In order to manage its home health visits appropriately, Enhabit Inc. (NYSE: EHAB) hopes to have anywhere from 0% to 10% fee-for-service discounts when negotiating managed care episodic contracts.
Historically, Enhabit has seen an average discount on a per visit basis between 35% to 40%, which is pretty significant, Enhabit CEO Barb Jacobsmeyer said on Tuesday.
However, the cost of doing business in managed care contracts these days includes those steep discounts.
“We’d love today to just stop taking the payers that pay those large discounts,” Jacobsmeyer said during an Oppenheimer investor presentation. “Unfortunately, today, we know that we have to go to our referral sources and we have to be able to accept more than just traditional Medicare to be seen as a good provider for them.”
The goal, Jacobsmeyer said, is to secure more contracts — region by region — so the home health and hospice provider can start to turn away some of the payers that “are not paying us fairly at this point.”
The Dallas-based Enhabit has 252 home health locations and 105 hospice locations across 24 states. It spun off from Encompass Health Corporation (NYSE: EHC) in July 2022.
On the heels of a disappointing fourth quarter, Enhabit has put an emphasis on increasing the number of its clinical transition coordinators (CTCs). That role is for those who help make the transition from facility to the home in Enhabit’s markets.
Those coordinators have also been helpful in collecting important information from referral sources.
“We have asked them to find out from those referral sources what payers would be most significant for us to try to get contracted with, so that we can be viewed as more of a full-service home health provider,” Jacobsmeyer said. “Historically, the majority of what we could take was fee-for-service Medicare. As you can imagine, most of these facilities are saying that’s what everyone wants, and to be really seen as a great partner, they want us to be able to take more than just the fee-for-service Medicare.”
That important feedback is then passed along to Enhabit’s payer innovation team, which then works on those regional contracts where those CTC’s work.
Enhabit realized that it not only had to increase the number of managed care contracts on its books, but it had to improve the quality of those contracts.
In order to do that, the company has been selling its value proposition.
“What we do is really go in and show the value proposition, which includes: access to care, the timely initiation of care and, probably most importantly, our lower-than-the-average rehospitalization rates,” Jacobsmeyer said. “We are having quicker success with these regional MA plans. We’re at the table with all the national plans, but it just moves very slowly. That’s why we’ve really put a focus on these regional contracts because they do understand that value proposition, they can make those decisions quicker, and they can really then track the impact that we make with those patients.”
The plan is paying off so far. Enhabit has negotiated 18 regional contracts, nine of which are active with seven of those being paid at an episodic rate with that 0% to 10% discount.
“Much improved over our current average,” Jacobsmeyer said.