Aveanna Healthcare’s (Nasdaq: AVAH) preferred payer strategy has generated positive outcomes for its home-based care segments – and is set to gain even more traction after the company’s recent acquisition of Thrive Skilled Pediatric Care. 

Specifically, Aveanna has focused on partnering with preferred payers that reimburse on an episodic basis to expand its margins, improve clinical outcomes and alleviate workforce challenges, according to the company’s Q1 earnings call on Thursday.

“We believe that episodic care gives us the ability to structure a care plan with the physician based on the actual needs of each individual patient,” an Aveanna spokesperson told Home Health Care News “This gives our team the ability to produce better clinical outcomes and provide our patients with optimal care while managing overall utilization and decreasing our administrative burden. We would rather focus our resources on achieving clinical goals and continuing to be the most efficient form of health care.”

The company has reached its episodic mix goals for its private duty and home health and hospice segments. In Q1, Aveanna’s home health and hospice episodic mix was 77% and grew by three new agreements, Shaner said, though volume growth was flat year-over-year. The company aims to maintain its episodic mix above 70% while returning to a more normalized growth rate in 2025.

Atlanta-based Aveanna reported rate improvements with government and payer partners, contributing to an overall 14% year-over-year increase in Q1 revenue to $559.2 million.

Revenue for Aveanna’s home health and hospice segment rang in at $56.7 million in Q1, a 3.9% year-over-year increase, despite what CEO Jeff Shaner described as a “tough macro environment for home health.” Still, Medicare revenue per episode of care increased 2.7% year-over-year, to $3,152.

The company’s private duty services revenue grew by 16.5% year-over-year to $460 million, driven by 10.9 million hours of care and a 6.1% volume increase from Q1 2024..

“The thesis behind our preferred payer strategy continues to play out,” Shaner said. “Our preferred payers, especially on the [private duty services] (PDS) front, continue to just ask for more and more clinical capacity. So we expect that to be a robust year for us on the preferred payer standpoint, and we think that will play through even the medical environment that’s going on today.”

The difficult labor environment is Aveanna’s primary challenge to the company’s growth trajectory, Shaner said. The preferred payer strategy is the key to overcoming this challenge, according to Matt Buckhalter, chief financial officer.

“We continue to fight through a difficult labor environment while keeping our patients’ care at the center of everything we do,” Buckhalter said. “It is clear to us that shifting caregiver capacity to those preferred payers who value our partnership is a path forward at Aveanna.”

Aveanna’s acquisition of Thrive Skilled Pediatric Care, announced in early April and set to close in the coming weeks, will help drive the company’s preferred payer strategy, according to Shaner. 

As well as reporting momentum regarding plans to integrate Thrive Skilled Pediatric Care, Shaner announced that Aveanna achieved five rate enhancements for its private duty services segment and is on pace to meet its overall legislative goals for 2025.

As part of its legislative strategy, Aveanna plans to improve reimbursement rates in at least 10 states and advocate for Medicaid rate integrity for children with complex medical conditions.

While home-based care organizations have protested potential Medicaid cuts associated with the Trump administration, Shaner spoke positively regarding Medicaid policy and said the company supported saving costs for the Federal and state governments.

“The last few months have really demonstrated how significant the bipartisan support for Medicaid program integrity is,” Shaner said. “It still remains to be seen how this plays out over the course of summer, so there’s still a lot to be done. … But I think our dialogue has been very positive, been very open, and it’s great to see bipartisan support for the core of Medicaid program integrity being retained.”