As costs for in-patient health care services rise, there has been a systemic shift towards the use of private duty home care agencies. While the basic services offered through a private duty agency are similar to Medicare and Medicaid-funded home care services, there are some major differences in service delivery, revenue and the overall experience between private and government-funded care.

What is Private Duty Home Care?

Seniors, people living with disabilities and those who need help while recovering from an illness or injury often turn to private duty home care services for assistance. This type of care is provided through an agency, or directly from a private caregiver.

Private duty home care is home care that is delivered on a private-pay basis, which means clients or their families pay either the home care agency or the caregiver. Because the service works on an individual basis, private duty home care services can be customized to meet the unique needs of each client.

Nurse Next Door providing private duty home care

Clients who hire a private duty home care provider have the ability to access as much support as they feel they need, without seeking approval from their primary care physician or any other medical professional. With private duty care, there are no eligibility requirements, and clients are free to use the service on a short-term or long-term basis.

Another important distinction of private duty home care is that home care agencies have the flexibility to match caregivers with clients based on skills, preferences and overall compatibility. This flexibility leads to a high level of client satisfaction, and that can help increase profits for the home care agency.

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Does Medicare and Medicaid Cover Home Care?

Medicare and Medicaid are government-funded health insurance programs for seniors age 65 and older, and eligible adults with qualifying disabilities. Medicare Part A (hospital) and Medicare Part B (medical) cover some home health services such as intermittent skilled nursing care, occupational and physical therapy, medical social work, speech-language therapy and limited personal care.

Medicare and Medicaid only provide limited coverage for home health care services under specific circumstances, and services are delivered through agencies that are under contract with the government. Service availability varies in each state and is subject to change each year.

Many states promote the use of Medicaid and Medicare-funded home care services as a way to delay or reduce institutionalization rates among medically-fragile seniors and people with disabilities. According to Genworth’s 2019 Cost of Care Survey, the national median cost for nursing home care in a private room is $8,517, while home health aide and homemaker services cost $4,385 and $4,290 respectively. Note that costs vary throughout the country, and care costs tend to be linked to the local cost of living.

What Kind of Home Care Services Are Covered Under Medicare and Medicaid?

Medicare and Medicaid-funded home care services are usually designed to be a short-term measure rather than a long-term solution for beneficiaries who require support while recovering from a serious illness or injury.

There are strict rules related to the types of home care services that can be provided through government-funded programs. For example, Medicare will not pay for home delivered meals or in-home meal preparation, around-the-clock home care, or personal care services such as assistance with bathing, dressing or toileting when this is the only type of support required by the client.

Medicaid and Medicare will not cover homemaker services including assisting clients with personal shopping or errands, doing laundry or cleaning, or providing companionship when no other care is required.

Qualifying for government-funded home care services can be difficult, as clients must be under the care of a physician who agrees to create an ongoing care plan that specifically includes home care. Clients must also be medically-certified as requiring intermittent skilled nursing care and/or time-limited in-home therapy services that are designed to help the client improve within a reasonable amount of time. In most states, clients must also be designated as homebound by a medical doctor in order to be eligible for government-funded home care through Medicare or Medicaid.

How Is Private Duty Home Care Different From Medicare and Medicaid-Funded Home Care?

There are significant differences between the type of care available through a private duty home care agency and government-funded home care services.

From the perspective of the client, Medicare and Medicaid-funded home care can be difficult to qualify for, given that there are strict eligibility criteria that must be met. Government-funded home care clients have no say in who their caregiver is, how frequently the caregiver visits, or when visits are provided. In most cases, Medicare and Medicaid home care services are time-limited, and clients who require ongoing care are required to re-qualify for services frequently.

In terms of service delivery, agencies that provide contracted home care services under Medicare or Medicaid often have to deal with significant financial and logistical barriers that limit their ability to achieve and maintain profitability. Government-funded home care services are focused on delivering services at the lowest possible cost, and that often means caregivers cannot deliver the services that the client requires.

From the perspective of a caregiver or home care agency, working with Medicare or Medicaid-funded home care clients involves little to no control over profit margins. Obtaining reimbursement for services rendered can also be challenging, since payments are made through government departments that often involve multiple levels of bureaucracy.

Service providers must complete complex and time-consuming report forms to account for their invoices, and the amount of work is highly variable and subject to government policies. There are also strict rules around the type of care that government-contracted caregivers can deliver, and that can place a strain on the clients, their families and the caregivers while leading to conflicts between the provider and the client. For example, Medicare and Medicaid will not pay for basic support services such as assistance with meal preparation or companion care, which are often key to the health and well-being of seniors and people with disabilities.

For these reasons, many home care providers opt to avoid working with Medicare and Medicaid clients altogether in favor of the direct service delivery model of private duty care

Benefits of Private Duty vs Medicare/Medicaid Home Care

As a care provider, working on a private-pay basis offers many advantages. Private duty home care agencies have complete control over their margins, which makes this service delivery model far more appealing than working as a government-contracted agency.

Private duty home care agencies are also free to offer a broad range of non-medical services to their clients, such as homemaking, companion care and ongoing personal care, regardless of whether or not the client is recovering from an injury or illness. Additionally, home care agencies are able to provide around-the-clock care upon request, which can mean increased revenue and better service delivery for clients who want to use home care services as an alternative to a senior care facility. 

There are also financial benefits to take into account. It’s a common misconception that not servicing Medicare/Medicaid can remove Private Duty agencies from earning profits from a larger home care market. While this may be the case for some, Nurse Next Door is a premium home care brand delivering a premium experience – and our Franchise Partners are able to charge a premium price to provide it. When you consider that the profit margins on Medicare/Medicaid aren’t as substantial as some may believe, and that private duty home care agencies are able to set their own pricing, it’s clear that working on a private-pay basis can also have its financial advantages.

 

Private duty home care franchise owners have complete control over staff recruitment and caregiver allocation, which has a significant impact on both margins and client satisfaction. By retaining control over staffing, private agencies can opt to hire caregivers who meet specific criteria that aligns with the overall service delivery model and brand of the agency, and that in turn can help grow the business. As part of Nurse Next Door’s Happier Aging philosophy, we provide all clients with a perfectly matched Caregiver – this is another benefit of private-pay care. Providing a highly-trained, friendly and reliable Caregiver provides clients and their families with the peace of mind that comes from continuity of care. It all comes back to Nurse Next Door providing a premium service. By creating a caring support system that clients and their families can depend on, we’re able to build a lasting relationship and in some cases, become just like a family member over time. This is one of the reasons to buy a senior care franchise with Nurse Next Door.

To learn more about the differences between private duty home care and Medicare/Medicaid funded home care service delivery, contact Nurse Next Door. As the leading provider of private duty home care services throughout North America, Nurse Next Door offers attractive franchise opportunities for those who want to be a part of a growing essential-service business.

 

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