An Affordable Care Act program designed to incentivize home and community care over nursing homes will create a huge growth opportunity for home care staffing agencies in participating states. The Balancing Incentive Payments Program is a $3 billion dollar program that will match state spending for alternative care at higher levels through September 2015.
To qualify, participating states must have lower than 50 percent current Medicaid spending on home and community care. They must also demonstrate that they are making it easier for patients to access treatment alternatives to nursing home facilities. Seventeen states are currently participating in the Balancing Incentive Payments Program: Arkansas, Connecticut, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Mississippi, Missouri, New Hampshire, New Jersey, New York, Ohio, and Texas.
This incentive program also creates a great opportunity to sell invoice factoring to growing home care agencies. Companies that provide home and community care services often turn to factoring to cover their cash flow needs. With the increase in available Medicaid funds, maintaining a steady cash flow will be more important for ever for home care companies.
Remember that home care factoring deals tend to be tricky to fund.
Before marketing to home care agencies it is important to understand their complexity and to address the following elements before placing the deal:
- Home care deals are often partly staffing and partly third-party medical, which may limit the number of funding options available.
- Not all states accept a notification of assignment. If the state in question does not accept the notification then they are under no obligation to pay the factor, creating what may be an unacceptable risk to the factor.
- Depending on the state, the payer may not be the agency receiving the services. While claims may be paid directly by that agency, in some states other agencies make the payments on the first agency’s behalf and in others a third-party processor handles them.
- In most states, there are no standard invoices associated with claims – only claim numbers.
- Home care deals also feature small paid transactions. Rather than invoices in the thousands for a single service or product, or a week of standard nurse staffing shifts, home care staffing claims are for individual shifts. A sample home care claim is for four hours of work at $18 per hour, or $72 total. Also, though the home care agency will likely factor multiple claims in a single funding they are still paid individually by the state.
- Most importantly, most of the client information a factor needs for approval may be protected by HIPPA privacy laws. In order to gain access to that information the factor will have to sign a Business Associate Agreement with the home care agency (the “covered entity”). The agreement must be very specific about the type of information shared and obligates the factor to take all necessary steps to safeguard the information.
In addition, the factor may have to provide records and explanations of its practices relative to the agreement to the Department of Health and Human Services on request to ensure HIPPA compliance. Find more information about Business Associate Agreements at HHS.gov.
If factoring for the home health care field is outside of your niche, consider a referral partnership with healthcare factoring companies who can fund these deals. For a successful factoring placement, do your research to find factors who are experienced with handling the complexities of funding healthcare deals. The ideal factors for these deals work with staffing companies, third-party medical providers, or both, and are able to work with Medicaid in the state where services are provided. Pairing home healthcare prospects with the right factoring company benefit clients and also help your own business grow.
Philip Cohen is the founder and president of PRN Funding, LLC, which is an extraordinarily focused niche factor in the healthcare funding market place.
Visit the PRN Funding website at www.prnfunding.com for more factoring and brokering information.