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Where do HME providers fall in the move to value-based care? Experts weigh in

The decade-long growth of value-based care is affecting every area of healthcare — including the home medical equipment (HME) sector.

To learn how the transition to value-based care models affects HME providers and about existing barriers to value-based care, we spoke with three experts:

  • Kris Srinivasan, senior manager, payer strategy for McKesson Medical-Surgical
  • Zach Gantt, president and CEO of Encore Healthcare, whose Nexus software supports respiratory therapy providers1
  • Laura Williard, vice president of payer relations at the American Association for Homecare2

We have edited their responses for length and clarity.

Kris Srinivasan, Senior Manager, Payer Strategy, McKesson

Where is the push coming from in the transition to value-based care? Are Medicare reimbursements a key factor?

Srinivasan: I don't think it's any one entity. In pockets of the country, it's providers, and in other pockets, it's payers. Nationally, the CMS (Centers for Medicare and Medicaid Services) initiatives are driving toward value-based care.

Is that because CMS wants to move all fee-for-service Medicare members to value-based care by 2030?

Srinivasan: The caveat to that number is that it was year 2025 five years ago, so they may end up bumping that date too. But CMS is definitely putting more pressure on these sources to adopt it.3

So what's your timeline for the transition?

Srinivasan: Because changes as big as this take time, we're probably 10 years out from seeing a greater-than-50% shift to these types of contracts.

How does the HME provider's role change?

Srinivasan: Today, providers are paid to fulfill an order and deliver it to the front door, and there's no expectation for them to say, "Hey, we've noticed this is going on with the patient. What do you think, doc?"

With value-based care, the onus will be on members of the healthcare continuum who are seeing and touching the patient to more proactively manage their conditions.

What will happen to HME providers who don't make the shift?

Srinivasan: Referral sources are moving toward value-based care. In the future, if you're a provider in that continuum of care who's not delivering on a value-based care model, you may be left out.

How can HME providers sustain their businesses during the transition?

Srinivasan: Where it gets tricky for providers today is they're going to have to manage it both ways and know when to push and say, "I need a value-based care agreement."

The way to sustain it is to say, "OK, I'm not going to take your fee-for-service contract, but let's work out a value-based contract."

However quickly the fee-for-service reimbursement drops is how quickly I think value-based care is going to be implemented and adopted.

Zach Gantt, president & CEO, Encore Healthcare

How did your former company, Alana Healthcare, begin moving into value-based care?

Gantt: We said, "We've got access to these patients; we're managing their equipment. What if we tracked their outcomes and create a story around what we're doing?"

So we started to track every data point we could from these patients. Then, we started going to payers and saying, "On the DME [durable medical equipment] side, we've saved you $5 million. What do you think we could do if you gave us all your COPD [chronic obstructive pulmonary disease] patients?" [Durable medical equipment includes medical devices and supplies used in the home.]

What do HME providers need to do to start making the shift?

Gantt: You have access to all patients you're getting paid for through the equipment. Start tracking outcomes on them, implement programs on them, solve problems with them.

And then that'll create the outcomes that you need to go to payers or to go to hospital systems or to go to ACOs [accountable care organizations]. That's kind of the crawl-before-you-walk-model. [Accountable care organizations are groups of providers and hospitals that provide coordinated care and share in savings from reducing waste.4]

It sounds like HME providers need to make investments in things like technology and training?

Gantt: It's really just about spending a little bit now to invest in the strategy in the future, which is that everything is going to value-based care.

So HME providers should take the initiative?

Gantt: Payers don't ask for this because they wouldn't expect a DME to do something like this. So when we go to payers, we don't say, "This is Jim Bob's DME, and we're here to talk about going from equipment into patient outcomes." We say, "This is the population health division of our company, separate from our DME division."

How can HME providers address broader issues that affect outcomes, like social determinants of health?

It's not really about being able to solve every problem. It's about being able to identify the gaps in care, and then connect the patient with people that can solve the problems.

Laura Williard, vice president of payer relations, American Association (AA) for Homecare

Are HME providers hesitant to move to a value-based model?

Williard: It's not that they don't want to do this; it's that they don't really know how to do this. Providers need help in learning how to track things and what they should be tracking and how to have conversations with the payers. So I think it's more of that than a hesitancy to move to value-based contracts.

What can providers do to get started?

Look at whatever program you might have, your population of your patients, and say, "What do I feel like I do that is helpful from their healthcare setting, from their overall cost of care?" Start thinking about that and see if there are ways you can implement some of those tracking models inside of your company. Then, I think step two is really doing some research and learning about value-based care.

And then start having conversations with payers and referral partners?

Talk to them and say, "We want to move into more of a value-based world, and these are the things I know we do for you."

Sometimes those conversations will take you a long way in dealing with referring providers or payers.

What resources does AA Homecare provide?

We are working through our Payer Relations Council on a value of HME presentation that we hope to have done probably around summertime that all of the providers can utilize to go have conversations with payers. We'll also be putting out some more education around this, hopefully coming up at Medtrade Fall.5

Any last thoughts?

The pandemic has really shone a light on the abilities of the HME industry to keep people at home. So now is a perfect time for us to push even further into the value-based world.


From the views of the experts above, it appears that the drive towards value-based care is irrevocable. The consensus seems to be that building a value-based model requires significant conversations, both internally and externally. Internally in terms of the re-organizations required to deliver value-based care, and externally so that the views of patients, customers and providers are properly evaluated and delivered upon.

For more information, check out our brochure, Making the move to value-based care.


© 2022 McKesson Medical-Surgical Inc.