How Humana’s Purchase Of Kindred Home Health Could Affect Care

Dec 21, 2017

Credit James McNair

  On Tuesday, Kindred announced the company is being split:Kindred’s long-term care and rehab hospitals will be sold to two private equity firms and its home health and hospice agencies will now be partially owned by insurance company Humana. The sales, if approved, will likely mean changes to the care patients receive.

So, what will that look like? Health care can depend on a lot of factors, including by how much providers are paid and policies enacted by government agencies. But health care experts agree that having a health insurance company also controlling home health services could have a variety of effects for patients. Some may be positive, some may not.

Humana Influence On Clinical Care

Patients who have both Medicare coverage and home health services through Kindred could see differences in care after the deal goes through, depending on what kind of Medicare plan they have.

Right now, Medicare pays for home health services like having a physical or speech therapist, nurse or other specialist come to a patient’s home. These services are recognized as a cheaper method of care than going into a nursing home.

Some Medicare patients are enrolled in traditional plans, which are run by the federal government. People in those plans can get all of the home health visits they need within a 60-day period, but providers are paid a lump sum for five visits. If there are more then five visits, the providers don’t get any extra money until a much higher visit threshold is hit.

So this means home health agencies — like Kindred — are incentivized to limit care to five visits, according to Kathleen Holt, associate director of the Center for Medicare Advocacy.

This won’t change under the potential Humana-Kindred deal, but Holt said profitability could possibly become an even larger factor in clinical care decisions.

“If Kindred is serving patients at the behest of Humana, and feels that they need to get the patient’s through their plan of care more quickly, that’s not to the benefit of the patient to have their care plan shortened,” Holt said.

But people enrolled in another type of Medicare — “Medicare Advantage” plans — could be poised to benefit.

Humana runs some of these Medicare Advantage plans. The insurance company contracts with Medicare and gets one lump sum of money per month to cover enrollees’ health costs. These plans aren’t bound by that 60-day model, but pay per visit.

And with Humana controlling both the insurance coverage and the home health services, it might make economic sense for the company to pay for more home health visits in an effort to keep patients out of the hospital and prevent them from racking up large medical bills.

“You’d hope they’re thinking about lower cost services in the home that prevent higher cost services in the hospital. But we’ll have to see how that plays out,” said Harvard Medical School health care policy professor David Grabowski.

Pressure To Join

This scenario could result in Humana taking a financial risk for some home health patients — like the ones on Humana Medicare Advantage plans — but not for others on traditional Medicare.

And because Humana will control the care patients get from Kindred home health workers, that could also sway people to join the Humana plan.

That’s something Kathleen Holt with the Center for Medicare Advocacy has considered.

“If [enrollees] feel that people that are in a Humana plan can get better care in a home health agency, they may feel the need to move to a Humana plan,” she said.

For the past few years, but especially after the failure of its potential merger with Aetna, Humana has been focusing on its Medicare Advantage business. And that business is growing. In 2014, Humana had 2.8 million Medicare Advantage enrollees. This summer, the company reported it had 3.3 million members, coming in as the second largest insurer of Medicare Advantage enrollees nationwide.

Gaining a home health business opens the potential for even more members for Humana’s Medicare Advantage business. And if the care a traditional enrollee gets differs from that of a Humana enrollee gets, it’s possible that might drive even more patients into Humana’s Medicare Advantage plan.

Disclosure: Kindred Vice President Susan Moss is a Louisville Public Media Board Member.

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