Mental and physical health are vital components of overall wellbeing and can influence each other in many ways. Yet, individuals with mental health conditions may encounter challenges in accessing adequate health care, which can impede their ability to manage their physical health. Home health care providers, however, are increasingly stepping in to bridge this gap.

In-home behavioral health care provides specialized support to promote mental wellness for individuals with a wide range of behavioral or psychiatric disorders. Those who qualify may be experiencing depression, anxiety, agoraphobia, difficulties associated with aging in place, struggles with substance use or problems coping with trauma. Mental health at-home support aims to improve these patients’ access to quality care.

“Untreated mental illness or behavioral health issues can significantly increase the risk of worsening mental conditions, the progression of chronic medical conditions, and the development of heart disease, stroke, dementia and a weakened immune response,” Barbara Andazola, vice president of clinical practice, strategy and programs at Amedisys (Nasdaq: AMED), told Home Health Care News.

Amedisys, headquartered in Baton Rouge, Louisiana, provides home health care, hospice, palliative and high-acuity care in 38 states.

“Most adult patients receiving home health services have a chronic or life-altering illness that can affect their mental wellness, which is crucial for how they think, feel, cope, make health-related decisions and determine how they will participate in their care,” Andazola continued. “Providing person-centered care and achieving quality clinical outcomes is impossible without addressing patients’ mental wellness needs, especially in home health, where clinicians directly observe the impact of mental and physical health on a patient.”

Many home health providers see behavioral health as a natural extension of their mission to help seniors successfully age in place.

At the same time, as value-based care measures become more prominent, making sure seniors are as mentally fit as possible also becomes more important from a business perspective.

“Behavioral health care is a crucial offering for home health providers because it allows for continuity of care across lifespan and settings, especially for individuals with dual diagnoses or developmental disabilities,” Dallas Star, regional director for Bayada Home Health Care, told HHCN. “Home health providers can leverage their expertise in home-based care to deliver specialized behavioral health therapies such as applied behavioral analysis (ABA) in the comfort of the client’s home. This personalized approach can help clients generalize skills and improve the overall quality of life.”

Bayada provides home health, home care and hospice services in 23 states, as well as in Canada, Germany, India, Ireland, New Zealand, South Korea and the U.K.

Psychiatric registered nurses (RNs) usually provide services for this patient population, sometimes with the aid of a licensed clinical social worker.

Those with Medicaid or a limited income may qualify for in-home behavioral health care at no cost. Most providers will work with clients to seek approval and evaluate needs to determine coverage available through insurance providers.

To initiate services, clients must speak with their physician or mental health professional who can provide a referral and work with the home health care provider to develop a personalized care plan. The duration of care depends on individual needs and goals.

Psychiatric nurses conduct an initial assessment and collaborate with the physician to develop an individualized care plan. The nursing services outlined in the care plan typically include evaluating, teaching and administering medications; managing situational crises; conducting self-harm assessments; teaching self-care and promoting mental and physical wellbeing; providing supportive counseling and delivering psychotherapeutic interventions such as education on disease processes, symptom management, safety, coping skills and problem-solving.

If a patient needs additional services or a different level of care, home health clinicians, with the approval of the patient’s physician, will coordinate with local community resources to ensure the patient receives the necessary services to remain safely at home. If this is not feasible, they will arrange to transfer care to an appropriate outpatient or inpatient facility.

“Similar to patients receiving other types of in-home services, those receiving behavioral health care are satisfied with their outcomes and appreciate the ability to receive care in the comfort and safety of their own homes,” Andazola said.

States mobilize crisis intervention teams to further address access to care

The Centers for Medicare & Medicaid Services (CMS) recently approved New Hampshire’s Medicaid State Plan Amendment for community-based mobile crisis intervention teams to provide services for people experiencing a mental health or substance use disorder crisis.

New Hampshire can now connect Medicaid-eligible individuals in crisis to a behavioral health provider 24 hours a day, 365 days a year. This approval marks 20 states and the District of Columbia that have expanded access to community-based mental health and substance use services under a new Medicaid option created by the Biden-Harris American Rescue Plan.

Mobile crisis intervention teams provides screening and evaluation; stabilization and de-escalation; and coordination with and referrals to health, social and other services, as needed. This helps states better integrate behavioral health services into their Medicaid programs.

Providing fast, appropriate care to someone in crisis may reduce the need for costly inpatient services, and this new option will help states expand access to behavioral health professionals as the initial contact for someone in crisis. New Hampshire can now receive Medicaid funding for mobile crisis response crisis planning, directly connecting people to specialized services, referring ongoing supports, and follow-up check-ins for individuals experiencing a mental health or substance use disorder crisis.

Though home health providers often have behavioral health capabilities – and sometimes even specific service lines for that care – there are still barriers to implementation.

“There is a clear need for ongoing behavioral health services as a standard offering for home health patients,” Andazola said. “However, the shortage of psychiatric-trained RNs and the specific experience requirements set by Medicare for reimbursement limit the expansion of these services. The Medicare home health benefit excludes occupational therapy (OT) as a qualifying clinician discipline. Despite OTs being highly skilled and capable of addressing functional limitations often experienced by behavioral health patients due to mental illness or cognitive deficits, they can only provide these services if the patient’s condition also requires skilled nursing physical or speech therapy. Until CMS addresses these and other requirements, expanding behavioral health services for home health patients will remain limited.”

