Keys To Financial Resiliency Amid Home-Based Care Payment Pressures

Payment rates for at-home care providers have been a major theme of the past week, with the arrival of a final Medicare Advantage (MA) rule from the Centers for Medicare & Medicaid Services (CMS), and Medicaid remaining in the crosshairs of federal budget action. We also tackled building margin and financial resilience in our latest HHCN+ TALKS.

The news has been mixed. MA insurers got a bigger rate boost than the one initially proposed by the Biden administration, which could have some trickle-down benefits for home health providers. But MA is still exerting a lot of pressure on providers, and administrative burdens and program complexity are perhaps even more significant difficulties for agencies than rates, provider executives said during the TALKS discussion.

Meanwhile, the Senate’s proposed budget framework–adopted on Thursday by the House of Representatives–maintained a provision related to $880 billion in health care reductions that has stoked fears about drastic hits to Medicaid.

Needless to say, it’s more crucial than ever for at-home care providers to prepare for an uncertain future and develop financial resiliency. And I came away from the TALKS discussion with the clear takeaway that flexibility and efficiency are essential in achieving these goals.

In this week’s exclusive, members-only HHCN+ Update, I highlight the methods providers are using to streamline operations and improve financial resilience. I also offer analysis and key takeaways, including:

• What providers are doing to navigate payment pressures
• How technology, including artificial intelligence, plays a role in boosting profit margins
• How hiring and maintaining top-tier staff is essential not only for smooth operations but stable financials

Navigating payment pressures

The home-based care industry faces significant margin pressure from inflation, as well as Medicare and MA rate trends.

“Medicare has decreased our payments by nearly 10% over the past three to four years,” Trent Smith said during the recent HHCN+ TALKS. “Furthermore, when you take Medicare Advantage into account, this results in an effective 40% to 50% reduction on a per-visit basis.”

Smith is the founder and CEO of the AI-driven technology platform Apricot Health and, until recently, the CEO and owner of Accentra Home Healthcare.

He also stated that the larger issue may lie in the complexity of MA and the considerable back-office administrative burdens.

Meanwhile, Medicaid-focused home care providers are also feeling margin pressure while also fearing for what the future holds, given the prospect of deep Medicaid cuts.

“Looking back or reflecting on that hour of service can sometimes feel daunting when you recognize how little margin is left after compensating a caregiver for driving out, delivering that service and returning home,” Kevin Smith, CEO of Best of Care, said during the TALKS.

He mentioned receiving communication from contract partners who refer Medicaid-funded businesses and consumers to Best of Care in Massachusetts, indicating that certain funding and care programs will be “closely scrutinized.”

“We are being informed that we will monitor the utilization of those hours and funds for consumers,” Kevin Smith said. “If they are not maximizing their service delivery, we will likely remove them from that care program and transfer them to another that may lack sufficient funding. These individuals will transition from receiving 24 hours a day of care to just 10 hours a week. When projected across a network of care, this presents a significant problem for facilities, hospitals, social workers, clinicians and nurses. The entire spectrum will feel the impact.”

He further stated that providers are responsible for monitoring the business, maximizing service delivery and staying on top of hiring to ensure they can manage necessary cases while also focusing on other core aspects of day-to-day operations. 

Trent Smith agreed, emphasizing that managing authorizations and using background tools with robotic process automation and AI agents is crucial to execute those goals.

The role of AI in boosting profit margins

Using AI can increase profits in home-based care agencies by streamlining operations, enhancing efficiency and improving patient care, ultimately leading to greater client satisfaction and potentially higher revenue.

A Home Health Care News survey in December 2024 revealed that more than half of home-based care companies have already invested in AI or plan to do so within the next year.

“One of the largest inefficiencies in home health is the time caregivers spend documenting care instead of providing it,” Wes Little, executive vice president of analytics and AI at WellSky, wrote in a recent LinkedIn post. “We estimate that across the industry, 25% of visit costs are currently tied up in documentation requirements – such as completing intake notes, OASIS forms, recertifications and more.”

WellSky is a post-acute technology company based in Overland Park, Kansas.

