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As noted in Part 1, nursing homes will continue to be a critical piece of the long-term care continuum. But more Americans will seek less restrictive options for senior care in the future, and at the top of this list is home health care.

So, how does a traditional long-term care pharmacy begin to establish a presence in home care? Some pharmacies have decided to go it alone, while others have built relationships with home health agencies (HHAs). There are advantages to each approach, but the better option for LTC pharmacies may lie with collaboration.

Dispensing Is a Commodity

Efficient pharmacies have leveraged automation to dispense large quantities of medicines with remarkable accuracy. Mail order and LTC pharmacies have led the way in removing complexity and cost from the dispensing process. As a result, expectations from payers and regulators have been raised.

Payers, both public payers like Medicare and Medicaid as well as private payers, will continue to reduce reimbursement for the act of dispensing prescriptions. This limits dispensing as a pathway for business growth.

Building on Our Strengths

Can any of us hope to compete with Amazon on price? Probably not. But our industry wasn’t built on a mentality of discounting a commodity.

The LTC pharmacy industry was built by bringing a professional focus to appropriate care, helping nursing homes better manage resident prescription drug regimens. The Nursing Home Reform Act of 1987 made nursing homes responsible for ensuring residents had appropriate pharmaceutical care, and nursing homes contracted with specialized pharmacies to deliver these services. Our ability to enhance patient care remains as valuable as ever, and it’s adaptable to new modes of service.

Collaborating for Success

HHAs are covered differently by Medicare and Medicaid, but unlike LTC pharmacy, home care companies’ dominant source of revenue is from private payers. This is beginning to change, as HHAs see an increasing percentage of revenue coming from the public sector. However, since most consumers of home health services are Medicare or Medicaid beneficiaries, the drug benefit is provided by a source with which we have considerable experience: Medicare Part D.

The opportunity for symbiosis is compelling. We’ve become experts at navigating the Medicare drug benefit and have long been proficient in managing Medicaid reimbursement issues. HHAs have far more experience in the private payer market than we have. Maybe we can learn something from each other and provide a real benefit to patients simultaneously.

Challenges to Breaking into Home Health

While most patients using home health have drug coverage under Medicare or Medicaid, reimbursement outside of institutions can be challenging. CMS requires Medicare plans to have LTC pharmacy networks, but the required services in Medicare apply only to residents of qualifying institutions. This qualification doesn’t include home care. So even though you may have provider contracts with all the PDPs in your area, you will probably be paid as a retail pharmacy, which is generally a lower reimbursement than LTC.

LTC pharmacy industry groups are working on expanding the venues available for LTC services to include home care. Eventually we will get there, but for now the challenge will be to provide these services without our typical Medicare reimbursement.

We know who our target facilities are in our service area. We are probably speaking with nursing home executives on a regular basis to try to win new business. HHAs are not as familiar to us, so we have homework to do. We need to discover where they’re located and begin getting to know them.

Get Started Now

Expanding into new arenas can be daunting. As an LTC manager, you’re an expert; you are used to people coming to you for advice. Venturing into a new area like home care puts you into the role of student. That is often a challenge for senior managers.

Maybe the best way to get started is just to start. Begin finding HHAs in your service area and see if you can schedule some time to meet with the most senior person you can identify. Try a low-key approach such as, “I don’t know much about home health, but I want to learn. I think there may be an opportunity for us to work together. Any chance we can meet and talk?”

It’s still early in this evolution – but getting started now will pay dividends sooner than waiting ever will.

The X Factors

  • Get educated! Home health executives will be impressed if you have taken the time to understand as much as possible about their industry prior to the first meeting.
  • Get face time! Now is the time to reach out to home health professionals in your service area. Offer a pharmacy tour and show them how your services complement their services.
  • Don’t quit! You didn’t get where you are by getting easily discouraged. Keep at it until you develop relationships that result in partnerships.

What X factors would encourage (or discourage) you from reaching out to a home health agency about collaborating? Share your thoughts!

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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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