much do you rely on MassHealth?
James: About 70 percent of our revenue comes from MassHealth; 30 percent comes from MediCare, HMOs and MCOs.
How do you absorb a cut like that?
James: That is your profit. Right now, they pay us about $70 a visit. Now, they are going to pay us $52 a visit. Your costs aren't going to change; what you are paying your employees probably isn't going to change; rent doesn't change. There is only so much you can cut, which means the extra $18 comes from your bottom line.
What started your growth to begin with?
James: We didn't start growing until 2014; in January 2014 we had about 25 employees. What really accelerated our growth was when the Affordable Care Act kicked in. There was an increase in eligibility for patients, and that coincided with us being a newly enrolled agency.
We stabilized around mid-last year, so we decided to keep our focus on sustaining a certain level of growth and focusing on processes and improvements.
Did that growth increase competition?
James: It did until a year ago, then Massachusetts put a moratorium on any new agencies. The number of agencies was rapidly growing. Agencies have to be licensed by MassHealth and the Centers for Medicare & Medicaid Services to do business, and they haven't licensed any new agencies for a year now.
What makes the challenges worthwhile?
Milka: It is very rewarding because of all the success stories.
You can have a patient who had to go to the hospital multiple times a month, and then you work with them to get their condition stabilized, so they can go onto living their lives. From that standpoint, it is very rewarding.
This interview was conducted and edited for length and clarity by Brad Kane, WBJ editor.
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