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The home-based care staffing environment will always be a challenge for providers, but things look far better now than they did two years ago in the wake of the pandemic. However, one area that remains a lingering problem for providers is nurses, and specifically nurses who are leveraging a worker shortage to maximize earning power. 

A confluence of factors made recruiting and retaining home-based care workers from 2020 to the beginning of 2023 a major headache.

Increased government aid kept a large amount of workers on the sidelines, for extended periods of time. Meanwhile, many clinical professionals either retired or exited the industry after being burnt out by pandemic-related pressure.

Most of that has abated, but home health providers have told me that one issue definitively remains, and that’s bringing on – and hanging onto – nurses.

“If I had 200 nurses show up in my parking lot, I would hire them all without interviewing them,” Bill English, president and CEO of Accurate Home Care, told me in jest at the Continuum conference last year.

English’s joke was layered with some truth, however. Home health providers are desperate for nurses, and affordable ones. Without them, it’s tough to grow – or in some cases, to even survive.

In May of 2023, Adam Holton – then the chief people officer at Amedisys (Nasdaq: AMED) – told me that nurses jumping ship to collect sign-on bonuses was one of the company’s gravest concerns.

He and many other leaders hoped that particular issue would subside as the public health emergency was put further into the rearview, but recent conversations I’ve had suggest that it hasn’t.

In this week’s exclusive, members-only HHCN+ Update, I take a closer look at one of the most pressing issues facing the home health industry, which is a widespread inability to sustainably hang onto a vital workforce.

Home health care’s nursing problem

In May 2023, when I chatted with Holton, Amedisys had some of the best data on home-based care workers in the industry. Its applicant tracking system, specifically, was one of the company tools he was touting.

And that’s also why he was so sure of this problem with home health nurses, or nurses in general.

“When there’s a severe shortage, you expect some of this,” Holton said. “But there’s ample evidence that there is still a contingent of nurses who are really taking advantage of going from one sign-on bonus to another.”

Jeff Knapp, the chief people officer at Bayada, was also a part of that conversation. He agreed, and called Bayada’s nursing woes not a sourcing issue, but a retention issue.

For certain, there are ways to keep the less financially inclined nurses onboard. Those include good company culture, solid training, proper recognition, bonuses and, in general, competitive compensation.

But the average home health provider doesn’t have time to waste and money to blow. And when they are hiring nurses who then turn around and leave in short order, that amounts to a significant financial loss. The recruiting and training costs add up, with little return on investment.

In April 2022, an analysis in Health Affairs showed that the total supply of registered nurses decreased by more than 100,000 from 2020 to 2021, which was the largest decrease in supply in the last 40 years.

Another analysis, published by the Health Resources and Services Administration in November 2022, projected a U.S. shortage of close to 80,000 nurses in 2025, a problem that’s expected to continue – and even exacerbate – throughout the decade.

Specifically within home health care, a study published in the National Library of Medicine in 2021 found over 30% of full-time registered nurses and about 25% of licensed practical nurses left their position in a large home health care agency “over the course of a year.”

To make matters worse, health systems – which compete with home health agencies for nurses – often have more financial resources. At the same time, skilled nursing facilities (SNFs) are soon to be subject to a minimum staffing mandate, which could also increase competition over a small pool of nurses.

And the issue Holton brought to my attention nearly a year and a half ago hasn’t gone away.

For instance, in Care Advantage’s case, nurses are actually declining sign-on bonuses that may tie them to the company for a longer period of time. They’re doing that, in many cases, so they can eventually jump ship for other offers.

“All the big companies are paying high retention bonuses and sign-on bonuses,” Joe Navarro, the chief people officer at Care Advantage, told me this week during Home Health Care News’ Staffing Summit. “It’s to the point that, when I’m interviewing and hiring nurses, when I offer a sign-on bonus, they say they don’t need one. Because they want to be able to jump three months from now, four months from now, for better compensation.”

For large home health providers, that’s an issue. For smaller providers, it’s hard to even enter the competition.

Care Advantage has a large regional presence. Still, nurses jumping ship has become one of its biggest challenges.

“It’s very hard to attract and retain nurses at this point,” Navarro said. “And I think that’s one of the biggest challenges that there is in the industry.”

A costly turnover problem is also magnified in light of the current payment environment in home health care.

It costs far more now to hire and retain a nurse, but all the while, the Centers for Medicare & Medicaid Services (CMS) is reducing home health payment. The agency has cut core payments the past two years, and proposed a third straight cut for 2025.

On the other side of payment, Medicare Advantage (MA) plans are often paying rates for home health care that fall below the cost of care.

Navarro suggested one solution, which was to ensure nurses fall in love with the company culture shortly after joining.

Home health providers could also employ strategies to get a better sense of which nurses are more likely to stay for the long haul.

Having a nurse on staff is better than not having him or her on staff. But if that nurse is set to leave fewer than 90 days in, the economics on that hire could turn upside down.

The post The Home Health Nursing Problem That Isn’t Going Away appeared first on Home Health Care News.

OHA’s Health Care Market Oversight (HCMO) program reviews health care business deals to ensure they do not harm the state’s citizens or communities. In July, both UnitedHealth Group and Amedisys submitted responses to the OHA’s request for information. The authority is still seeking public comments on this matter.

