Amedisys Prioritizing Palliative Care Expansion

Expanding its palliative care business is a rising priority for Amedisys Inc., (NASDAQ: AMED) following Chairman Paul Kusserow’s return as CEO.

The company’s palliative care strategy rests on the back of risk-based payment models, primarily Medicare Advantage, Kusserow indicated at the J.P. Morgan Healthcare Conference. This push dovetails with the home health and hospice provider’s plans to extend the continuum of services it can bring into patients’ homes, including palliative and high-acuity care.

“We’re excited to be able to do at-risk palliative in the home. We’re moving towards value. We’re moving towards taking risk, which means doing what we say and taking that level of risk to keep people in the home,” Kusserow said at the conference. “All these assets that we’ve been assembling over the past eight years should enable us to provide more and more opportunities to take risk in the home.”


Among those assets is the Amedisys subsidiary Contessa, which the company acquired in 2021 for $250 million. Contessa is a likely engine for propelling the anticipated palliative care growth.

Contessa already provides palliative care, which has been a key component of its growing number of joint ventures. During the past two years, the company has launched JVs that offer palliative care with Mount Sinai Health System, Baylor Scott & White Health, Memorial Hermann Health System, and Henry Ford Health System, to name a few. 

Some of these partnerships, such Mount Sinai, pre-date Amedisys’ purchase of Contessa. Nevertheless, the parent company has continued to pursue those agreements post-transaction. As of November 2021, Contessa had more than 100 hospital JVs in its pipeline, with the potential to double the company’s footprint.


Contessa is already forging agreements with Medicare Advantage payers to offer palliative care, which Kussersow expects to spur revenue upwards. 

“We signed a very good deal with a large blue payer to do at-risk palliative in the home,” Kusserow said. “So we’re very excited by that, and that’s going to drive the top line of Contessa quite considerably.”

More details on the agreement will be revealed in forthcoming announcements, Kusserow said.

Risk-based contracts, often used in Medicare Advantage or Accountable Care Organizations (ACOs), are structured around estimates of the expected costs necessary to address patients’ health care needs. This typically involves capitation, bundled payments and shared-savings arrangements.

The provider could receive a percentage of any savings, called upside risk, or losses, known as downside risk. In downside risk, the provider may be required to cover the difference if actual costs of care exceed what was budgeted.

Currently, Medicare Advantage and ACOs are among the few available avenues for palliative care reimbursement.

The U.S. Centers for Medicare & Medicaid Services (CMS) allows Medicare Advantage plans to cover home-based palliative care as a primarily health-related benefit, as well as a special supplemental benefit for the chronically ill (SSBCI).

The number of plans that cover the service as a primarily health-related benefit rose to 157 in 2023, up from 147 in 2022, according to an analysis by ATI Advisory. This does not include those who cover it as an SSBCI.

CMS also included palliative care elements in the hospice component of the four-year value-based insurance design demonstration — often called the Medicare Advantage carve-in. Geographically, the program will be available in 806 counties in 24 states, up from 461 in 2022.

In this kind of payment environment, a key selling point for home-based care providers will be the ability to reduce hospitalizations, readmissions and emergency department visits, particularly among chronically ill seniors who are high utilizers of health care.

To that end, Amedisys expects that it can better support aging in place and further reduce institutional utilization by extending its range of capabilities further across the continuum, which in turn could draw in payers and referral sources.

“We believe that on the palliative side of things, we can go and work with the plans and take away palliative risk, take away those high-cost people, identify them, carve them out, manage them appropriately and get them into hospice at the right time,” Kusserow said “So that’s something that we’re going to be doing. Again, we’ll be announcing that soon. The other thing that we believe, with Contessa, we see very, very high demand for this product. So we’re in relationships now. We’ll probably land a couple more.”

To foster its anticipated growth, the company continues to double down on hiring and staff retention.

Labor shortages reduced clinical capacity for Amedisys during the summer months of 2022, which slowed admissions growth during the third quarter. These constraints, coupled with inflation and the return of Medicare sequestration, led to slower-than-expected growth in Q3 2022. 

For that quarter, the company’s net service revenue reached $558 million, up from $533.5 million in Q3 2021. Despite the $4.5 million increase, revenue fell short of Wall Street expectations and led the company to reduce its guidance for 2022. Moreover, adjusted earnings per share (EPS) hit $1.15 for the third quarter of last year, down 24.8% from Q3 2021. 

These factors likely contributed to former CEO Chris Gerard’s abrupt departure from the company last November and Kusserow’s subsequent return.

“We haven’t hit and been predictable on the earnings,” Kusserow said at the Bank of America Securities Home Care Conference in December. “So that’s the reason I’m back.”

To move the needle on the labor front, Amedisys has begun offering employees enhanced benefits packages that include more flexible clinician schedules, among other changes to their recruitment and retention practices. Additionally, bonuses for directors of operations at the company’s 550 care centers are partially contingent on turnover numbers.

Amedisys also hopes to increase capacity by reducing or streamlining clinicians’ administrative tasks to allow them to focus more on patient care, according to Kusserow. 

This builds on earlier efforts, such as the’s company 2021 implementation of a predictive analytics system designed to identify employees who were likely to leave their jobs, giving managers a chance to engage them in discussions. 

Health care employers, including Amedisys, could also benefit from changing conditions in the larger economy.

“The one thing that’s really going to help most is a recession. So, clinical labor works anti-cyclically from a recession perspective,” Kusserow said. “So when the economy is good, people leave. In a recession, they come back in fairly strongly. We’re seeing people come back in. That’s just a function of the economy.”

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