Benefit Innovation: Exploring a New Care Model with In-Home, In-Person Outpatient Physical Therapy for Care Optimization

Introduction

As commercial and Medicare Advantage plans, and Accountable Care Organizations (ACOs) are finalizing their 2025 benefits design, it is imperative to understand medical cost and utilization patterns. One undeniable trend is the notable increase in health care costs affecting adults, attributed to factors such as the aging population, the increasing prevalence of chronic diseases, and the utilization of expensive medical services.

Recognizing the unique needs of individuals, Luna provides personalized physical therapy programs that serve a variety of needs, from surgical assessments to postoperative care, ensuring effective rehabilitation outcomes. By integrating Luna into a health plan’s benefit design, members can receive high-quality outpatient therapy in-person and in-home by licensed physical therapists, at the price point of traditional outpatient therapy. Health plans who have implemented a benefit waiver created with the Centers for Medicare & Medicaid Services (CMS) to adopt an innovative health care delivery approach, have observed significant cost reductions.

Key Cost Trends in Healthcare

Recent Consumer Price Index data reveals a staggering 14.2 percent increase in the cost of home health care for the elderly and bedridden individuals over the past year, representing the most significant increase since data collection began in 2005. This notable escalation is primarily driven by the aging population, with forecasts indicating that approximately 70 percent of Americans aged 65 and older will necessitate long-term care in the years ahead.

• Aging population in physical therapy: Between 40-43 percent of individuals undergoing physical therapy are aged 65 or older, representing a significant portion of the patient demographic, constituting 55 percent of all physical therapy patients.
• Fall-related injuries: Approximately 25 percent of elderly adults experience falls leading to injuries.
• Financial impact of falls: The financial toll of falls is expected to rise dramatically, projected to increase from $50 billion to $70 billion annually within the current decade.
• Projected surge in joint replacement surgeries: By 2030, total hip replacement (THR) and total knee replacement (TKR) surgeries are anticipated to surge by 171 percent and 189 percent, respectively. Costs for these procedures range from $30,000 to $120,000 per surgery.
• Prevalence of musculoskeletal (MSK) diagnoses: A significant 58 percent of the Medicare fee-for-service population has some form of MSK-related diagnosis, with average annual costs ranging ~$20,000.

Optimizing Care with In-Home Physical Therapy

Care optimization focuses on in-person, in-home outpatient therapy and holds immense potential in reshaping the Medicare Advantage and ACO landscape. Leading health plans that partner with Luna to mitigate surgery expenses, enhance adherence to care regimens, lower care costs, mitigate the risk of falls, and foster greater mobility among patients.

The company supports health plan partners in enhancing health care delivery through:

• Cost savings: Offering outpatient therapy in-home enables health plans to deliver care at the cost of traditional outpatient therapy, leading to substantial savings for both the plan and its members.
• Improved access: By bringing therapy directly to the member's home, Luna enhances access to care, overcoming barriers like transportation and mobility issues. This improved access is a key factor in member satisfaction and loyalty.
• Better adherence: Members are more likely to adhere to their care plans when the services are conveniently provided in-home. The company’s in-home therapy fosters a stronger connection between the member and their care, leading to better adherence and, subsequently, improved outcomes.
• Lower total cost of care: Enhanced access and better adherence contribute to a reduction in the member's total cost of care. This aligns with the overarching goal of Medicare Advantage plans to provide high-quality care while controlling costs.
• Improved Star scores and risk adjustment accuracy: Through improved outcomes and better member engagement, health plans incorporating in-home therapy can expect higher Star scores and more accurate risk adjustment factors, positively impacting their overall performance.

Success Story: HOAG Orthopedic Institute

Hoag Orthopedic Institute (HOI) partnered with in-home, in-person outpatient therapy to implement an in-home outpatient model aimed at decreasing the overutilization of traditional home health services. Through this approach, HOI was able to significantly reduce per-episode care costs, with participating surgeons cutting home health utilization by 86 percent, resulting in decreased overall blended episode costs by $2,571 (across all combined home health and in-home outpatient cases).

Patients receiving in-home outpatient PT experienced lower costs and visit counts compared to those discharged to traditional home health, with impressive clinical outcomes and high patient satisfaction. Additionally, patients who received in-home outpatient physical therapy had a 28 percent lower hospital readmission rate compared to patients that received the traditional home health option.

By leveraging in-person care, technology, and standardized protocols, the model offers a promising alternative to traditional home health services.

Health Plan Best Practice

To promote uniformity and accessibility, Luna recommends eliminating copays for in-home, in-person physical therapy visits and assessments. By eliminating copays, organizations can significantly enhance the benefits of well-being initiatives and dismantle barriers to accessing care. This proactive approach not only fosters improved health outcomes but also leads to substantial cost reductions.

Furthermore, stakeholders may explore the implementation of a modest reward or incentive for individuals engaging in fall prevention evaluations and diligently adhering to mobility empowerment programs. This incentivized method can encourage active participation and foster a proactive approach toward fall prevention and mobility enhancement.

Conclusion

As health plans prepare to finalize their 2025 Medicare Advantage bids with CMS, it is crucial to consider innovative solutions that not only meet the evolving needs of members but also drive better outcomes and reduce medical costs for health plans and their elderly members. This benefit design modification presents a unique opportunity to stand out in a competitive market, enabling health plans to deliver top-tier care to their members within the familiar surroundings of their homes, all at the cost equivalent to traditional outpatient therapy.

References

• The Hill, 2024, https://thehill-com.cdn.ampproject.org
• National Library of Medicine, 2023, https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10072195/
• Reducing Home Health Overutilization with In-Home Outpatient PT: A Hoag Hospital and Luna Case Study, 2023, https://www.getluna.com/resources/hoag-whitepaper
• Luna Fall Safeguard Quality Program, 2024, https://www.getluna.com/resources/luna-fall-safeguard

About the Author

As chief growth officer for Luna, RaeAnn Grossman leads the health system, health plan, and strategic partner growth. She has been in the health care industry for nearly 30 years, leading health plans such as BCBSAZ, Centene/HealthNet, and Bright Health. She also built innovative companies such as Datavant, Signify, and Gorman Health Group. Grossman is a thought leader in care transformation, population health, risk adjustment, quality programs, and value-based care. She is passionate about simplifying the care journey and driving better outcomes for all populations.