In addition to the issue in Oregon, the deal has faced scrutiny from federal antitrust regulators, including the U.S. Department of Justice (DOJ).

Amedisys and UnitedHealth agreed to sell certain locations to Dallas-based VitalCaring Group, likely to address those antitrust concerns. That deal is contingent on the UnitedHealth Group-Amedisys deal closing, however.

“On an antitrust perspective, a number of states have adopted enhanced transaction notice requirements,” Les Levinson, partner and co-chair of the Transactional Health Law Group at Robinson+Cole, said during a recent Home Health Care News webinar. “There is a heightened interest in agencies being subject to a higher regulatory review. I think it’s something we have to pay attention to.”

UnitedHealth Group first agreed to purchase Amedisys – one of the largest home health providers in the country – in June 2023 for $3.3 billion.

According to comments published on the OHA website, the deal is not well-received by some groups in Oregon.

Mid Valley Health Care Advocates, based in Corvallis, Oregon, urged the OHA to deny the acquisition application, for instance.

“We are concerned that [UnitedHealth] as an insurer, and through Optum as a clinical provider and potentially as a home health and hospice provider, have the incentive and the ability to unfairly disadvantage competing providers and drive them from the market, reducing consumer choice,” the group said in a statement.

Another comment by the Oregon Nurses Association (ONA) read, “[UnitedHealth’s] track record of driving up profit margins at the expense of patients is not in alignment with Oregon values. Oregonians deserve high-quality, affordable health services; we are concerned that [UnitedHealth] will fail to provide that care if doing so interferes with their profitability. ONA urges OHA to reject the acquisition of Amedisys.”

With all that said, it is possible that a DOJ clearance of the deal could ultimately influence OHA’s decision, and move up the timeline to closure.

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The company joins nearly 400 participants in developing nationwide dementia care programs (DCPs). These programs intend to enhance care coordination and improve access to services and support.

Contessa Health has provided comprehensive in-home care since 2015. The company is based in Nashville, Tennessee, and partners with 11 health systems and multiple health plans, serving patients in nine states.

“CMS is excited to partner with Contessa under the GUIDE Model,” CMS Administrator Chiquita Brooks-LaSure said in a press release. “GUIDE is a new approach to how Medicare will pay for the care of people living with dementia. GUIDE participants are envisioning new ways to support not only people living with dementia but also to reduce strain on the people who care for them so that more Americans can remain in their homes and communities, rather than in institutions.”

The GUIDE Model, launched on July 1, tests a new payment approach for critical supportive services to improve the quality of life for individuals with dementia. These services include comprehensive, person-centered assessments and care plans, care coordination, 24/7 access to an interdisciplinary care team member or helpline and specific respite services to support caregivers.

“Our team of nurse practitioners, nurses and social workers have tremendous experience in helping patients and caregivers navigate the complex world of health care,” Gavin Baumgardner, Contessa’s Vice President and National Medical Director of Palliative Care at Home, said in a statement. “Through the GUIDE Model, we can apply this clinical model for dementia patients and their caregivers to allow this vulnerable population to live at home longer and achieve a better quality of life.”

Contessa’s involvement in the GUIDE Model will assist individuals with dementia and their caregivers in accessing education and support. This includes training programs focused on best practices for caring for a loved one with dementia.

Respite services are being evaluated under the GUIDE Model to determine their impact on helping caregivers continue to care for their loved ones at home, potentially delaying or preventing the need for facility-based care.

GUIDE participants represent a wide range of health care providers, including large academic centers, small group practices, community-based organizations, health systems, hospice agencies and other practices.

The model delivers on the Biden Administration’s Executive Order on increasing access to high-quality care and supporting caregivers and aligns with the national plan to address Alzheimer’s disease. 

Amedisys acquired Contessa Health in 2021 for $250 million. Since then, the latter has been a major focus of the former’s. Amedisys’ high-acuity care revenue – driven by Contessa Health – has steadily increased, quarter by quarter.

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There are certain headwinds affecting all home-based care providers right now, whether it be in payment, staffing or otherwise. Amid those challenges, the largest companies are all taking slightly different approaches to growth.

Enhabit Inc. (NYSE: EHAB), for instance, grabbed the attention of home health providers everywhere last week when it announced that it had terminated its contract with UnitedHealth Group’s (NYSE: UNH) UnitedHealthcare. That move fell in line with its overarching “payer innovation” strategy.

Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) is also focusing on its “preferred-payer” strategy, which includes drawing a hard line on rates – as Enhabit is doing – but also advocating for proper reimbursement from states in home- and community-based services (HCBS).

Leaders from Amedisys Inc. (Nasdaq: AMED) have been quiet over the last year, given the pending UnitedHealth Group acquisition. But, when it comes to its payer strategy, the company’s numbers tell a story worth paying attention to.

Elsewhere, Addus Homecare Corp. (Nasdaq: ADUS) is taking advantage of the headwinds. High interest rates and payment uncertainty across home-based care has led to a slow M&A market, allowing the company to pounce on acquisition targets with little competition.

The Pennant Group (Nasdaq: PNTG) has done the same.

All of the aforementioned companies’ strategies differ to some extent, and yet all are in place to achieve growth during a somewhat turbulent time for home-based care.

What’s behind those strategies is the topic of this week’s exclusive, members-only HHCN+ Update.

