This article is part of the HHCN+ membership
Medicaid uncertainty was one of the top concerns we repeatedly heard home health care providers discuss this year. When the One Big Beautiful Bill Act (OBBBA) was passed, with significant Medicaid cuts, health care providers' concerns seemed to be confirmed.
That is, states would limit their home and community-based services (HCBS) budgets because of the reduction in overall Medicaid budget dollars.
Despite this dramatic change to Medicaid financing, not all home health providers who accept Medicaid are pessimistic. In fact, on the latest episode of HHCN+ TALKS, Aveanna Healthcare (Nasdaq: AVAH) CEO Jeff Shaner expressed a particularly positive outlook.
“I don't think there's ever been a better time than now to take advantage of in-home and community-based services,” Shaner said. “People say, ‘You’re crazy, OBBBA changed that,’ but I don’t think it has changed.”
I've heard that there is generally more confidence in home health providers who accept Medicaid than in home health providers who accept Medicare, but that's because the threat to Medicare was so huge, and even though the final rule wasn't as tough as feared, I was still surprised to hear an upbeat explanation like Mr. Shaner's.
In addition to sharing bright perspectives, leaders shared techniques for health care providers operating in Medicaid settings. We highlight the top priorities for healthcare providers in the new year.
In this week's members-only HHCN+ update, we share key takeaways from our conversation with Shaner.
– His reasons for optimism
– Shaner’s Techniques for Implementing an Effective Medicaid Strategy
– Why long gameplay is important
dig into the good vibes
Private services make up the bulk of Avianna's business, with Medicaid and Medicaid managed care organizations (MCOs) being the organization's primary sources of payment, according to a Form 8-K filed in late September.
At the time, the company expected the impact from OBBBA to be “minimal,” but Shaner reinforced that optimism with TALKS.
“Pressure on federal and state governments to do more with less will continue to push residential and high-cost care settings toward home care,” he said. “That's who we are. That's what we do every day. That's what our industry does. I think being ready to execute on that strategy is very important, not just for Aveanna, but for the industry as a whole.”
This makes sense. As states need to do more with less, home care providers are poised to provide quality care while avoiding the most costly aspects of facility-based care.
Still, the Congressional Budget Office (CBO) estimated that OBBBA would “reduce federal Medicaid spending by an estimated $911 billion over 10 years and increase the number of uninsured people by 10 million,” according to KFF.
In my opinion, a trickle-down effect on these numbers seems inevitable. That is not the case with Avianna.
“There were no specific changes to the Medicaid Waiver Program under which the majority of Aveanna's patients qualify for services, nor were there any provisions that Aveanna believes would directly impact reimbursement rates,” the company's 8-K states.
In fact, this year the Centers for Medicare and Medicaid Services (CMS) ended certain exemptions for some home-based services, but that's clearly not the most important thing for providers like Aveanna.
Additionally, Aveanna has identified significant market opportunities. In the same 8-K, the company reported a Total Addressable Market (TAM) of $119 billion. Of this TAM, civilian employment nursing accounted for $10 billion. The document says only a small proportion of children and adults currently receive the private services they need, with home being the most cost-effective and preferred setting for patients.
PDS, which is the core of Avianna's business, is a protected patient population and is especially good because the costs of facility-based and home-based care are significant, Shaner said.
So Medicaid budget changes (while keeping millions of people without health insurance) will have less of an impact than many expected and, if Schoener is right, will encourage states' creativity in providing access to high-quality, cost-effective care. Therefore, states are likely to send more people directly into the arms of home care providers.
Still, some states have not increased funding for these services.
“I think the areas where we saw temporary rate cuts were North Carolina and Colorado, and those were necessary to balance the Medicaid budget for the rest of the year,” he said. “In both cases, they raised rates and then had to temporarily freeze and reverse the rate hikes. Again, it shows that states are probably still trying to digest how they're going to swallow this.”
In the big picture, states recognize the need for PDS to maintain their budgets.
Avianna is keeping its mouth shut when it comes to PDS's bullish stance, putting money into it. The company acquired Thrive Skilled Pediatric Care in April for $75 million and is exploring more Thrive-like deals in 2026. In fact, Aveanna is currently taking action on a “strong” pipeline of potential acquisitions and plans to get its 2026 M&A strategy off the ground.
Be honest and play the long game
Shaner and Aveanna recognize that there are many opportunities in the HCBS orchard, and the organization is preparing strategies to maximize its yield. Its strategy focuses on payer and legislator engagement.
“If you’re not relying on a payer, whether it’s state-based or federal-based, if you’re not partnering with the government, I encourage people to do that,” Shaner said. “When I talked to governors and Medicaid directors, I found that they were incredibly open. … I think it's very helpful for governors and their staff and chiefs of staff and Medicaid directors to say to you, “This is the problem we're trying to solve. How can we help?''
To implement this strategy, Aveanna moved from playing poker to putting cards on the table. For Shaner, gone are the days when providers kept secret important details like pay data. Aveanna is having very transparent conversations with its stakeholders, as there is now a clear labor shortage and wage rates are increasing.
This transparency works because it shows states that rate hikes directly benefit voters, he said. If providers can show that $2.75 or $3.25 of a $4 increase goes directly to home care workers, they can demonstrate that the increase in overhead costs will be relatively low and voters will receive most of the benefit (and pay more in taxes, as a bonus).
Shaner says it's not always easy to find the data to have these conversations, but it's important to find some kind of metric that reduces total treatment and hospitalization costs.
I think some of this is harder for smaller providers than for large publicly traded companies like Aveanna, which has 30 preferred payer agreements in private care services. I'd like to hear from smaller providers about their experiences working with state governments. Is it the same level of openness and respect for transparency? That may be the case, but I have my doubts.
Even with sufficient resources, Avianna may not see the benefits of this strategy immediately. In most states, rate hikes typically take one to two years to materialize. In some cases, it may take longer. In California, the company hasn't raised interest rates in seven years, and Shaner expects it will take almost five years for the company to achieve a rate increase. Despite the slow progress, Shaner said Avianna has no intention of leaving the state.
“We've learned over time that you can't leave the state just because the rates don't work,” he said. “Time will tell. Time and energy and effort will tell. That's the reality for us in most states. We believe deeply in these families, and I know our guys do the same. We're not going to abandon them.”
All signs point to the HCBS strategy producing substantial dividends, at least for Avianna. That means better rates, deeper partnerships, and a flurry of new deals as the new year begins.
