Home health providers are turning up the heat on Medicare Advantage plans over reimbursements and patient access.
Compassus, Aveanna Healthcare, Vital Caring Group and others said they want health insurers to pony up part of the 5.06% rate increase they will be getting next year from the Centers for Medicare and Medicaid Services or risk losing member access to home healthcare services. Providers said expectations of higher medical supply costs due to tariffs and rising labor costs are forcing them to bargain harder with health insurers for better rates to ensure that patients can transition quickly from the hospital to their home.
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“Enlightened MA plans appreciate the care and cost leverage that home health can create,” Compassus CEO Mike Asselta said in an email. The Brentwood, Tennessee-based-company operates home health locations across 32 states. “We’re optimistic that plans will put this rate increase to work enabling access to quality and timely care for the patients entrusted to them.”
Health insurers UnitedHealthcare, Aetna and Cigna did not respond to a request for comment on whether they planned to pass along a portion of the 5.06% rate increase to home health companies. A spokesperson for Humana said the company does not speculate on future negotiations with home health providers.
Over the last three years, home health companies have gotten annual fee-for-service Medicare rate increases of less than 1%, which they say don't keep pace with rising labor and transportation costs.
While low fee-for-service Medicare rates are a huge concern for home health providers, Medicare Advantage pay is an even bigger one. Home health providers said the private insurance plans pay anywhere from 25% to 50% less on average than traditional Medicare. More than half of people in Medicare are enrolled in Medicare Advantage plans.
Low Medicare Advantage rates will become even harder to swallow if tariffs make medical supplies more expensive, said Vital Caring Group President Luke James. The Dallas-based company offers home health and hospice services across Texas, Oklahoma, Louisiana, Mississippi, Alabama and Florida.
James said Vital Caring Group has approximately 120 contracts with health insurers and has already dropped some Medicare Advantage plans due to low rates. He said the company is prepared to walk away from others if insurers don’t narrow the gap between what they pay for home health services and what fee-for-service Medicare pays.
“Sometimes that is what it takes to get the payer to the negotiating table instead of just playing chicken,” James said. “There are payers that are paying us a 60% discount to [fee-for-service] Medicare and we’re kind of tired of losing a bunch of money every time we say yes to a referral. They refuse to negotiate. They force you into the situation to cancel.”
Playing hardball with insurers can work, but can also be risky. Last summer, Enhabit Home Health and Hospice cut off access to UnitedHealthcare Medicare Advantage members after the two companies could not come to terms during contract negotiations. Dallas-based Enhabit offers home-based care across 34 states. The home care company and the insurance giant negotiated a new contract in December that went into effect Jan. 1, but Enhabit lost the insurer's business for a few months.
Despite the risks, home health providers think the pendulum is swinging in their favor.
An aging population, a decrease in skilled nursing beds and increased patient preference for home-based care is ratcheting up demand for home healthcare. At the same time, there are fewer companies to provide the service than there were five years ago. Approximately 800 home health providers have gone out of business since 2020, according to industry trade group National Alliance for Care at Home. In rural states, such as Nebraska, two-thirds of the state’s counties have either no home health provider or only one, according to the Nebraska Home Care Association.
A dearth of home health providers and staff could be making it harder for patients to receive timely home health services following hospitalizations. An analysis of 2023 fee-for-service Medicare claims by healthcare analytics firm CareJourney by Arcadia found one-third of beneficiaries referred to home health after a hospital discharge did not receive care within seven days. Patients who don’t receive timely home healthcare are more at risk of rehospitalization or mortality, according to a study published last year in the American Journal of Managed Care.
Aveanna Healthcare CEO Jeff Shaner said he thinks Medicare Advantage companies will be open to negotiating better rates with home health companies in exchange for better patient access. The Atlanta-based company offers geriatric home health services in 15 states.
But Shaner also pointed out home health providers need data and scale to prove to insurers they can provide quality care on time and keep members from bouncing back to the hospital.
“Good things that happen to payers will ultimately flow down to providers, especially if you are smart in the way you partner with them,” he said.
Not every home health provider is as optimistic.
Reggie Ripple, vice president of home and community-based services for Hillcrest Health Services in Bellvue, Nebraska, doubts his organization will be able to squeeze more money from private insurers, even with the rate increase plans have coming.
"Historically I have personally found the process of getting the plans to engage directly with individual providers to be challenging at best," Ripple said in an email.
