Having the right data to prove personal home care’s worth to payers has not historically been readily available.
However, Addus HomeCare Corporation (Nasdaq: ADUS) has an intriguing pilot program in one state that its leaders hope will do just that.
“For us to go in and sit across the table with Medicare Advantage plans and tell them that we can help them from a personal care and home health standpoint, reduce their medical loss ratio, we have to prove that,” Addus CEO Dirk Allison said during the BofA Securities 2023 Healthcare Conference this week. “And this industry has typically not had that information. A little over a year ago, we started a pilot program in New Mexico that is managed Medicaid and they take risk. We’ve been developing programs with those payers and have started to develop data.”
The Frisco, Texas-based Addus provides home-based care services to approximately 47,500 consumers through 203 locations across 22 states.
Allison believes that using the data from the managed Medicaid results — three locations are using the pilot now — will open up the door to MA business for Addus. But it will take some time.
“We’ll probably feel good about those results at the end of 2023,” Allison said. “We’ll be able to take that data, how we reduce the cost of care — especially around emergency room visits and rehospitalizations — and take that to Medicare Advantage payers. It’s going to take a little more time to get there.”
Apart from dipping its toes into the MA space, Addus’ growth goals continue to be the same: a focus mainly on personal care — its largest segment — and the home health sector, when it makes sense.
“As a management team, we’re conservative,” Allison said. “We don’t want to disappoint you and others that are out there. We’re still at that 3% to 5% [growth rate] and we’d keep it there through 2023, but we do believe we exceeded that in the first quarter and we’ll probably be on the high end of that in the second quarter.”
Addus plans to stay conservative and let states’ Medicaid rates dictate some long-term growth goals.
“I think hours will get back to where they’re growing nicely,” Allison said. “I think the change we will have to see is, do the states continue what they did the last three years, giving us those nice rate increases each year to help offset some of the costs, mainly as relates to the caregiver wages?”
Caregiver wages are at the top of mind for Addus and many in the space following the proposed rule from the Centers for Medicare & Medicaid Services (CMS) that would require at least 80% of Medicaid payments for personal care, homemaker and home health aide services be spent on compensation for direct care workers.
Allison reiterated many of the same comments made during the company’s first-quarter earnings call, saying that it is difficult to understand why CMS would make a blanket proposed rule for Medicaid when every state operates that program differently.
“I think the concept can work, but the problem is that with Medicaid, there are 50 states of which each state has up to two or three waiver programs and each waiver program can have a different reimbursement profile,” Allison said. “Prior to CMS’ proposal, the Biden administration was very much behind the personal care industry, home- and community-based care and clearly wanting to expand coverage. They probably still are. It’s just that the proposed rule was a little bit of a shock.”
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