Amedisys ‘Will Buy Opportunistically’ in Home Health Market After PDGM Plays Out

Like so many others in the industry, the Patient-Driven Groupings Model (PDGM) remains top of mind for Baton Rouge, Louisiana-based home health giant Amedisys Inc. (Nasdaq: AMED).

Unsurprisingly, navigating the payment overhaul remains one of the company’s biggest priorities moving forward into 2020. Building out its hospice business and expanding its personal care network with ClearCare Inc. are also key areas of focus, according to Amedisys President and CEO Paul Kusserow.

“Internally, we have been practicing and drilling for PDGM since November 2018, when [the Centers for Medicare & Medicaid Services] (CMS) finalized the 2019 rule with the new payment model,” Kusserow said during a Wednesday third-quarter earnings call. “Since then, we’ve had a cross-functional team of over 40 of our best [staff membres] working daily to prepare our business for these pending changes.”

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While PDGM starts Jan. 1, several Amedisys locations will begin operating under the overhaul’s framework even sooner.

“As of November, 60 care centers will be in PDGM test mode, performing most of the functions required,” Kusserow said.

So far, Amedisys is seeing success in its PDGM test run, with results “exceeding expectations,” according to the CEO.

“We’ve dug into and dissected the behavioral assumptions, trained up our centralized coding function, implemented pay-practice changes that will allow us to better optimize our LPN and PTA utilization,” Kusserow said. “We have begun to roll out Medalogix Care so that we will have better analytics around individualized patient-specific care plans, as well as optimizing utilization management.”

Amedisys invested in Nashville, Tennessee-based predictive analytics firm Medalogix last year. The move signaled the company’s plan to eventually release Medalogix products across the business.

While Amedisys is ramping up for PDGM, the company remains active on the legislative front. The company has pushed for bipartisan legislation aimed at refining the overhaul in both the U.S. House of Representative and Senate.

“We continue to make great progress signing up co-sponsors to our House and Senate bills,” Kusserow said. “This legislation would prohibit CMS from making rate adjustments based on behavioral assumptions and allow only for adjustments based on observed evidence of a change in provider behavior.”

As of Amedisys’s Wednesday earnings call, 31 bipartisan lawmakers are co-sponsors for the Senate bill and 130 bipartisan lawmakers are co-sponsors for the House bill.

Apart from PDGM, home care will also play a role in Amedisys’s future.

In July, Amedisys locked in an agreement with ClearCare designed to build a national personal care services network through a partnership model. Broadly, the agreement works by helping interested home care agencies team up with Amedisys through ClearCare’s technology.

In September, the company told Home Health Care News that the personal care network exceeded 700 agencies. With its existing business segment, Amedisys delivered 824,251 personal care hours in Q3 2019, a nearly 2% increase over the 810,427 hours it delivered in Q3 2018.

“Long-term and part of our 2020 focus will be building a nationwide partnership of personal care agencies and the technology infrastructure needed to offer Medicare Advantage plans and others a true continuum of care by combining home health, hospice and personal care services,” Kusserow said.

San Francisco-based ClearCare provides caregiver scheduling, billing and other software solutions to more than 4,000 home care agencies in total, including several of the industry’s largest.

Financial results and hospice plans

Overall, Amedisys’ third-quarter 2019 net service revenue checked in at $494.6 million, an 18.5% increase compared to the $417.3 million the company brought in during Q3 2018.

Home health revenue totaled $311.5 million in the third quarter, a 5.6% increase over the $294.9 million from the same period last year.

As for M&A opportunities, Amedisys is taking a wait and see approach in response to PDGM, though the company will keep an eye out for attractive hospice assets.

Most recently, Amedisys acquired Tulsa, Oklahoma-based RoseRock Healthcare in April and New Jersey-based Compassionate Care Hospice in February.

“We are continuing to build and buy in hospice. We continue to work a full hospice tuck-in pipeline while streamlining our internal acquisition integration and absorption process as we wait for industry disruption in home health early next year,” Kusserow said. “We will buy opportunistically in home health once we see what PDGM looks like and build networks to expand our personal care coverage as well as innovate to allow more people to stay in their homes.”

The hospice M&A landscape has been scalding hot since early 2018.

At least 14 hospice deals transpired during the second quarter of 2019, according to data from M&A advisory firm Mertz Taggart.

Amedisys stock was down 3.14% at close of trading Wednesday.

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