Enhabit Home Health and Hospice CEO Barb Jacobsmeyer has been going to the mat with insurers over patient access to home-based services with a pay-to-play approach.
With demand for home healthcare increasing and Medicare Advantage enrollment surpassing traditional Medicare, Enhabit adopted a strategy three years ago that guarantees patient access to home care services in exchange for Medicare Advantage payment rates that are at least 80% of what traditional fee-for-service Medicare pays. Jacobsmeyer said the company’s payer innovation team has negotiated 76 contracts with insurers that offer better Medicare Advantage reimbursements.
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Jacobsmeyer said the result is a win-win for Enhabit, insurers and Medicare Advantage enrollees. Dallas-based Enhabit is one of the nation’s largest home care companies, with 255 home health locations and 115 hospice locations across 34 states. Encompass Health, a facility-based rehabilitation company, spun off Enhabit as a separate company in July 2022.
Enhabit’s strategy has proven to be a gamble. Last August, the company cut off home care access for UnitedHealthcare Medicare Advantage members after the two companies reached an impasse during contract negotiations. Enhabit and UnitedHealthcare negotiated a new contract in December that went into effect Jan. 1, but Enhabit lost business from its largest payer for a few months.
Jacobsmeyer said in an interview staffing shortages and low fee-for-service Medicare rates are forcing home health providers to make tough business decisions, including prioritizing patients with better-paying health plans and closing poor performing branches. But despite the challenges, Jacobsmeyer said Enhabit is still opening new locations and could add new service lines. The interview has been edited for length and clarity.
Do providers have more leverage with insurers as demand for home-based care increases?
The plans are still in the driver's seat. But with more beneficiaries choosing Medicare Advantage, enrollees are having access issues. Insurers are hearing complaints from the acute care hospitals that they can’t get patients discharged. Patients are sitting in hospital beds because they can’t get a home health company to take them.
What we have said to insurers is if you want us to prioritize your patient, then you are going to have to pay me for the value. You are buying access and you have to be willing to pay for that access. I think the pendulum has swung a little bit in our favor. I think since half of all Medicare-eligible beneficiaries are in Medicare Advantage plans, insurers are feeling the pressure of being able to access good, quality home health providers.
Was it risky taking on UnitedHealthcare over pay rates last year?
It was a big risk. But because we had been successful getting so many other contracts, we were confident that we could replace it. We really felt that we had enough access with other members and other carriers to replace it. The problem was it put all of our team members into replacement mode, instead of growth mode. UnitedHealthcare is the largest insurer, so we were replacing a lot of business and we hated to have to do that.
When hospital discharge planners are discharging patients, a large number are with UnitedHealth. We had referral sources that reached out to those local market presidents with UHC and said they wanted to be able to use Enhabit. Between our referral sources and patients contacting them, we were able to negotiate what I would say is a fair rate.
Is it more advantageous negotiating Medicare Advantage contracts that pay per episode or per visit?
We always go in wanting episodic payment because we can use our clinical decision tools to decide what the right care plan is and the right number of visits. We take responsibility fully for quality outcomes.
When plans pay us per visit, then we’re kind of stuck following what they believe to be the correct number of visits, and many times that is not the right visit plan for the patient. Some patients need more visits and some need less. The per-visit model puts the onus much more on the plan for quality outcomes because there are times when a patient needs to be seen much more frequently than what the they would approve.
What are the challenges of operating in rural communities where Enhabit closed or consolidated some locations?
The challenge is that those locations are often more expensive to operate. If the closest therapy school is hundreds of miles away, it is really hard to recruit and you do tend to pay higher rates for the clinicians. Then, you have the windshield time to drive from patient to patient. In Dallas, a nurse can make several visits within three or four hours. That could take an entire day for someone in a rural market. When you aren’t getting Medicare rate increases to cover inflationary costs, you can tolerate it for year one and year two, but continued years of that is just impossible.
Are you looking to expand your footprint or service lines?
We have been expanding our footprint through our de novo strategy. We do a lot of work to make sure the market has a large enough 65 and older population and is a decent labor market. We are focused on opening 10 new locations a year. We are leaning more towards hospice and some home health.
We always keep our eye on what is happening from a regulatory and policy perspective. If things moved towards site-neutral payment or if CMS would pay for a skilled nursing-at-home type model, that is where the personal home care side would become really important to what we provide today. We take care of quite a few patients that historically would have been inside of a nursing home. So, I think personal care would be a complement to skilled nursing-at-home.
Are you deploying technology into homes?
We do virtual visits and we find that to be a nice complement to the services that we provide. We have piloted and we continue to try different technologies, like remote monitoring, but we continue to find it difficult for older patients to embrace some of the various technologies. Will we get there someday? Sure. There are companies that are constantly innovating and I think at some point we’ll find a technology we think is very useful. But today, we’ve yet to find anything that we think is a game-changer from an outcomes perspective.
