In the current market where inflation and the costs of healthcare continue to rise, there’s a constant challenge in identifying where best to allocate a finite amount of funds.

Understandably, no easy decision exists, but consumer demand and, ultimately, what will make healthcare more accessible, convenient, cost-effective and better for patients must serve as our guide.

Thus, there are some care sectors where a reduction in federal funding is simply not feasible or sensible. Leading that list is home healthcare, a sector that has experienced significant growth during and following the peak of Covid-19 and continues to innovate for the benefit of its patients.

Despite this, the U.S. Centers for Medicare & Medicaid Services (CMS) recently proposed a permanent 7.69% cut to Medicare home health providers, plus a future “clawback” of payments to providers for care delivered in 2020 and 2021. In total, these cuts are estimated to reach $18 billion over the next 10 years, beginning in 2023.

Not only do these cuts significantly restrict the opportunity for delivering quality home healthcare American seniors deserve, but it also directly contradicts trends in home health and consumer preferences today.

In a study this year of physicians who predominantly serve Medicare fee-for-service (FFS) and Medicare Advantage (MA) patients, McKinsey estimated that $265 billion worth of U.S. healthcare services for FFS and MA beneficiaries could shift from traditional facilities to patient homes by 2025, without a reduction in care quality or access.

Further, an increasing number of seniors prefer to age in place by receiving care at home. In a late 2021 study by Interim HealthCare Inc., 79% of seniors ages 65-plus said their quality of life would be significantly better if they could receive healthcare at home rather than in a hospital or nursing facility.

In response to this growing and anticipated demand, providers have increasingly recognized the important role digital health technology plays in scaling home health services efficiently and cost effectively for the benefit of patients.

While most of this technology has focused on the important function of care delivery, home health providers, among others, are increasingly investing in “interoperability tech” that better connects them with their acute care counterparts, and vice versa.

This idea of interoperability creates a more robust healthcare ecosystem, where the exchange of patient data and health outcomes across systems makes for a smoother care experience for the patient, payer and provider. It’s long-awaited progress for the home health industry, and the entire care continuum, that could be interrupted with a reduction in funding.

For the patient, it could mean delays in phone calls and faxes or waiting days (or weeks) for referral paperwork to process so they can receive much-needed care faster after discharging from the hospital or visiting their primary care physician.

For providers and payers, this exchange of data enables payers to better see and measure the quantifiable value of home health providers that payers have lacked, thus helping them deliver appropriate reimbursement rates based on data and fact.

And beyond a more integrated system, this technology has automated administrative duties and fostered a leaner business model for providers. For example, in 2020, VNS Health slashed its accounts receivable by 50%, from $16 million to $8 million, by incorporating interoperability technology. They also saved $90,000 by eliminating temporary staffing services that were dedicated to administrative work.

All of these factors result in a more connected and robust healthcare ecosystem, where patients avoid unnecessarily lengthy and costly hospital stays and have access to convenient and timely post-acute care. Further, payers and providers experience a healthier bottom line.

CMS’ proposed cuts halt this momentum in its tracks and reverse the growth and innovation that’s resulting in higher quality and more efficient healthcare in the home. Recent legislation introduced that proposes delaying cuts until 2026 is a more reasonable approach.

Payers must remain well equipped to respond to these evolving patient preferences just as providers have done. If they don’t, patients and their loved ones are left to bear the steepest consequences of fragmented and costly care.

Photo: Nuthawut Somsuk, Getty Images