Top Home Health Trends For 2024

In 2023, the decreasing influence of COVID-19 did not mitigate the overall operating pressures home health providers were forced to face. In the new year, there still remains plenty of opportunity, but much to work through to tap into that opportunity.

More proposed rate cuts to home health reimbursement are expected from the Centers for Medicare & Medicaid Services (CMS). All the while, Medicare Advantage (MA) penetration is likely to continue.

By midyear, three – or more – of the largest home health entities in the country could be owned by payers. That could impact the industry at large in a number of ways. Providers not owned by payers will still have to find better ways to work with them, whether that’s through higher-rate contracts or more value- and risk-based ones.

But the home is where care is headed. Longstanding providers stand to benefit from that, so long as they can get their ducks in a row operationally.

Below are all of the home health trends HHCN believes should be on providers’ radar in 2024, based on research, reporting and extensive industry knowledge.

Curious what we forecasted for last year? Revisit our 2023 predictions here.

HHCN’s home care trends predictions, published last week, can be revisited here.

The fee-for-service landscape of yesteryear will be no longer

For years, home health providers were able to rely on the sturdy support of traditional fee-for-service Medicare reimbursement. That will no longer be the case in 2024 – and beyond.

CMS, in a vacuum, provides a reasonable rate for home health services. If providers weren’t aware of that, the the Medicare Payment Advisory Commission (MedPAC) is happy to remind them. 

MA beneficiaries have been growing steadily for the past decade, but providers in certain markets were able to stave off poor rates. A healthy mix was achievable, with a heavy reliance on the fee-for-service dollar. 

But, in 2023, over 50% of Medicare beneficiaries were underneath an MA plan, according to the Kaiser Family Foundation. That number is expected to continue ticking up.

On the other end, CMS is seemingly hellbent on denying traditional Medicare rate increases in the future, despite inflationary pressures.

From a reimbursement perspective, the walls are caving in on home health providers from both sides.

“The trend in Medicare Advantage continues to just rapidly outpace preparation by the industry,” New Day Healthcare CEO Scott G. Herman told HHCN in December. “Unless you’re building something specifically for MA, the ability to hold the 50-plus percent of traditional Medicare episodic mix in home health – it’s really just gone.”

In 2024, with the fee-for-service model eroding, home health providers will have to invest in operational models that can withstand MA rates and stagnant traditional Medicare rates.

Risk- and value-based care represent an opportunity for providers to get closer to what they believe they’re owed, so long as they can find partners willing to enter into appropriate agreements with them.

“We’re focused on understanding exactly how those Medicare Advantage players work, building remote models that support them, that are driven with data and analytics,” Herman continued. “We need to sit down and understand how to work with patients longitudinally, how to do cross referrals internally, and then take the business that those players really need us to take in markets where they’re struggling with providers.”

It will become clear whether payers will be allies or foes in home health care 

UnitedHealth Group (NYSE: UNH) and Humana (Nasdaq: HUM) are two of the biggest health care companies in the country. They’re also both now heavily involved in home health care.

On UnitedHealth Group’s end, it owns LHC Group and is in the process of acquiring Amedisys Inc. (Nasdaq: AMED). Humana, of course, owns CenterWell Home Health, formerly Kindred at Home.

Legacy home health providers have mixed feelings about whether these companies being in the home health business will be a good or bad thing.

Some providers feel queasy about it, knowing that they’ve been at odds with these players before in MA negotiations. Others believe more eyes and more investment in home-based health care is always a good thing.

But advocacy efforts will offer a first glimpse at whether these players will be behind home health providers’ universal causes.

“We start processing all of this, thinking, ‘OK. Is this a good thing or a bad thing in the aggregate?’” National Association for Home Care & Hospice President William A. Dombi told HHCN last year. “And I think we start seeing some really positive elements to it. There may be a home care company who would disagree with that, for their own personal circumstances. I can respect that and understand it, but at the same time, how do we take the energy entering into this space and really turn it into something positive for everyone?”

CMS is likely to propose more rate cuts in June. When it does, it will become more clear whether the large payers are willing to fight alongside home health providers. Alternatively, it could show they’re more focused on MA policy, and view home health care as more of a side project.

More payers will lessen, remove prior-authorization requirements for home health services

Medicare Advantage penetration gives MA plans an inherent advantage. But more care shifting to the home, in part because of shifting patient preferences, gives home health providers an advantage in negotiations.

Home health referral rejection rates are at an all-time high, according to companies like WellSky that track such things.

Plans unable to work well with home health providers will lag behind. Their beneficiaries will need home health services as much as ever.

Outside of rates, providers have expressed prior authorization requirements as one of their top gripes with plans.

“The prior authorization process should be based upon the patient’s primary diagnosis and have a standard number of visit authorizations based upon evidence-based medicine,” Intrepid Healthcare CEO John Kunysz told HHCN in October. “Care delayed is care denied.”

In 2023, providers began to gain momentum in terms of lessened or removed prior authorization requirements. HHCN expects that momentum to continue in 2024. It makes sense for the providers and patients.

BCBS of Massachusetts removed prior authorization requirements for home care services last year, recognizing that patient care was being delayed.

