Demand for home-based care services remains steady – but little else in the industry does. With rapidly advancing technology, looming threats such as the proposed home health rate cut and regulatory shifts like the companionship exemption, providers today are navigating an unprecedented mix of challenges and opportunities.
Amid significant disruption, providers are finding ways to capitalize on new opportunities while advocating for fairer sailing weather, according to experts at Home Health Care News’ FUTURE conference. By adopting risk-based reimbursement models, implementing AI-powered technologies and improving efficiency, providers can work toward a future where health care is centered in the home.
These opportunities come amid a slew of challenges, including significant reimbursement pressures for home health providers.
The growing prevalence of Medicare Advantage, for instance, requires a mindset change from providers.
“Medicare Advantage [is] now the primary payer, we have data that shows that it’s now surpassed 50% of all payment types claims data,” Luke Rutledge, president of Homecare Homebase, said at FUTURE. “That is going to be the future of home-based care. So we got to get really comfortable with that.”
Dallas-based Homecare Homebase is one of the largest technology and administrative services companies serving home-based care providers
The growing share of Medicare Advantage enrollees has put home health providers in a “really tough spot,” according to Bud Langham, advisor and former home health and hospice executive vice president of Enhabit (NYSE: EHAB).
“We’ve been public about this, that you’ve got to be willing to say no and walk away, and that is incredibly hard,” Langham said. “We’re all striving for growth. But it comes down to, how do you negotiate the contracts that allow you to take care of people in a way that drives good outcomes and great experience? That means that you’re going to bump up against payers where you’ve just got to say no.”
Dallas, Texas-based Enhabit offers home health and hospice services in 34 states, with a footprint of 249 home health locations and 114 hospice locations. The company has publicly walked away from some Medicare Advantage payers, notably UnitedHealth Group’s (NYSE: UNH) UnitedHealthcare.
Home health providers’ top concern, Langham and Rutledge said, is the proposed home health Medicare rate cut, which amounts to a 9% cut. The proposed cut would slash providers’ bottom lines, Rutledge said, and would ultimately harm access, Langham said.
For home care providers, the top disruptive force at play is the proposed companionship exemption, according to Dan Deak, founder and CEO of Home Halo Franchising.
“The one that potentially has the most impact is the caregiver exemption rule,” Deak said. “There are so many more people who need care today than when that rule was phased out in the past. We’re already facing caregiver shortages. Is this going to exacerbate the problem? I’m going to be interested to see what the market bears and adjust accordingly.”
The companionship exemption rule has sparked some controversy in the industry. While some stakeholders call the U.S. Department of Labor’s (DOL) proposal a “win,” others have warned it would exacerbate the industry’s staffing woes.
Greenwood Village, Colorado-based Home Halo is a non-medical home care franchise operating in eight states. The provider offers assistance with activities of daily living (ADLs), home management assistance, respite care and specialty dementia services.
Industry tailwinds
While the proposed rate cut represents Enhabit’s greatest challenge, it is not without a silver lining. The company’s chief financial officer recently said that the disruption that would result from CMS’ proposed rule, if it goes through as proposed, would create an opportunity for growth greater than what the company saw in 2025.
There are other reasons that providers might welcome some of the recent federal-level changes.
“If you look at what the administration is doing today around health technology, opening the door for innovation and supporting innovation and patient-facing applications and creating interoperable networks, there are some really outstanding opportunities for early adopters to participate in that and to change how we do health care, with initiatives like kill the clipboard,” Langham said. “So there are some good things out there, too, but these are the menacing problems that we have to tackle first for sure.”
Beyond regulation, opportunities for providers largely come in technology-enabled packages, often outfitted with AI-powered tools.
Providers are primarily interested in scribing and ambient listening, tools designed to reduce documentation and burden, Rutledge said. The desire for these tools, he said, comes down to the need to automate data entry, which Rutledge called the “wave of the future.”
For home care companies, the top priority for improving efficiency is automating scheduling, according to Deak.
“For us, one of the biggest bottlenecks in the big business, and I think all home care agencies deal with it as well, is that scheduling component,” he said. “AI is going to have a massive impact on that. If we can retain more caregivers through more efficient scheduling practices, we’ll retain more clients, and our businesses will continue to grow.”
Improving scheduling processes has an additional crucial benefit: improving retention.
“Caregivers aren’t going to leave you for 50 cents more an hour,” Deak said. “What they’re leaving you for is that you’re not giving them the number of hours that they need and the time frame that they need it, and that’s why you have a lot of caregiver turnover. If we can focus on doing a better job of scheduling and using tools that are going to be coming of age here, now and in the near future, to do a better job of scheduling, we can retain more caregivers, and retain more clients in the process.”
Similarly, home health providers cannot “recruit their way out of” industry-wide staffing challenges, Langham said. Instead, the Enhabit advisor recommended that providers focus on creating an exceptional experience for clinicians. Technology is one key to creating a positive work environment, Langham said, that allows home health providers to support their clinicians even while in the field.
The future of home-based care
While the industry faces fluctuating challenges and new opportunities, the one constant, according to Deak, is “that our population is aging.”
“There’s going to be more people to take care of,” he said. “I think it’s going to take a holistic approach to providing care for all of those individuals.”
Despite the forces of change at play, Langham predicts that the industry may not evolve significantly over the next ten years, due to the health care system’s emphasis on filling beds in growing hospital systems – but that there is potential for “radical change.”
“The optimist side of me thinks it should be radically different, and [all providers] should be taking care of twice as many patients as we are today, because those people are there who need the care,” Langham said. “We’ll be doing that under risk-based contracts, and our physical offices will be extraordinarily lean. … Our outcomes will be better, and the total cost of care will be better because the system recognized all of us in the room and leaned in and said, ‘Let’s go do it that way.’”
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