Home Health Providers Navigate Challenges in Shifting to Value-Based Reimbursement

Home-based care providers are facing increasing pressure to move away from traditional fee-for-service reimbursement models towards alternative and value-based payment arrangements. However, progress toward value-based care has slowed due to challenges on the payer side, including increased demands for return on investment and stringent utilization management practices, especially within Medicare Advantage plans. Providers must demonstrate clear evidence of innovative care delivery and measurable outcomes to secure value-based contracts from payers. Industry experts highlight that payers now expect significantly higher ROI from value-based care programs, preferring outcomes that substantially improve care quality and reduce costs. Despite this, episodic or bundled payment models remain limited, with most payers continuing to reimburse per visit. This creates complexity for providers who must balance cost reduction with maintaining or enhancing quality of care. Organizations such as VNS Health have adapted by integrating additional services like virtual visits, remote patient monitoring, and community paramedicine into bundled payment models, enabling more comprehensive care delivery within value-based frameworks. These innovations have helped VNS Health and similar providers renegotiate payer contracts to include performance-based bonuses and episodic arrangements. Providers are cautioned to avoid under-investing in care quality amid cost containment efforts, as overly narrow focus on reducing total cost of care can undermine patient outcomes. Careful structuring of alternative payment models is necessary to align financial incentives with both cost efficiency and quality enhancement. The transition to value-based care in home health reflects broader shifts in managed care payment strategies and necessitates new provider competencies in data-driven care innovation and payer engagement. Successful adoption depends on providers' ability to prove value through improved patient outcomes and operational efficiencies, while meeting evolving payer expectations for risk-sharing and ROI. This evolving payment landscape underscores the need for ongoing collaboration between payers and providers, as well as regulatory awareness to support effective and sustainable reimbursement reforms in the home health sector.