Amedisys Weary of Current Medicare Advantage Opportunities, Bullish on SNF-to-Home Diversion

Just as the Patient-Driven Groupings Model (PDGM) was slowly becoming the new normal, home health providers were hit with the impact of the COVID-19 emergency.

Amedisys Inc. (Nasdaq: AMED) has weathered both storms. Now, it has its sights set on gaining market share from skilled nursing facilities (SNFs) and pursuing Medicare Advantage opportunities — but only when the time and reimbursement rate are right.  

That’s according to Amedisys President and CEO Paul Kusserow. The company’s leadership touched on this and other topics during BMO Capital Markets’ 2020 Prescription for Success Healthcare Virtual Conference.

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Amedisys’ performance amid ongoing disruption has placed them in the category of “recession-proof,” or at least proven what the company has always said to be true, according to Kusserow.

“We believe that we are countercyclical, from a recession perspective,” Kusserow said during the presentation. “We believe we are relatively recession-proof in our business because it largely [revolves] around finding and keeping good people. We find that in a recession environment we tend to do better at that. We feel very good about where we are going for the remainder of this year.”

As a business, Amedisys has 480 care centers in 38 states and Washington, D.C.

Under the COVID-induced recession, the idea that in-home care companies are immune has gained popularity. Though experts have pushed back against the idea that any industry remains unaffected by an economic downturn.

“Nothing is recession-proof,” Eugene Goldenberg, a managing director at Edgemont Partners, previously told Home Health Care. “Even though health care is much more of a defensive industry — and kind of continues to grow through the ups and the downs — what we’ve seen with COVID-19 is that there are certain pockets of sub-sectors within health care that obviously fared much better than others.”

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Edgemont Partners is a New York-based independent, health care-focused investment banking firm.

While Amedisys’ home health business has experienced some COVID-related disruption, the company has slowly been able to bounce back.

“On the home health side, we took a pretty severe hit to volume early on,” Chris Gerard, the company’s chief operating officer, said during the presentation. “We bottomed out the first week of April. We’ve since seen consecutive weeks, other than the week of Memorial Day, of sequential improvements in volume.”

From an admissions perspective, the company is just shy of pre-COVID levels, according to Gerard.

Still, elective procedures and hospital referrals for Amedisys, haven’t fully returned to pre-COVID levels yet. The company remains confident that this will change due to the growing demand for elective procedures.

“In talking to the facilities that are doing the procedures, we are learning that there is pent up demand,” Gerard said. “They are running full schedules, extended hours and sometimes even weekend procedures. Many of them are focused on younger ages first and then will get to the older populations later on.”

During the presentation, leadership also touched on its interest in Medicare Advantage and the double-edged sword of remaining profitable under the lower reimbursement structure that comes with it.

“I still think that Medicare Advantage is the place to be for us, but not under the current reimbursement,” Kusserow said. “Average reimbursement on a visit for Medicare Advantage is $125 a visit, versus $165 for fee-for-service Medicare. But you also look at where the world is going: Medicare Advantage is growing at about 7% versus fee-for-service at 1%.”

As such, Amedisys has been aggressively approaching payers and taking on gain-sharing risk. Last year, about 5% of the company’s book of business was at-risk.

Looking ahead, the company expects to eventually expand that further, while also seeing a growing number of diversions from SNFs to home health.

“We believe in the SNF world, there are a couple of areas where we can play,” Kusserow said. “We believe there’s about 10% of what Chris [Gerard] has named ‘jump ball business,’ which in some cases went either way. Now, we think that business is going to shift into the home… It’s going to be a long-haul back for the SNFs.”

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