Challenges Facing Home-Based Care Providers under Medicare Advantage

Home-based care providers are grappling with significant financial and administrative challenges linked to Medicare Advantage and Medicaid. These challenges are prompting some providers to restrict new admissions based on payer type. A recent survey by Home Health Care News, conducted ahead of the PAYER Summit in Chicago, highlights issues extending beyond reimbursement rates to include administrative burdens such as AI-driven prior authorization delays and care denials and appeals.

The survey gathered insights from senior leaders in organizations providing skilled home health care and non-clinical services. Findings indicate that Medicare Advantage reimbursements lag notably behind traditional Medicare, with a 38% reported difference according to Homecare Homebase data. Approximately 56% of respondents pointed to Medicare Advantage as the payer placing the most financial pressure, outpacing Medicaid at 31%.

Insufficient reimbursement rates, cited by 56% of respondents, were a top complaint about Medicare Advantage, alongside significant administrative burdens (43.8%), authorization delays (37.5%), and denials. Medicaid-related challenges include anticipated rate cuts and inadequate update projections through 2027. Moreover, eligibility verification and payment delays compound these issues for providers.

Furthermore, 75% of participants emphasized the necessity of increasing base rates for financial stability and reducing prior authorization requirements. Some providers have already secured rate increases, such as Aveanna Healthcare Holdings, which expects state rate increases by 2026, and Addus HomeCare Corporation, projecting an additional $17.5 million in annual revenue due to a rate increase in Illinois.

Nevertheless, persistent issues compel providers to adapt their operations. About 75% of providers have reduced new admissions to navigate reimbursement and administrative challenges. Additionally, 25% have bolstered staffing for billing and revenue cycle management or outsourced these functions, while 18.8% of providers have scaled back services in response to payer-related difficulties.