As 2024 Nears, Large Home Health Providers Are Cementing Their MA Strategies

Home health providers’ battle for fair reimbursement from Medicare Advantage (MA) plans will be a “generational battle,” and not one they will win overnight.

But, at least for larger home health providers, their strategies in that battle are much more definitive than they were even a few years ago. 

Luke James, the president of VitalCaring, told Home Health Care News earlier this month that he’s had positive conversations with MA plan executives of late – ones where home health care’s importance is acknowledged.

“I was on a call with an executive from one of the largest Medicare Advantage organizations yesterday, and I think even MA plans have woken up to the fact that the rejection rates are high,” James said. “And that there’s a clear delineation between what spend, readmissions and ER utilization look like for patients that have orders for home health coming out of a hospital – between those that actually get home health versus those that don’t.”

Providers aren’t waiting around for plans to figure that out, though. Instead, they’re drawing the line between plans that pay fairly and those that don’t.

That was one theme from a few of the publicly traded home health companies’ earnings calls over the last month.

“Some payers are now recognizing the variation of quality results within the industry and are willing to pay for access to high-quality providers like Enhabit,” Enhabit Inc. (NYSE: EHAB) CEO Barb Jacobsmeyer said on the company’s third-quarter earnings call.

Enhabit began meaningfully applying this strategy last year. In exchange for fair rates or better contracts, Enhabit creates capacity for those plans.

“They get access to our high-quality care, superior outcomes and evidence-based specialty programs, and we get access to more members and competitive rates and terms,” Debra Konjanovski, senior vice president of payer innovation at Enhabit, told HHCN last month. “The conversation always begins with data, so we can highlight our high-quality performance. We have an incredible data and analytics team that helps us target payers by market. They use internal proprietary data, third party data and even several public sources to target payers. We also listen to our local teams to understand which payers they need us to bring under contract.”

Each quarter, Enhabit has announced new contracts with MA plans and conveners. Its payer innovation team plays a large part in that process.

In the third quarter, non-episodic MA admissions grew by 33.5% for the company.

Broadly, fee-for-service revenue is dipping for home health companies as MA revenue takes on a greater share. 

For instance, Amedisys Inc. (Nasdaq: AMED) saw Medicare revenue decrease year over year in the home health segment, but non-Medicare revenue increased significantly – from $113.6 million to 133.7 million, a 17.7% year-over-year increase.

Aveanna Healthcare Holdings (Nasdaq: AVAH), meanwhile, has taken a similar approach to Enhabit.

Its putting MA plans – and other payer sources – that pay fairly for home-based care services in its “preferred payer” network.

“Our preferred payer relationships benefited from accelerated caregiver hires of approximately three times more than our other payers, and we continue to experience staffing rates approximately 20% to 25% greater with significantly higher patient admissions,” Aveanna CEO Jeff Shaner said on the company’s third-quarter earnings call. “These positive labor trends have continued into the fourth quarter, and further validate our preferred payer strategy. Preferred payers reimburse us a fair rate, and we pay market competitive wage rates, while also earning value-based payments for achieving positive clinical outcomes and improved caregiver capacity.”

These more defined strategies are new, but they are already beginning to produce meaningful data that can be provided to other plans.

Enhabit mentioned, for instance, that it uses its 30-day hospital readmissions rate – which is 20% better than the national average – as leverage in its current payer negotiations.

Addus Homecare Corporation (Nasdaq: ADUS) has been collecting that relevant data for a few years now, and has gotten to a point where it believes plans are “very bullish” on its ability to impact post-acute spend on their behalf, according to its leaders.

“We really believe we’re at the beginning of being able to sit down and talk to some of the payers that are excited about value-based care, showing them what personal care along with home health can do,” Addus CEO Dirk Allison said on the company’s third-quarter earnings call. “We’re starting to get that data. That’s really what you’ll see in 2024, a focus on bringing in home health, a focus on our unit growth and a focus on some internal things on personal care.”