Staying on course with its payer innovation strategy, Enhabit Inc. (NYSE: EHAB) has decided to walk away from certain Medicare Advantage (MA) payers – and namely UnitedHealth Group’s (NYSE: UNH) UnitedHealthcare.
That decision, and the recent home health proposed payment rule, were top of mind for Enhabit leaders on Tuesday.
Specifically, Enhabit President and CEO Barb Jacobsmeyer expressed the company’s support for the Preserving Access to Home Health Care Act, which would help stop payment cuts.
“The National Association for Home Care & Hospice and the Partnership for Quality Home Healthcare have continued to work with our congressional allies to streamline the focus of the bill and draft offsets that would provide pay-fors,” she said during the company’s second-quarter earnings call on Wednesday. “We understand that important committee stakeholders are working to score the legislation and pay-fors. We remain actively engaged with our trade associations, and the industry on these advocacy efforts.”
Dallas-based Enhabit has 256 home health locations and 112 hospice locations across 34 states.
The proposed payment rule, which was released at the end of June, includes a permanent prospective adjustment to the 2025 home health payment rate of -4.067%.
Aside from Enhabit’s focus on home health payment cut, payer innovation in MA continues to be a significant priority for the company. Jacobsmeyer credits its strategy in this area, as well as improved utilization of clinical resources, for the company’s 6.4% growth in total admissions.
“Our payer innovation strategy continues to succeed with our field team successfully shifting admissions out of historically lower paying contracts to better paying contracts that recognize our better way to care,” Jacobsmeyer said. “In quarter one of 2023, only 6% of non-Medicare visits were in payer innovation contracts. That rate grew to 43% in quarter two 2024. This shift into payer innovation contracts is driving an increase in non-Medicare revenue per visit, and equally as important, demonstrates our commitment to relationships with payers who understand the value of our care.”
Jacobsmeyer noted that the fastest way to get the majority of Enhabit’s non-Medicare business to the payer innovation contracts will be to continue to focus on referrals within the payer innovation contracts, negotiate improved rates with non-payer innovation contracts and to terminate lower reimbursing contracts when necessary.
With this in mind, Jacobsmeyer revealed that Enhabit has recently presented UnitedHealthcare with a termination notice.
“After over nine months of unsuccessful negotiations with UnitedHealthcare, we submitted our termination notice on August 1,” she said. “We will dedicate our clinical resources to fee-for-service Medicare patients, and those that are members of the 68 favorable contracts. We remain committed to providing our strong quality of care to United Healthcare members, if at some point they decide to contract with acceptable rates.”
Given that Enhabit has 68 agreements, including two national agreements, the company feels confident in its ability to replace this census, according Jacobsmeyer.
During the call, Jacobsmeyer also addressed Crissy Carlisle moving on from her role as Enhabit’s CFO.
“We are grateful for Crissy’s important contributions to Enhabit,” she said. “Since our spin-off from Encompass, I’ve enjoyed working side by side with her and witnessed firsthand her passion for Enhabit’s mission and her deep commitment to all our stakeholders. She has played a large role in helping the company achieve stability across the business and position our organization for growth. Most importantly, Crissy has been an incredible partner and true friend, and I look forward to her continued leadership, as we search for her successor.”
In Q2, Enhabit’s net service revenues were $260.6 million, a 0.6 % decrease compared to the same period last year.
Home health revenue saw a 12.7 % year-over-year decrease. The company’s home health revenue checked in at $121.7 million, compared to $139.4 million in Q2 2023.
Companies featured in this article:
