Aveanna Takes Stock of Medicaid Rate Wins
For the first time in Tony Strange’s career, he has led care plans, state Medicaid agencies, and even the US Centers for Medicare & Medicaid Services (CMS) asking what can be done to improve access to home and community-based services .
Strange — the CEO of Aveanna Healthcare Holdings Inc. (Nasdaq: AVAH) and a home healthcare industry veteran — discussed this paradigm shift on a fourth-quarter conference call Tuesday. During the call, he also touched on other “stock gains” the company has experienced.
Notably, Strange said that 24 of the company’s 31 states have passed rate hikes over the past 12 months.
“We continue to see benefit expansions in several of our key states and are already discussing further rate improvements in states that recently implemented rate increases in 2021,” Strange said. “Although Medicare is growing, it accounts for just 12% of our total revenue, making it the largest single concentration of a payment source. We have 31 unique payment systems in as many countries. In addition, we have over 250 individual Medicaid managed care contracts.”
Based in Atlanta, Aveanna provides home health care, private nursing, hospice and other services to a wide range of patients.
Overall, Aveanna’s revenue was $414.1 million for the fourth quarter of 2021 compared to $422.3 million for the fourth quarter of 2020, a decrease of $8.2 million, or 1.9% .
This is due to a $35.6 million decrease in revenue from the company’s personal services segment compared to the same quarter last year.
For full year 2021, revenue was about $1.7 billion, compared to about $1.5 billion in 2020, an increase of $183.5 million, or 12.3%.
While Aveanna touted its diverse payer mix, it highlighted Medicaid’s ability to respond to gaps in care.
“While Medicare is a very good partner in our home health and hospice businesses, Medicaid is an excellent payer partner in the states where we operate,” Strange said. “Payers fully understand the impact that COVID-19 has had on access to care and have not only been willing, but anxious to devote more resources to managing the care of these individuals in their homes.”
With that in mind, Aveanna is in talks with a handful of payers willing to explore new operating and payment models for private services that move away from an hourly, fee-based model.
Strange found that this allows for greater flexibility in staffing requirements.
Aside from discussions with payers, Aveanna also addressed the business impact of the Omicron variant.
During most of the public health emergency, Aveanna had between 200 and 300 caregivers in quarantine at one time.
In December, that number rose to nearly 3,000 for most of January and February. The company is now finally back to pre-Omicron quarantine levels.
Aveanna is not an anomaly. Home care giant Addus HomeCare Corporation (Nasdaq:ADUS) also looked into Omicron’s staffing issues.
Additionally, Aveanna witnessed what Strange called “the great vaccine mandate debate.”
“While the OSHA mandate was ultimately rejected, the CMS mandate was upheld,” he said. “While immunization compliance has been a struggle for most companies, including Aveanna, I am proud to report that 98% of all our employees have either been vaccinated or have a qualified waiver. We comply with all local, state and federal mandates.”