Almost Family Takes On CMS’ Value Challenge

Coming off a record revenue year, one of the nation’s largest home health providers has its sights set on winning in a shifting health system. Part of the plan involves a new business segment, launched as the government continues to reward low-cost settings and value-based purchasing models come into effect.

Almost Family (NASDAQ: AFAM) had its most acquisitive year ever in 2015, investing $150 million in capital and capturing $140 million in revenue in six transactions, company executives said at the recent J.P. Morgan Annual Health Care Conference.

Over the year, it acquired three home health and home care agencies: Ohio-based Blackstone, New York-based WillCare and New Jersey-based Bayonne. These major acquisitions accounted for $116 million in added revenue.

Within the company’s newly created Health Care Innovations (HCI) Segment, Almost Family completed three transactions last year that led to $24 million in revenue and positive cash flows. It most recently acquired Long Term Solutions (LTS) for $37 million.

The HCI Segment is outside the range the range of Almost Family’s core home health business, but represents a side of the business that President and Principal Financial Officer Steve Guenthner expects to grow based on changing health care system regulations and rewards.

“The current state of the health risk assessment business is that CMS has said … ‘We want to understand not just how you assess and find care needs, but how to integrate the care plan with the patient,’” Guenthner said at the J.P. Morgan conference. “In addition to assessing, it’s doing something about it. That fits together with Almost Family and our home health care business. Not only do we assess the needs of a patient, but fulfill the needs of a patient.”

While some businesses within the home health industry are focused on limiting or refining their scope of services to one niche, Almost Family is betting on business from both Medicare-related services and private duty.

“We like them both,” Guenthner said during the presentation.

Another big impact on the business is the start of home health value-based purchasing (HHVBP) models, which kicked off at the start of the new year in nine states that were randomly selected by the Centers for Medicare & Medicaid Services (CMS). Almost Family operates in three states with VBP models, representing about half of the company’s total business, according to Guenthner.

The models will assess quality performance measures for all Medicare-certified home health agencies in Arizona, Florida, Iowa, Maryland, Massachusetts, Nebraska, North Carolina, Tennessee and Washington. Agencies will then be scored based upon these measures, and eventually could see a small change in their reimbursement rates based on them. The first reimbursement adjustment is anticipated to begin January 2018.

“We’re taking up this challenge,” Guenthner said during the presentation. “We’re committed to this challenge and have been advocating for it in Washington and CMS since 2010. This is a good thing for our business.”

Written by Amy Baxter