Finding the right payers

Aveanna and Enhabit are both trying to turn around their businesses. Each saw their share price tumble after going public, and each has addressed that issue – at least in part – by revamping their payer strategies.

Enhabit’s payer innovation strategy has been well documented, and I covered its decision to walk away from UnitedHealthcare in last week’s HHCN+ Update.

“After over nine months of unsuccessful negotiations with UnitedHealthcare, we submitted our termination notice on August 1,” Enhabit CEO Barb Jacobsmeyer said last week. “We will dedicate our clinical resources to fee-for-service Medicare patients, and those members of the 68 favorable contracts. We remain committed to providing our strong quality of care to UnitedHealthcare members, if at some point they decide to contract with acceptable rates.”

Similar to Enhabit, Aveanna is taking back its most vital resource: frontline workers.

“By focusing our clinical clinical capacity on our preferred payers, we achieve solid year-to-year growth in revenue and adjusted EBITDA,” Aveanna CEO Jeff Shaner said on the company’s second-quarter earnings call. “We also experienced improvement in our caregiver hiring and retention trends by aligning our efforts to those payers willing to engage with us on enhanced reimbursement rates and value-based agreements. While we continue to operate in a challenging labor and inflation environment, our preferred payer strategy allows us to return to a more normalized growth rate in our business segments.”

Aveanna posted solid year-over-year growth in all three of its segments – private-duty services, home health and hospice, and medical solutions – in the second quarter.

Enhabit has touted its 68 “favorable” non-Medicare agreements. Aveanna, too, is taking stock of the payers and states that are willing to pay it an adequate rate for home-based care services.

Aveanna said that no single payer makes up more than 10% of its business, which lends itself to a healthy business. At the same time, that means work is cut out for the company when it comes to renegotiating higher rates for services.

As seen above, Aveanna is set to triple and nearly triple its preferred payers and value-based care arrangements, respectively, by the end of 2024.

Traditionally, one concern in home-based care has been that at least one provider will be willing to accept substandard rates, making negotiations for the rest of providers tougher.

Now, though, the larger companies are leading by example.

“As we continue to grow, we are accelerating our preferred payer strategy and medical solutions by aligning our capacity with those payers that value our services and appropriately reimburse us for the care we provide,” Aveanna CFO Matt Buckhalter said on the call. “We continue to fight through a difficult labor environment while keeping our patients’ care at the center of everything we do. It is clear to us that shifting caregiver capacity to those preferred payers who value our partnership is a path forward.”

Amedisys is likely to be joining a payer itself by year end. But it has clearly been focused on winning better MA business over the last couple of years. In the second quarter, its non-Medicare home health revenue grew by 24% year over year.

Another study published this week suggested that MA members utilize home health care less than their traditional Medicare counterparts. While there’s likely a lot of reasons for that, it’s probably not a good long-term strategy for MA plans to cheap out on home health care, an essential and less costly service.

‘Bold’ M&A

One of the other most enlightening admissions of this past earnings season came from Addus, which suggested its recent M&A activity was partly made possible by less competition – particularly of the private equity variety.

Last year, Addus acquired Tennessee Quality Care for $106 million, enhancing its value-based care capabilities in the state. This year, it agreed to acquire Gentiva’s personal care assets for $350 million, allowing it to enter multiple new states.

Over the past two to three years, M&A has reached historical lows in the home-based care space. Activity across home health care, home care and hospice has fallen off a cliff since there was the flurry of activity in 2020 and 2021.

“Realistically, over the last 12 to 18 months, we’ve not seen a lot of competition out there,” Addus CEO Dirk Allison said on the company’s second-quarter earnings call. “There’s been the occasional smaller strategic player that’s bought a few deals on a localized basis. From a PE standpoint, it’s really been very slow as far as competition for the last bit. Now, obviously, if rates come down in September, as everybody’s expecting, there’ll be a point where PE will come back in and that’s fine. It’s been a market in which up until the last year or so, we’ve always operated with competition from those folks.”

The Pennant Group (Nasdaq: PNTG) has joined Addus in bucking the downward M&A trend. It has executed a slew of transactions over the past couple of years, including a large deal for Signature Healthcare assets in its current footprint, as well as a deal that will place it on the East Coast for the first time.

“This period of expansion provides insight into our potential as a provider of choice in our local communities, a best-in-class operator across our industries and a disciplined – yet bold – growth company with the sophistication and adaptability to become a key solution in the health care continuum,” Pennant Group CEO Brent Guerisoli said on the company’s second-quarter earnings call. “Since the beginning of the year, we have entered into the Muir Home Health joint venture; closed an additional two home health and two hospice transactions; initiated a management agreement with Hartford HealthCare; announced the largest acquisition in our history with the Signature transaction; and completed three senior living deals.”

Most of the largest home-based care providers recognize the need for two things in this market: better contracts with all managed care partners, and scale that will allow them to sustain success in the face of stroke-of-the-pen risk.

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Last year, the company’s medical professionals achieved 2.5 million home visits through Medicare Advantage (MA).

“As a direct result, our clinicians identified 300,000 seniors with emergent health needs that may otherwise have gone undiagnosed,” UnitedHealth Group CEO Andrew Witty said Tuesday during the company’s second-quarter earnings call. “They connected more than 500,000 seniors to essential resources to help them with unaddressed needs such as food insecurity, medication, affordability, transportation and financial support. They also identified and helped close more than 3 million gaps in care that made a real difference in people’s lives.”

