Low reimbursement rates continue to hamper Aveanna Healthcare Holdings Inc.’s ability to recruit and retain employees, executives said during the first quarter 2023 earnings call Thursday.
“As we have previously discussed, the labor environment represents the primary challenge that we are aggressively addressing in 2023 to see Aveanna resume the growth trajectory that we believe our company can achieve,” CEO and Director Jeffrey Shaner said Thursday.
He added, “As communicated in our previous quarter, our ability to recruit and retain the best talent is a function of rate. Our business model offers a preferred work setting that is mission-driven, providing a deep sense of purpose for our teammates. But our caregivers need to be able to provide for themselves and their families in this inflationary environment, and we must offer a competitive wage.”
The private duty, home health, hospice and medical solutions firm suffered a $32 million loss in the quarter ended March 31 on higher revenues of $466.4 million.
Still, Aveanna made progress on rates in three states in the first quarter — part of a strategy laid out in the earnings call for the 2022 fourth quarter — Shaner said. It delivered a double-digit rate increase in Oklahoma. It also believes it will secure a double-digit rate increase for its Texas private duty nursing business beginning Sept. 1. And it is working on a rate increase in California, which it is hoping to nail down in the California budget on July 1.
It also has made headway on increasing the number of preferred payers— “those that support value-based care by offering an above-market reimbursement rate and value-based payments in exchange for proven savings,” Shaner explained.
Its goal for 2023 is to double volumes from private duty services preferred payers to 20% of volumes from 10% by year-end. In the first quarter, it added two additional preferred pay agreements in key markets.
“It’s clear to us that shifting caregiver capacity to those preferred payers who value our partnership is the path forward at Aveanna,” CFO David Afshar said.
Shaner echoed other home care leaders in expressing concern about the proposed Medicaid home- and community-based services rule that would require that 80% of funds go to worker compensation.
“We applaud the intent of the rule, which is to open access to Medicaid beneficiaries and certainly improve quality measures and transparency in rate setting,” Shaner said. “But the idea that CMS would set an 80% threshold for direct care workers’ compensation is significantly concerning. And the precedent that, that would create we just don’t think is appropriate.”
He added that the rule underestimates oversight training, onboarding and electronic visit verification expectation requirements that the Centers for Medicare & Medicaid Services mandates.