Trent Smith is a passionate proponent of AI, having created Apricot to boost profits at Accentra. Apricot Health is an AI platform that streamlines start-of-care documentation, allowing providers to focus on patient care.

“Handling authorizations and background tools with robotic process automation and AI agents is essential,” Trent Smith said. “Ultimately, we want our nurses to focus on their nursing duties instead of being burdened with administrative tasks.”

AI-based documentation and workflow tools that automatically capture and organize clinical information during a visit can help agencies reduce total documentation times by 60% or more, according to Little. By automating extensive documentation, agencies can realize a 15% cost savings on direct caregiver labor per visit, Little continued.

When caregivers spend less time on documentation, they can see more patients within the same staffing structure. With the industry currently constrained by supply and more than 70% of referrals being declined, a 15% reduction in direct care time due to AI-driven documentation efficiencies leads to increased acceptance rates and growth without a significant increase in headcount, according to MedPAC’s March 2025 report to Congress. 

AI can lighten employees’ administrative load by automating tasks such as scheduling, intake and revenue cycle management, leading to quicker reimbursements.

“By leveraging AI to enhance the efficiency and quality of each of these areas, leading home health providers will be well-positioned to reap the benefits,” Little said. “Even a modest 15% efficiency gain in each cost category can lead to a 67% increase in net income per visit.”

I think that early technology adopters will be among the home-based care providers most likely to endure the challenging operating environment. A robust tech stack can mitigate cost pressures and also encourage staffing success.

Hiring and maintaining top-tier staff can ease provider burdens

While harnessing the power of AI is one route toward gaining operational efficiency and combating margin pressure, technology alone is no panacea; at-home care providers also must make strides in building stronger workforces. Kevin Smith and Trent Smith laid out the case for focusing on people and tech.

Hiring top-tier talent can relieve provider burdens by ensuring clients receive high-quality and efficient care. Employing top performers also reduces staff turnover and enhances overall agency efficiency, ultimately fostering a more sustainable and positive work environment.

Skilled caregivers are better equipped to manage complex care needs, deliver effective interventions, and uphold client safety and well-being. Moreover, highly capable staff can complete tasks quickly and efficiently with minimal supervision, allowing more time for other essential responsibilities and reducing burnout.

Recruiting and retaining this talent requires an investment, but it yields significant returns. When clients receive consistent, high-quality care, they are more likely to be satisfied and recommend the agency, potentially leading to increased referrals and business growth.

“A competitive rate and a benefits package that appeals to job seekers in the non-medical home care industry requires flexibility,” Kevin Smith stated. “You must offer these incentives to hire as many people as possible and enable them to work when and where they can. However, all these elements come at a cost, and hiring the right talent to implement these strategies requires significant financial resources.”

In an environment filled with uncertainty, Kevin Smith emphasized that the best thing providers can do is offer job security.

“This means hiring the right people and providing them with the resources they need to succeed, as well as educating, training, supervising and supporting them,” he explained. “By doing this, we can retain our valuable employees, especially when hiring new staff would be cost-prohibitive.”

Job security can directly translate to client retention.

“If we’re losing clients and our client attrition rate is too high, there’s a good chance that if there are significant cuts, the individuals we lose may not return with the same service plan,” he said.

Of course, elevating recruitment and retention efforts while also taking steps to harness AI is easier said than done, particularly given that cash-strapped agencies likely have little money to invest in either endeavor. In other words, achieving financial resiliency may be a chicken-and-egg problem: Providers need to make investments to ease economic pressure but they are under too much financial pressure to make investments.

However, I think a comment from Trent Smith holds a critical tip for providers looking for a way out of this confounding situation: Agencies need to get back to the basics. Providers need to focus on the most fundamental building blocks of at-home care, such as the Medicare conditions of participation, to ensure that, in devising their strategies, they are separating the signal from the noise created by ever-increasing complexity and uncertainty in markets and public policy.

“Financial resilience is the ability to absorb macroeconomic shocks while still finding ways to grow and remain margin-positive,” Trent Smith said. “This involves reducing unit costs per patient and seeking ways to grow your back office without increasing headcount by improving efficiency in your processes. Essentially, it means asking, ‘What are the requirements? What do the Medicare conditions of participation truly state? What do you really need to do?’”