Witty added that within 90 days of a home visit, 75% of patients receive follow up in a clinical setting.

Plus, UnitedHealth Group found that MA patients with chronic conditions, who are receiving these home visits, have more stable health outcomes. They spend less time in the emergency room and other hospital settings than fee-for-service patients, according to Witty.

“The bottom line — our home visit programs help patients live healthier lives, and save taxpayers money,” he said. “It is only [MA] that makes programs and results like this possible.”

In-home health evaluations are a differentiator for MA plans. They can help plans recognize chronic conditions and keep members out of the hospital, but they also – at times – allow MA plans to boost profits.

During the call, UnitedHealth Group’s leadership team also commented on the Change Healthcare cyberattack again, which occurred at the start of the year. Change Healthcare is a U.S. billing and payment system, and a subsidiary of UnitedHealth Group.

“Our focus has centered on the patients, care providers and customers who rely on us to keep the health system running,” John Rex, president and CFO of UnitedHealth Group, said. “Payment and claims flows for most care providers are back to normal, but we know that is not the case for some. We continue to work with those who are not there yet. UnitedHealth Group has provided more than $9 billion in loans, and advanced payments to help providers mitigate the impact of the attack, all at no cost to them.”

Rex noted the Change Healthcare cyberattack had an impact on UnitedHealth Group’s results.

“This largely encompasses the loss of revenues, combined with the cost of keeping these capabilities fully ready to serve,” he said. “Notably, these effects are not excluded from adjusted earnings.”

For the second quarter of 2024, UnitedHealth Group brought in revenues of $98.9 billion, a nearly $6 billion increase over the prior year period. 

Optum — UnitedHealth Group’s health care services arm — has Q2 revenues of $62.9 billion, which grew by over $6 billion compared to the prior year. This increase was led by Optum Rx and Optum Health.

UnitedHealth Group did not comment on the ongoing Amedisys acquisition. But Amedisys recently agreed to divest locations to VitalCaring, which could clear the way for deal closure.

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The deal will only come to fruition if the UnitedHealth Group-Amedisys deal goes through. But there is speculation that UnitedHealth Group and Amedisys worked with the Department of Justice (DOJ) on the divestment locations.

“While it’s still difficult to predict how the DOJ acts on the pending AMED sale, the divestiture agreement helps increase the likelihood of the AMED deal closing,” an analyst note from Jefferies read. “While we recognize that scrutiny of UNH’s deals is high and that the DOJ could still move to sue to block its acquisition of AMED, our belief is that the composition of the portfolio of assets that AMED/UNH are selling to VitalCaring was determined through multiple conversations with the DOJ over the last few months. For this reason, we believe that the divestiture agreement announced on Friday, technically, addresses anti-trust concerns, which should meaningfully increase the likelihood of the AMED deal closing in the next few months.”

UnitedHealth Group acquired LHC Group – one of the largest home health providers in the country – last February for $5.4 billion. A few months later, it agreed to acquire Amedisys for $3.3 billion.

Combining LHC Group and Amedisys’ footprints under Optum – UnitedHealth Group’s provider arm – raised concerns from antitrust regulators. That led to the divestment package that is now materializing. 

A location count related to the divestment has not yet been disclosed, but initial reports suggested that Amedisys was prepared to offload over 100 locations to the buyer.

If VitalCaring were to gain 100 or more locations from Amedisys, that would turn it into one of the largest home health providers in the country. Currently, the company has about 65 locations, mostly in the Southeastern U.S.

The Amedisys deal would more than double VitalCaring’s current footprint, also expanding it further across the U.S.

With 150+ locations, VitalCaring will supersede the location total of some of the larger, private home health providers. The deal would put it in the ballpark of others like Compassus, Elara Caring and AccentCare.

Backed by The Vistria Group and Nautic Partners, VitalCaring is led by April Anthony, the former CEO of Encompass Home Health & Hospice. Encompass Home Health & Hospice eventually spun off of Encompass Health (NYSE: EHC), becoming its own public entity – Enhabit Inc. (NYSE: EHAB). Anthony left the company before its spinoff.

When the Dallas-based VitalCaring first launched a couple of years ago, it was a smaller, regional provider. Anthony told Home Health Care News that, after establishing a culture, the goal was to gain more scale.

She also mentioned a void she saw in the home health market, one that she felt she and VitalCaring could step into reasonably soon.

“If you think about five years ago, you had all these founder-owned, founder-ran businesses,” Anthony said last September. “The people who were around the table leading home health businesses were lifers. They were people who were passionate about home health care. Now, that’s not necessarily [the case]. There’s this void in the market that I’m super excited about stepping into. We have the opportunity to bring the heart back to home health care.”

Anthony, if the deal closes, will again be at the helm of one of the largest home health companies in the country. It will also help with operational struggles like negotiating with Medicare Advantage (MA) plans.

The deal is expected to close at some point before year end.

Luke James – the president of VitalCaring, and also an Encompass veteran – said at Home Health Care News’ Capital + Strategy conference that he thought now was actually a good time to grow as a home health company.

“If you have a long-term vision, and your sponsors aren’t looking to exit tomorrow, then you’ve got the patience to be able to buy when it’s tough and be really well positioned when they’re looking to exit,” James said.