“By removing prior authorization requirements for home care services, we’ll help hospitals to expedite discharges at a time when many are struggling with overcrowding,” BCBS of Massachusetts Chief Medical Officer Dr. Sandhya Rao told HHCN in November. “This change will also reduce delays for Blue Cross members ready to transition their care from hospital to home.”

Cigna (NYSE: CI) did, too. The company removed hundreds of prior authorization codes in 2023, and is in the process of doing the same for MA, specifically.

Expect ‘passive acquisitions’ and accelerated consolidation

Home health operators face a mountain of challenges, from the unrelenting labor crisis and skyrocketing demand, to the margin shrink tied to contracting fee-for-service rates. Simply put: The cost of doing business is higher than ever.

And that’s unlikely to change in 2024.

In light of that reality, HHCN anticipates further consolidation for the home health industry over the next 11 months. That consolidation will happen in the form of M&A activity, agency closures and “passive acquisitions,” or one provider agreeing to take on a distressed provider’s patient population.

There are signs that this accelerated consolidation has already started.

In August, St. Joseph’s Health revealed plans to close its home health care agency, citing economic challenges. Around the same time, a home health program in Alaska was forced to shut down “mainly due to federal regulations that make operating it challenging and inefficient.” A few months later, Boone Health announced it was closing its home care and hospice service lines.

On the M&A front, the fourth quarter of 2023 brought at least 13 home health-related transactions, according to data from M&A advisory firm Mertz Taggart. In terms of volume, that tied for the second-most deals since the end of 2021.

It’s important to underscore that consolidation alone isn’t HHCN’s prediction, as consolidation in the home health industry has been happening for years.

In fact, the home health industry has actually seen its number of active agencies decrease since at least 2014. According to data from the most recent Home Health Chartbook released by the Research Institute for Home Care (RIHC), there were 11,353 active home health agencies in 2022, 11,474 in 2021, 11,565 in 2020, and 11,569 in 2019.

HHCN’s forecast, more specifically, is that the pace of consolidation will speed up by a noticeable degree.

The public market will look different

Every new year brings new speculation in the home health space about which companies could go public and which publicly traded companies could change ownership.

In the years following the COVID-19 pandemic, many home-based care companies considered going public, but their tuned change when the economy took a downturn.

There are a few companies HHCN is keeping an eye on, starting with Enhabit Inc. (NYSE: EHAB).

The home health and hospice provider is possibly headed toward a sale. It’s not unrealistic to expect the company to end up in the hands of an already publicly traded company – that would be acquiring the company for strategic purposes – or a private equity firm. 

On the other side of things, BrightSpring Health Services has filed for an IPO and is eyeing a $3.1 billion valuation.

The home- and community-based services provider first planned to go public with a goal of raising $800 million in 2021. The company nixed that plan soon after, but is running it back.

Help at Home, another home- and community-based provider, is also reportedly gauging interest in a sale. The company, backed by The Vistria Group and Centerbridge Partners, has been rumored as a potential candidate for an IPO in the past.

Payer innovation teams will play an even greater role at their organizations

In a move to diversify payer sources and embrace value-based care, some of the largest home health companies in the industry have thrown their weight behind internal payer innovation teams.

In 2024, this will only intensify, as providers look to rely less on fee-for-services Medicare.

In this respect, companies like Enhabit, Bayada Home Health Care and VNS Health are already ahead of the pack.

As a result, Bayada has been able to increase the amount of managed care revenue tied to the company’s value-based contracts. VNS Health set its sights on taking on more risk, and has also achieved 68% managed care penetration in New York. Enhabit has negotiated agreements with 37 — and counting — MA and commercial payers.

Ultimately, providers that have put payer innovation front and center at their organizations believe that it has allowed their companies to operate more autonomously.

“It allows us not to be beholden to one individual payer, if we’re having a difficult negotiation,” Devin Woodley, vice president of managed care contracting and B2B sales at VNS Health, previously told Home Health Care News. “It also helps us on the referral side. One of the reasons why referral sources love us is because we’re contracting with, essentially, every major payer.”

More home health providers will incorporate mental health care

It’s been well established that seniors prefer to age in their home, and receive care there.

Concurrently, the demand for behavioral health services in the U.S. has continued to skyrocket in recent years.

This, naturally, opens the door for home health providers to reach a patient population whose behavioral health needs are often underserved.

Specifically, fewer than 50% of seniors with mental and/or substance use disorders receive treatment, according to the National Academy of Medicine.

Some providers have already stepped into this opportunity to deliver care to this population of older adults. Innovive Health — a Medford, Massachusetts-based home health company — has made offering care to Medicaid-eligible seniors with severe mental illnesses a priority.

“They’re a very challenging population to treat and manage,” CEO Joe McDonough previously told HHCN. “They’re often resistant to care. There’s a lot of social determinants, as far as having adequate housing, adequate food supply, adequate access to medications. This is a population that continually has challenges, as far as access to care.”

Due to Innovive’s care delivery model, the company has seen positive outcomes among its patient population.

“We’ve seen a market decrease in hospitalizations as well as ED utilizations in this population,” McDonough said. “This is because we provide intensive case management. We also ensure medication compliance, and coordinate with all providers to make sure that they have a treatment plan that assures the most optimal outcomes.”

Additional contributions from HHCN reporter Joyce Famakinwa, HHCN reporter Patrick Filbin and HHCN Managing Editor Bob Holly.