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During the nearly 40-year history of the long-term care pharmacy industry, the primary venue for service has been the skilled nursing facility. Despite the prevalence of nursing homes and assisted living, Americans have long expressed their preference for remaining at home if possible, and the pandemic only accelerated this. It’s time to consider how this could impact your pharmacy.

Why the Trend toward Home Health Care?

Nursing homes meet a critical need. Many seniors and people with disabilities require skilled care that can be administered in no other setting. The low-income elderly and many middle-class Americans rely on nursing-home-centered long-term care options. LTC pharmacy got its start following the enactment of the Nursing Home Reform Act of 1987, which created service standards for nursing homes that our pharmacies were created to meet.

Even so, most Americans prefer home health care (HHC) because it doesn’t require the patient to live outside their community. The less-restricted environment of the home allows us to be cared for in familiar surroundings, near to our loved ones and personal possessions. The experience of nursing homes during the coronavirus pandemic damaged public opinion of the industry, while HHC seems to enjoy greater public enthusiasm.

Those who pay for long-term care, both public and private payers, prefer home health services over nursing homes because HHC is significantly less expensive than institutional care. This fact has created a sense of urgency in states to move more LTC beneficiaries away from nursing homes and into home- and community-based care. The option is very popular, and there are waiting lists for Medicaid recipients to have access to this option. One of the Biden Administration’s proposed initiatives involved spending $150 billion in federal money to expedite the move to more home- and community-based care.

Coverage for Home Health Care

As with nursing home care, HHC coverage under Medicaid and Medicare is complex and can be difficult to decipher. Home health is a covered benefit under the Medicare program as long as the beneficiary fulfills certain requirements.

All state Medicaid programs cover some form of HHC, but the scope of coverage varies by state. The good news on Medicaid is that most of your beneficiaries will receive drug benefits under Medicare Part D and not Medicaid.

Another option is Medicare Advantage (MA), often referred to as Medicare managed care, or Medicare Part C, which provides coverage for all required Medicare Part A and B services. Unlike traditional Medicare, there is a limit on out-of-pocket costs for the beneficiary, but the more interesting feature is one created by CMS during the Trump Administration.

Beginning in 2020, CMS allowed MA plans to offer supplemental benefits that had previously been beyond the scope of medical care, including services intended to foster independence and keep beneficiaries out of institutional settings. Despite a slow start, MA plans with non-medical supplemental benefits have steadily increased and have driven the popularity of these plans. In 2021, MA enrollment has increased to 46 percent of total enrollment.

Preparing Your Pharmacy for the HHC Trend

Given all the data on patient and payer demand, home health care is a market force that will impact your pharmacy and require a different approach. As you can imagine, providing pharmacy services to 100 residents in a single location, such as a nursing home, is a far different proposition than providing services to the same number of residents spread over dozens of zip codes. Fortunately, LTC pharmacies have found that competing in the HHC model is possible, and that it has opened up new opportunities to expand our mission.

Part 2 will explore possible ways to serve this growing market.

The X Factors

  • For LTC pharmacies, nursing homes remain the primary place of service. Continue to focus your efforts on your current clients.
  • Think longer term about where the elderly and the disabled will receive care in your community over the next five years.
  • Imagine how your business model would need to change to serve non-institutionalized seniors.

What do you think the X factors are for serving seniors at home?

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Written by: Paul Baldwin, Baldwin Health Policy Group
Paul’s pharmaceutical industry experience in public and government affairs led to becoming Executive Director of the Long Term Care Pharmacy Alliance, helping lead the industry through the Medicare Modernization Act and creation of the prescription drug benefit. Paul was VP of Public Affairs for Omnicare before founding Baldwin Health Policy Group.

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