A VitalCaring spokesperson told HHCN that the company could not provide specific details on a pending transaction, but did offer that “this represents our ongoing commitment to grow VitalCaring in pursuit of our mission to transform lives and foster hope through genuine caring to patients nationwide.”

The post What An Amedisys-VitalCaring Deal Would Mean For Each Company appeared first on Home Health Care News.

The divestiture was a way for Amedisys to avoid further antitrust concerns from regulators prior to it joining UnitedHealth Group (NYSE: UNH).

UnitedHealth Group’s Optum agreed to purchase Amedisys last June for a purchase price of $3.3 billion. Optum already owns LHC Group, another one of the largest home health companies in the country.

The Baton Rouge, Louisiana-based Amedisys has 521 care centers in 37 states and the District of Columbia. It offers home health, hospice, palliative and home-based high-acuity care.

In May, a report surfaced that UnitedHealth Group and Amedisys were working with regulators on a divestment package over “over 100 locations.”

A short time after, a “private equity-backed” buyer for those locations emerged. Home Health Care News reported that buyer was VitalCaring, the Dallas-based home health and hospice company led by April Anthony. VitalCaring is backed by The Vistria Group and Nautic Partners.

VitalCaring then reportedly backed away from the deal, due to disagreements over the worth of those locations once they left the Amedisys network, sources told HHCN.

HHCN also reported at the time that it was likely both parties would come back to the table. VitalCaring is one of the few growing home health providers with enough capital backing to pull off an acquisition of this magnitude.

Now, the deal is agreed upon between the two parties, though details are minimal. A purchase price was not listed in Amedisys’ 8-K filing, nor was the number of locations.

According to the financial filing, the divestment agreement being finalized is dependent on the UnitedHealth Group deal going through.

“Consummation of the Divestiture is contingent on a number of conditions, including the consummation of the previously announced merger transaction (the “Merger Transaction”) contemplated under the Agreement and Plan of Merger, dated June 26, 2023 (the “Merger Agreement”), by and among UnitedHealth Group, Aurora Holdings Merger Sub Inc., a wholly owned subsidiary of UnitedHealth Group (“Merger Sub”), and Amedisys, pursuant to which Merger Sub will merge with and into Amedisys (the “Merger”) upon the terms and subject to the conditions set forth in the Merger Agreement, with Amedisys surviving the Merger as a wholly owned subsidiary of UnitedHealth Group,” the filing states.

The transaction is expected to close in the second half of 2024.

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The Centers for Medicare & Medicaid Services’ (CMS) proposed home health payment rule, released Wednesday, included significant cuts for the third straight year. Those cuts, among other proposed changes, raise questions over the stability of the industry in the coming years.

It has providers asking themselves and others the question: “Why us?”

For an industry that demonstrably saves money for the larger health care ecosystem, such harsh and continued cuts seem to be contradictory, home health stakeholders believe.

“These cuts are nothing short of draconian,” Stacey Smith, the vice president of public policy at AccentCare, said Wednesday.

On top of those cuts is the threat of CMS clawbacks for what the agency believes to be overpayments to home health agencies over the last five years. That clawback number has risen to $4.55 billion in total – more than $966 million than CMS previously estimated. And it will keep growing until further, temporary cuts are implemented.

CMS has expressed that it doesn’t want to put multiple cuts – of the permanent and temporary variety – on top of each other. But some providers see more cuts, for more years, that will keep them in payment purgatory. They would rather rip the Band-Aid off.

“CMS is not proposing the implementation of temporary adjustments, now estimated at a truly bewildering $4.5 billion,” Stephens wrote in an analyst’s note yesterday.

“Bewildering” and “draconian” feel like two descriptors of the 2025 proposed rule that most providers and advocates would agree with.

In this week’s exclusive, members-only HHCN+ Update, I’ll dive deeper into the cuts, but also consider a few other noteworthy proposals included in the rule, including changes to the Home Health Value-Based Purchasing (HHVBP) model, the Conditions of Participation (CoPs) and more.

Predictably unsustainable

In 2022, CMS proposed a 4.2%, or $810 million, decrease to aggregate payments for 2023. It ultimately finalized a permanent behavioral adjustment cut to the Patient-Driven Groupings Model (PDGM), but also finalized a 0.7%, or $125 million, increase.

In 2023, CMS proposed a 2.2%, or $375 million, decrease to aggregate home health payments for 2024. It finalized a 0.8%, or $140 million, increase compared to 2023 aggregate payments, while again implementing permanent cuts.

Wednesday, it proposed a 1.7%, or $280 million, decrease to aggregate home health payments for 2025.

The final rule is expected in late October or November, but the jig is up. Providers believe CMS, to push its cost-cutting agenda, lessens the blow in the final rule to get provider and advocate heat off its back.

And with that, it’s time to evoke the Paul Kusserow quote that I revisit when proposed and final payment rules are released.

“My concern is the game that we play with CMS,” Kusserow – then the CEO of Amedisys Inc. (Nasdaq: AMED) – told me two winters ago. “It’s a long, exhausting game. They come up with a proposed significant cut. The whole industry gets all worked up about it and runs to Washington. I’ve done this, and everybody in our business has. We lobby, lobby lobby, they get a lot of pressure, and then they come back with something that is just mediocre. It’s not enough for us to get Congress all worked up about it to pass legislation. But it’s enough to keep us in purgatory. We have to get through this dribbling sense of inadequate reimbursement.”

