Amedisys Working on Reimbursement Pilots, ‘Hunting for a Nice Home Health Deal’

Home health and personal care services provider Amedisys Inc. (Nasdaq: AMED) is experimenting with a new model that better fits the Medicare Advantage-heavy environment of today.

The Baton Rouge, Louisiana-based Amedisys has started to pilot a new model that takes into account the case rate on a per admission basis, which will hopefully drive down business per episode in order to take in more Medicare Advantage (MA) patients across its home health segment.

Amedisys CEO Chris Gerard detailed how some of the company’s home health models differ from a reimbursement and risk-taking standpoint compared to a typical gain-sharing arrangement at this week’s UBS Global Healthcare conference.

“If you think about the models today with Medicare Advantage, it’s either on a per visit basis or an episodic basis,” Gerard said. “Most plans are trying to move to a per visit basis and then basically control utilization. That’s how they’re controlling their costs. That model is not really sustainable. It’s not going to drive our desire to take more of that business. So what we’re looking at is a new model that is on a per admission basis.”

Gerard said the new model will allow Amedisys to manage its own utilization, and, by driving down the length of stay for patients, the company will then drive down business costs per episode. It will likewise help with workforce capacity, he noted.

“This will unlock the capacity for us to take care of more patients, and then us actually redeploying that capacity to take in more Medicare Advantage patients,” he said.

Amedisys provides home health, hospice and personal care services in 38 states and Washington, D.C., with 21,000 employees. Overall, it has 548 care centers and cares for 445,000 patients a year. It additionally provides hospital-at-home level care via Contessa, which it acquired for $250 million last year.

Ideally, Gerard said, the fee-for-service model is the most attractive margin profile for Amedisys.

MA plans and home health care providers have a fragile relationship. Unless, of course, one has bought the other.

At the same time, Amedysis and other providers can’t ignore the MA plans that are playing a larger role in home-based care.

M&A plans

It’s been a few years since Amedisys has struck a deal at the scale of an AseraCare or Compassionate Care Hospice (CCH).

Scott Ginn, Amedisys’ vice president and CFO, said the reason for that is a combination of navigating a difficult M&A environment and the fact that it’s harder to source deals of that size.

“We’ve spent almost $700 million in acquisitions on the hospice side,” Ginn said. “We wanted to pause [and] make sure we integrate it. We did AseraCare in the middle of COVID, and now we want to see those ADCs start to return. It doesn’t mean we won’t look at hospice, but we’re probably one-and-half years behind where we thought we’d be, mainly because of COVID issues and around what’s happened with ADC. We’re still hunting for a nice home health deal – you’ve got to get through the diligence pieces.”

A staffing solution

Like all providers, Amedysis is trying to adapt to the new labor market and believes it’s found a solid solution when it comes to clinician help.

“We’ve been very clear for the last couple of years that having clinical capacity is going to be the biggest barrier for our success,” Gerard said. “It starts with our retention, our hiring and recruiting, and our ability to build our own kind of workforce. But at the end of the day, you still have to have some access to staffing on demand.”

That reasoning went into Amedisys’ $5 million investment into connectRN.

Historically, Amedisys has used contract staffing where a clinician will sign a 12-week commitment to work. However, the Omicron variant proved yet another obstacle and drove up the price point for those clinicians.

connectRN has helped Amedisys get clinician help in an on-demand fashion and doesn’t lock the company into long-term commitments that might be interrupted by COVID or other factors.

“This is more of a variable cost model for us,” Gerard said. “It allows us to flex when we have some challenges in our markets. … I think it’s going to help us create additional clinical capacity that we didn’t see access to before doing this investment.”

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