While personal care is the smallest segment in Amedisys Inc.’s (Nasdaq: AMED) portfolio of service offerings, the home-based care powerhouse has lofty goals to expand its personal care services into as many as 47 additional states in the years to come. Medicare Advantage is serving as a catalyst for the growth.
That’s according to comments CEO Paul Kusserow made to investors on the company’s first quarter earnings call with investors Wednesday.
When asked about growth targets for personal care in the years to come, Kusserow said Amedisys’s ultimate goal is to achieve “national coverage or close to it.”
This would mean booming growth for the service line, which is currently offered in only three states. According to the company’s website, Amedisys offers personal care services in most of Massachusetts, as well as in the areas surrounding Jacksonville, Fla, and Knoxville, Tenn.
“[With] some of the rules that have been coming out from CMS, there’s obviously an understanding there of the need for unskilled care [or] personal care,” Kusserow said during the call, noting that such services are key to helping seniors age in place.
Kusserow was alluding to CMS’s recent decision to expand the supplemental benefits Medicare Advantage plans can cover — for the second year in a row.
CMS first added non-medical in-home care as an MA benefit in 2019. In another announcement earlier this year, CMS revealed that MA plans would have even more freedom in 2020, giving them permission to cover any benefits that “have a reasonable expectation of improving or maintaining the health or overall function” of beneficiaries with chronic conditions.
Kusserow expects more of the same in the years to come and is actively looking for deals with MA plans, he said during the earnings call.
“We anticipate there’s going to be more ability for Medicare Advantage plans to be able to fund some of these [personal care services],” he said. “When we look at capitation and possibly doing capitated deals with Medicare Advantage plans, this is also very important.”
In Q1 2019, personal care services generated only $20.2 million of Amedisys’s total net service revenue of $467.3 million. Meanwhile, its home health segment generated $310.1 million in Q1 revenue, while its hospice line generated $137 million.
Amedisys is currently looking for creative solutions to expand its personal care reach and capitalize on MA opportunities, Kusserow said. In some places, that may mean joint ventures or partnerships rather than acquiring a personal care business outright, which the CEO said is difficult to do.
“Hopefully in the next couple of months, I will come out with some answers there that will give us much better coverage without actually having to go and [make 200 acquisitions],” he said. “There are 25,000 players out there in this business.”
While Kusserow told investors the company is looking for alternatives to outright acquisitions, he did not comment on specifics.
“From a margin profile perspective, I don’t know what this would look like,” he said. “Ultimately, the most important thing is that we do have national coverage or close to it, and that’s what we’re aiming for.”
Humana’s MA doubts
While Kusserow was bullish on Medicare Advantage opportunities, Humana President and CEO Bruce Broussard has voiced his concerns about the extent to which insurers may be able to offer them.
Broussard told investors on a Wednesday earnings call that insurers may be limited in what benefits they can offer in 2020 if the health insurance tax (HIT) returns, as is expected. HIT was in place for 2018 but suspended for 2019.
However, his views should be taken with a grain of salt, at least one expert believes.
“Any time there is a Medicare Advantage reimbursement or insurance tax issue, the insurance companies will use the all supplemental benefits as leverage in their advocacy,” Anne Tumlinson — founder of Washington, D.C.-based research and advisory services firm Anne Tumlinson Innovations — told Home Health Care News. “But this may be a more powerful advocacy point for them now that these benefits include non-medical benefits like home care.”