While providers have become acutely aware of this game, it appears CMS will continue to play it.

In this game, though, CMS still slides in permanent cuts that will have long-lasting effects on the home health industry. And what’s most disheartening about that for providers is the fact that home health care is one of the only industries that is both future-facing and cost-saving.

“Home health care is a proven, efficient spend in that it reduces the total health care cost for the entire system,” Choice Health at Home CEO David Jackson told me. “It continues to be frustrating that we are looked at in a silo, and not seen for the significant value that we bring. … It’s frustrating for providers, who are seeing an increased difficulty in retaining and maintaining staffing levels that are sufficient to serve the public.”

Indeed, home health care does save health care systems and health care payers money. It’s why private payers want more home health services for their members, not less.

It’s also why HHVBP saved Medicare hundreds of millions during its demonstration period, and why it is expected to save Medicare billions more over the coming years. It’s important to note that the home health-focused HHVBP is among the few CMS Innovation Hub initiatives that has produced savings – a fact that recently led to its head, Elizabeth Fowler, having to testify in front of Congress.

During that hearing, Republican Chair of Energy and Commerce Cathy McMorris Rodgers (R-Wash.) said she has “a hard time believing any objective observer could look at the results thus far and describe CMMI as a success.”

What’s more, though more home health care is good for the overall system, Medicare fee-for-service cuts almost guarantee there will be less services to go around for an aging population moving forward. That’s particularly the case because of Medicare Advantage (MA) penetration, with MA plans already paying far less for services than traditional Medicare.

It is not CMS’ job – it has asserted – to consider MA payments for home health services. Because of that, an incomplete picture of home health agency profits are often painted by the Medicare Payment Advisory Commission (MedPAC) and others.

“MedPAC needs to be instructed to include all Medicare reimbursements and related costs rather than just Part A,” VitalCaring President Luke James previously told HHCN. “Part C — or Medicare Advantage — now represents more than half of the Medicare beneficiaries in our country. Home health providers didn’t ask for this reality, nor did they cause it. But the industry is reeling from the numerous negative implications this reality has caused.”

Instead, providers are banking on higher rates from MA plans, as well as tech investments to reduce costs on the back end. But there’s no guarantee those measures alone will be enough, particularly for the thousands of providers without scale.

“Mom-and-pop agencies are a necessity for the delivery of care in the United States,” Jackson said. “They serve smaller communities, niche communities. I’m always fascinated at what a nurse in rural East Texas or West Texas has been able to do, that a big company just never would have done. … That is something I think we need to foster in the system.”

What else is in the proposed rule

Every year, in addition to the estimated decrease or increase in base payment, there are many other elements of a proposed rule to consider.

The now-nationwide HHVBP model could change. CMS is accepting comments for consideration around future performance measure concepts. In the past, some providers argued that certain HHVBP measures were out of home health providers’ control. For instance, patients in extremely poor condition when received by home health agencies are sometimes unlikely to get better, no matter how exemplary the care they receive is.

In addition to that request for information, CMS is also considering how it could further embed health equity measures into HHVBP.

Jackson noted that cuts on their own have the chance to worsen health equity.

“Nurses are going to be magnetized to these more affluent markets,” Jackson said. “It’s going to hurt the ability to obtain talent in rural markets, in markets that have difficulty finding staff. That’s going to have a negative impact on health equity.”

That will likely be exacerbated by the minimum staffing level requirement in nursing homes, which will naturally make the competition for nurses more fierce in post-acute care.

CMS is also taking a greater look at home health access. In the past, MedPAC has viewed access based on how many agencies exist per U.S. county. But counties vary by size, as do home health agencies. Providers have argued that access is worse off than the agency-per-county metric would suggest.

“We are seeking public comments on factors that influence the services HHAs provide, the referral process, limitations on patients being able to obtain HHA service, such as rural location and availability of staff, plan of care development, and the HHA’s communication with patients’ ordering physicians and allowed practitioners,” the 250-page proposed rule read. “We ask the public for data, detailed analysis, academic studies, or any other information to support their comments that provide a direct link to patient health and safety.”

Outside of questions around initiation to care, CMS specifically wants to know the answer to this question: “What challenges, barriers, or other factors, such as workforce shortages, particularly in rural areas, impact rehabilitative therapists and nurses in meeting the needs of patients at the start of care and early in the plan of care?”

Of note is also that CMS seems to accept some industry data – for instance, regarding health equity – but not all. Last year, CMS scoffed at most of the data that the industry put forth around referral rejection rates and contemporary home health access.

CMS also proposed an “acceptance to service” policy, which it believes at least some home health agencies already have.

“This new standard would require the HHA to develop, implement, and maintain through an annual review a patient acceptance to service policy that addressed criteria related to the HHA’s capacity to provide patient care, including, but not limited to, anticipated needs of the referred prospective patient, case load and case mix of the HHA, staffing levels of the HHA, and competencies and skills of the HHA staff,” the proposal read. “In addition, we propose the HHA would have to make public accurate information about the services offered by the HHA and any limitations related to the types of specialty services, service duration and service frequency.”

