Barbara Jacobsmeyer, Credit: Enhabit Home Health and Hospice

Continued uncertainty around Medicare reimbursement rates could keep dogging the home health industry this year, Enhabit Home Health & Hospice executives said Thursday during a webinar sponsored by CSJ Securities.

Enhabit CFO Chrissy Carlisle told the audience the firm is focusing on hospice deals more than home health deals due in part to the additional -3.925% behavioral adjustment to the Patient Driven Groupings Model (PDGM) expected in 2024.

“I think we will see home health players come to market, but the real question is are we going to reach an agreement on the bid and ask because we would need the seller to acknowledge that reimbursement uncertainty,” Carlisle asserted. 

The Centers for Medicare and Medicaid Services phased in the first half of the 7.85% behavioral health cut for this year and only increased Medicare reimbursements to home health providers by a meager 0.7%. Hospice providers, on the other hand, received a 3.85% rate bump.

Carlisle’s view on home health valuations is in line with a report released earlier this week by business consulting firm KPMG. The firm predicted that home health valuations could come under pressure this year due to a number of factors, including the labor shortage and rising interest rates. 

MA factor

Medicare Advantage is an additional challenge, according to the Enhabit team. CEO Barbara Jacobsmeyer told the audience home health firms will have to negotiate more aggressively with MA plans as they become an even larger share of the Medicare market. MA plans are expected to comprise more than half of the Medicare market within a couple of years.

Jacobsmeyer said large home health firms will have an advantage over smaller ones because their scale will guarantee payers more access to caregivers and data.

“We are saying that we will commit access and timely access of care for your members, but we need to be paid fairly,” Jacobsmeyer explained. “These conversations are becoming successful more quickly with multi-state or regional plans that can make decisions quicker.” 

Jacobsmeyer said Enhabit has already signed contracts with nine larger payers and is negotiating with others. 

Enhabit provides home health and hospice services in 34 states with approximately 10,000 employees. The company has more than 250 home health locations and a little more than 100 hospice offices. Enhabit was spun off from Encompass Health last summer.