Amedisys Inc. (Nasdaq: AMED) is eyeing the growing managed care population and is eager to influence how these payers view and reimburse home health providers.
Some of the biggest home health providers—not only Baton Rouge, Louisiana-based Amedisys but also Louisville-based Almost Family (Nasdaq: AFAM) and Lafayette, Louisiana-Based LHC Group (Nasdaq: LHCG)—have made it clear they intend to grow their managed care revenues.
The trend toward managed care is clear, with one in three Medicare beneficiaries in a Medicare Advantage (MA) plan as of 2017, according to the Kaiser Health Foundation. But with payments lower than in traditional fee-for-service Medicare, the long-term success of home health providers is still questionable unless they negotiate better arrangements with the private insurance companies that administer MA plans.
“We do want to change the game,” Amedisys CEO Paul Kusserow said during a presentation at the Annual Oppenheimer Healthcare Conference in New York City on Tuesday. “If we allowed Medicare Advantage to grow at the natural rate and play the same game that will cut into margins, and that whole demographic trend will work negatively against us. That’s something we aren’t going to stand by and watch.”
Fee-for-service (FFS) payments on a per visit basis are much higher than current managed care contracts, $160 versus $120, respectively, according to Kusserow. To get those payments higher, Amedisys wants to take on more risk in its managed care contracts, with the potential to share in cost savings.
“We are trying to change the nature of the game [by] going back to payers and saying what is it going to take to be [the] fee-for-service [rate] or above, and what can we take risk on—on quality, readmissions…” Kusserow said. “We’d love to take aging-in-place risk.”
Kusserow has already stated that he believes managed care opportunities for home health care providers will accelerate over the next few years, particularly amid major consolidation across the health care space. With major Medicare Advantage provider Humana (NYSE: HUM) acquiring Kindred at Home (NYSE: KND), payers are already seeing value in home-based care.
The drive toward lower cost care and value—away from institutions—will also continue to open the door for home health care.
“As we become more adept, learn more about disease-specific care, increase our skill set… [we will] provide those doctors a choice: do you wan to send people to a skilled nursing facility (SNF) or can someone with good skills keep that person at home,” Kusserow said. “If you haven’t been to a SNF lately… it’s definitely a reason to stay at home.”
Written by Amy Baxter