The staffing-specific requirements could be the successor to the nursing homes’ minimum staffing level mandate. While it’s unlikely a similar mandate would come into home health care, given its one-to-one nature, a more stringent policy around staffing capabilities could come to fruition.

Potential mitigators

More lobbying efforts will follow this proposed rule. The Partnership for Quality Home Healthcare CEO Joanne Cunningham believes that this year being an election year will actually bode well for the industry.

Jackson said the same.

“In an election year, we need to be loud,” he said. “We need to be vocal.”

In the past, the industry has had no issue getting measures like The Preserving Access to Home Health Act introduced. The issue has been getting it to move after introductions in the House and Senate.

CMS may again reduce the cut by the time the rule is finalized. But it’s clear that the agency is not budging on its behavioral adjustment thesis.

Despite it being unlikely, Congressional action may be home health providers’ best bet in 2024.

The post ‘Draconian’ And ‘Bewildering’: Inside The 2025 Home Health Proposed Payment Rule appeared first on Home Health Care News.

As UnitedHealth Group (NYSE: UNH) and Amedisys (Nasdaq: AMED) work on a divestment strategy that will satisfy regulators, a lot hangs in the balance.

For one, UnitedHealth Group and Optum’s deal for the home health and hospice provider Amedisys is one of the largest deals in the industry’s history, only trailing Optum’s deal for Amedisys’ peer, LHC Group, last year. The former deal is worth $3.3 billion and still pending, while the other was worth $5.4 billion and is finalized.

Getting the deal done is important to both parties. UnitedHealth Group is banking on home-based health care for its value-based care strategy, but is under significant and widespread antitrust scrutiny. Amedisys, on the other hand, has a good deal in place – in this market – for its shareholders.

A Jefferies analyst note suggested that, if the deal were to fall through, Amedisys’ stock price would likely fall. The agreed-upon purchase price is $101 per share, but Jefferies sees that coming down to $74 per share without the deal getting done.

All the while, if Amedisys offloads 100-plus of its locations to avoid antitrust litigation, the buyer has the chance to bolster its footprint and capabilities considerably. A regional provider could become a nationwide one. A top-10 home health provider could become a top-5 provider.

With news last week that the divestment strategy has hit a snag, there’s still a lot of dominos yet to fall.

What dominos need to fall, and where they may fall, is the topic of this week’s exclusive, members-only HHCN+ Update.

Divestment dynamics

To put things into perspective, about 1% of the entire home health market could change hands in the Amedisys divestment.

There were 11,353 active home health agencies in 2022, according to the Research Institute for Home Care (RIHC). That number has likely slightly dwindled since, due to Medicare Advantage (MA) penetration and Medicare fee-for-service rate cuts.

In a fragmented home health industry, over 100 locations changing ownership is no small deal. If the Optum-Amedisys deal is completed, Optum will become the largest provider of home health care with just about 10% of the market underneath its belt.

The divestment will likely decrease Amedisys’ footprint by about 20%. Currently, the company has 522 locations across 37 states and the District of Columbia.

Initially, Amedisys had what appeared to be a perfect partner for the divestment: a private equity-backed home health provider looking to scale.

Capitol Forum reported last week, however, that the partner had walked away from the Amedisys deal. Based on information I gathered from industry sources, I later reported that partner was, in all likelihood, the April Anthony-led Vital Caring.

The Vistria Group and Nautic Partners each own one-third of VitalCaring, with Anthony owning the final third.

VitalCaring President Luke James said earlier this year at HHCN’s Capital + Strategy conference that he thought now – despite the headwinds – was a great time to scale in home health care.

“If you have a long-term vision, and your sponsors aren’t looking to exit tomorrow, then you’ve got the patience to be able to buy when it’s tough and be really well positioned when they’re looking to exit,” he said.

Whether the divestment partner was VitalCaring or another entity, the change of heart is interesting for a couple reasons. Given how long it appears talks persisted, for example, it seems likely that the interested parties hit a snag later down the line in talks. So why is that?

One source told me that the buyer may have wanted assurance that the Amedisys referral sources that exist today would exist post-acquisition. Or, if that assurance wasn’t there, that the parties would come to an agreement on a lower price.

There’s also a lot that goes into this significant of a carve-out deal. The buyer would need to have the right leadership in place to integrate seamlessly – or risk the “snake eating an elephant” analogy.

Of course, acquiring a large home health footprint could also infuse leadership talent into the buyer’s organization.

James also mentioned the need for more home health talent at VitalCaring earlier this year.

“We’re not at a point yet where we feel like we have all the talent we need,” he said. “When we’re looking at deals that have real go-getters within, talented people that have a seat at the table within the organization – that adds a lot of value.”

If the Amedisys-divestment buyer does come back to the table, it’s likely they’ll have some leverage.

As of right now, it’s a tough time to solicit offers for around 100 home health and hospice locations. Private equity money mostly remains on the sideline. Payers – like UnitedHealth Group and Humana Inc. (NYSE: HUM) – have antitrust concerns. There aren’t a ton of home health providers who fit the bill as potential suitors, for a variety of reasons.

The locations could be split up, but the Capitol Forum did suggest Amedisys is still looking for a single buyer.

And that’s why, in my view, VitalCaring would have been perfect.

The post What The Amedisys Divestment Snag Means For The Home Health Industry appeared first on Home Health Care News.