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Transform Care Infographics March 11, 2015

Market Primer: There’s No Place Like Home & Community-Based Services

Global Head, Health Services, Oliver Wyman
Partner, Health & Life Sciences, Oliver Wyman

Governors around the country have recently announced plans to restructure their Medicaid programs in ways that affect the care of people with intellectual disabilities, mental health and behavioral problems, and other recipients of long-term care. Several initiatives, such as those proposed in Wisconsin, Pennsylvania, and Illinois, aim to reduce reliance on institutional settings. Oliver Wyman’s government programs experts Jim Fields and Parie Garg take a closer look at contracting opportunities in the Home and Community-Based Services (HCBS) market:

Dorothy’s famous refrain—“There’s no place like home”—takes on new meaning for state officials managing escalating healthcare costs. They are more likely to be chanting these days, “There’s no place like Home…and Community-Based Services.” Or at least they should be, given the remarkable opportunity these services have to drive savings.

HCBS is a broad category of care that provides services for individuals suffering from a range of conditions, including traumatic brain injury, intellectual disabilities, and developmental disabilities. As the overall healthcare market moves to value and payers and providers think about how to manage their most complex and costly populations, HCBS offers an option for keeping patients at home, in an environment they are familiar with, all while keeping overall costs down.

When compared with institutionalization, HCBS has demonstrated significant savings across a number of different states. In New York, Florida, and Idaho, early results have been promising, with savings estimated at more than $2M per 500 individuals moving to HCBS.

Traditionally, HCBS services have been reimbursed by Medicaid, on a fee-for-service basis. However, as states face increased budget pressures, they are being forced to consider ways to manage the rising costs of these populations requiring long-term, often complex care. Their varied approaches may have far-reaching implications for the HCBS market, its providers, MCOs, and patient populations, including:

  • Deinstitutionalization of care. HCBS is expected to see a significant uptick in services, as previously ineligible Medicaid enrollees are granted access through HCBS waivers. The HCBS market is expected to grow by 2-4% over the next 5-10 years.
  • Managed Medicaid. The implementation of Managed Medicaid is on the rise across multiple states. For the first time, HCBS providers and Managed Medicaid players will be expected to cross paths and work together, to provide care to arguably the most complex of individuals.
  • More people receiving fewer services. The population needing HCBS services is expected to continue along its current growth trajectory, due to aging in of individuals, increased accuracy of ID/DD diagnoses, and a generally sicker US population. The growth of need for services coupled with constrained budgets will naturally lead to a reduction of services on a per individual basis, an impact that is already being seen in the market. In addition, MCOs will make care delivery more efficient—cutting down on waste, fraud, and abuse, generating a further reduction in services rendered on a per person basis.
  • Increasing expectations of HCBS providers. HCBS providers will now be expected to interact with multiple managed care entities, rather than a single state—placing a significant operational burden on their business. IT and communication requirements for HCBS providers will increase dramatically, as they will be expected to file claims, coordinate care with multiple MCOs, and potentially work as part of a care team.
  • Market consolidation. The majority of the market is comprised of local, mom and pop shops that are not going to be able to keep up with the increasing administrative and technological expectations from MCOs. As such, the smaller outfits will either shut down operations or be purchased by larger, national companies.

Going forward, MCOs can look at how they incorporate HCBS providers as part of their networks—and how their services might extend beyond a Medicaid offering into managing high-cost, complex commercial and Medicare members. As providers take on risk-bearing contracts, they should consider how they manage care transitions with HCBS entities, and how HCBS providers might help them manage ER frequent fliers, provide home assessments, and serve as an extension of their care team.

On the road to deinstitutionalization, payers and providers may soon find themselves acting less like the Scarecrow (without a thought in their mind about HCBS Providers) to being more like the Tin Man, thinking about how HCBS can be the heart of their care coordination programs for the frail and complex.

As the overall healthcare market moves to value and payers and providers think about how to manage their most complex and costly populations, HCBS offers an option for keeping patients at home, in an environment they are familiar with, all while keeping overall costs down. – Oliver Wyman's Jim Fields & Parie Garg

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