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Strong Investor Interest In Home-Based Care Providers Servicing Veterans

Updated: Sep 20, 2023

Headline: Strong Investor Interest in Home-Based Care Providers Servicing Veterans


The Veterans Administration (VA) has long been considered a ‘payer of last resort’ for home care providers, offering below-market rates and slow pay for services to our veteran community that deserves better. As a result, this business line has often been viewed as important, but not desirable for home care operators, resulting in low M&A interest from industry consolidators.

That changed in 2018 with the passage of the VA Mission Act of 2018. This federal law aimed to enhance veterans' access to healthcare services within the VA system and through community care providers. Of particular interest to home-based care providers, the act replaced the Veterans Choice Program with the new Community Care Program.

Community Care Program

The new Community Care Program expanded the eligibility criteria for veterans, provided more stable funding, improved the program’s long-term sustainability, and standardized and streamlined access requirements to receive care. Additionally, the Act established the Community Care Network (CCN), which serves as the contract vehicle for the VA to “purchase” community care from community healthcare providers for veterans.

The CCN established agreements with two third-party administrators (TPA), Optum Public Sector Solutions, Inc. (Optum), part of UnitedHealth Group, Inc. and TriWest Health Care Alliance (TriWest) and divided the country into five different regions:

The CCN established agreements with two third-party administrators (TPA), Optum Public Sector Solutions, Inc. (Optum), part of UnitedHealth Group, Inc. and TriWest Health Care Alliance (TriWest) and divided the country into five different regions:

The TPAs are responsible for developing and administering the CCN within their assigned geography. Their scope of work includes the following:

  • Provider Network Management: Establish and maintain networks of community healthcare providers, such as home care or home health providers.

  • Appointment Scheduling: Help coordinate appointment scheduling for veterans.

  • Claims Processing: Handle claims processing and payment from community healthcare providers.

  • Authorization and Coordination: Assist in obtaining authorizations for medical services that veterans need from community providers and ensure necessary documentation is in place.

  • Quality Assurance: Monitor the quality of care.

  • Communication: Facilitate communication between the VA, veterans, and community healthcare providers.

In order for a home-based care provider to provide services to veterans and get reimbursed for it, it needs to:

  1. Establish a contract with a TPA: This involves executing an agreement and going through certain credentialing.

  2. Build relationships with local VA representatives: This should be in the form of high-quality and timely care.

  3. Billing: Submit proper billing through established protocols and online portals

  4. Receive payment or follow up on unpaid claims: As with any payer, providers will need to follow up with TPAs on unpaid claims, but the majority of the time this will be due to minor and easy-to-fix issues

Attractive Reimbursement

In addition to the improved and more efficient Community Care Program, the VA also has attractive reimbursement rates for home-based care services:

  • Personal Care Services: The rates for personal care services depend on the state/city/market serviced, but the majority will be in the low $30’s/hr.

  • Home Health and Hospice Services: VA will reimburse at Medicare rates.

Investor Interest

Investors have caught wind of the improvements in the VA healthcare ecosystem and have developed a strong interest in home-based care providers that service veterans. Below are some of the reasons for the renewed investor interest:

  • Payor Diversification: Increasing the number of payors reduces the risk that a certain payor will lower rates, stop reimbursement, change material terms in agreements, etc.

  • High Reimbursement Rates: Current reimbursement rates are on the high end for home-based services.

  • Uncertainty Other Payors:

    • Private Pay: Concerns with the state of the economy could inhibit clients’ ability to pay high rates

    • Medicaid: CMS’s proposed Medicaid Access Rule requiring providers to pass 80% of reimbursement to direct care workers jeopardizes the feasibility of the different state programs.

    • Medicare: Looming proposed rate cuts increase risk

  • Value-based Care Opportunities: An additional payor means an opportunity to care for more individuals, have more leverage when negotiating contracts, and capture higher-margin health services.

“We are hearing more from strategic buyers interested in adding VA to their existing Medicaid home and community-based services business,” Mertz Taggart Managing Partner Cory Mertz said. “It’s a perfect complement to that business line. The models are very similar, payer diversity reduces risk, especially in light of the proposed 80/20 rule, and the current reimbursement rates are strong.”

M&A Market For Home-Based Care Providers Servicing Veterans

The strong investor interest in home-based care providers that service veterans and receive reimbursement through TPAs has increased the demand and value of these assets.



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