Enhabit (NYSE: EHAB) is piloting new technology that the company’s leaders hope will help the company navigate the proposed home health Medicare payment cut.

While preparing for a potential 6.4% rate cut, Enhabit has identified potential upside if the final rule resembles the proposed rule, according to company leaders at the Jefferies Healthcare Services Conference on Tuesday.

While Chief Financial Officer Ryan Solomon shared that although there is no “silver bullet” to mitigate the rule’s potential impacts, the company is focusing on its visits per episode (VPE) pilot.

The pilot was launched in approximately 11 locations in August and involves strict adherence to Medalogix, the technology the company uses to provide a VPE recommendation, Solomon said. The technology evaluates impacts to quality, which is measured through patient transfers to facilities such as skilled nursing.

“Some of our peers tend to hover in the 12 VPE range,” Solomon said. “If you look at our most recent performance, we’re just under 14. So, we think there’s a meaningful opportunity there.”

Enhabit has assembled a team to review VPE recommendations and adapt its system to the number of recommended visits, CEO Barb Jacobsmeyer said. The only way to exceed the recommended number of visits would be if a clinician collaborates with the team to explain the variant.

Solomon emphasized the importance of focusing on cost areas and general administrative expenses to ensure the company is prepared for the final rule.

“Should the final rule look more like the proposed, I think there will be potentially some disruption that could create some growth opportunity above and beyond what we have seen this year in our home health platform, and then there’s elements that are finer tuned in paraprofessional optimization and other aspects of the business that we’d look to continue to optimize,” Solomon said.

Enhabit’s overall strategy has shifted over the past three years.

Jacobsmeyer explained that when the company became independent from Encompass in July 2022, the focus was on recruitment, retention, developing a payer strategy and M&A while working to stabilize and grow. The second quarter of 2025 is a “great example of those things coming all together,” she said on the call.

Jacobsmeyer shared that most of the year has been spent winning contracts with the majority of Medicare Advantage (MA) plans, as more beneficiaries are choosing MA.

“To be considered a full-service provider to our referral sources, we must be able to accept the majority of payers. This has been about a two-and-a-half-year journey of negotiating to get contracts that pay us fairly for the services we provide,” she said. “We’re seeing the results of that, both from a growth perspective and when we look at improving revenue per visit, especially on the non-Medicare side of things.”

Enhabit currently operates 249 home health locations and 114 hospice locations across 34 states. In August, Jacobsmeyer announced she would leave the company in July 2026 or when her successor is appointed. 

Improving volumes

As hospital acuity rates rise, the demand for home care has also increased, according to Jacobsmeyer. The fee-for-service model provides numerous options for patients transitioning from the hospital, including inpatient rehabilitation and skilled nursing facilities. However, MA plans may decline patients who visit those settings due to higher costs.

“There are many patients on the hospital side of MA that need to be moved out,” she said. “That’s why messaging is so important. We need to educate discharge planners at the hospitals that we want all patients, not just some, because that puts us upside down. [Home care] remains a greater need for patients, and it is taking them longer to get, which is why the timely initiation of care has been an important message to our referral partners. Not only can we take the patients, but we can take them promptly.”

Jacobsmeyer stated that leaders must be willing to walk away from disadvantageous payer contracts, just as Enhabit did from several MA payers in 2024. By doing so, the company experienced an immediate drop in census, but this also enabled the company to secure a double-digit percentage increase in payments from one large payer. 

As she prepares to step down from her role, she mentioned that her successor is in an excellent position.

“We are in a position to differentiate ourselves from a clinical experience,” she said. “Because if we can pull more clinicians, we’re going to pull more market share. I think there’s a lot of opportunity for Enhabit as we look to the future.”