How do home care agencies make money? It’s the same as any other business – charging for their services! They earn revenue through various sources, such as private pay, insurance reimbursements, and government funding.
Point-of-care services are becoming increasingly vital as the United States population ages: by 2054, the country will be home to 84 million adults ages 65 and older, compared to just 62 million in 2024. This means agencies should feel confident in their ability to make money and remain profitable long-term as long as they successfully navigate the challenges affecting the industry today.
Importance of Home Healthcare Services
Home healthcare provides clients with personalized care in the comfort of their homes, improving their quality of life and enabling them to preserve their independence well into their golden years. The industry encompasses many services – both medical and non-medical – including skilled nursing, physical therapy, and personal care assistance.
When delivered effectively, these services reduce hospital readmissions through early detection, lead to substantial healthcare cost savings by actively managing clients’ conditions, and create employment opportunities as demand continues to grow.
Revenue Sources for Home Healthcare Agencies
Some agencies rely on a single source of revenue, while others are more inclined toward payer source diversification. There is no right answer, and agencies may work with a different mix of payers over time depending on their capacity and goals. Here’s what each one brings to the table.
Medicaid Reimbursement
Medicaid is an important tool for making healthcare more accessible to diverse populations, helping low-income individuals and families more easily afford essential services. However, getting reimbursed for Medicaid billing can be a complex process on the agency side. To receive payment, healthcare providers must submit claims for the services provided to Medicaid beneficiaries, which require state-specific procedures and documentation, including Electronic Visit Verification (EVV).
Private Insurance
Private insurance plans vary in coverage and reimbursement methods for home healthcare services. Some plans may cover a portion of the expenses, while others may provide comprehensive coverage for the user. Many long-term care insurance policies cover non-medical home services, while others may cover short-term skilled care.
Working with private insurance companies can be challenging due to strict eligibility requirements, pre-authorization processes, and detailed documentation requirements. Agencies need to navigate these rules carefully to get reimbursement in a timely manner and avoid claim denials.
Out-of-Pocket Payments or Private Pay
Private pay is one of the most straightforward ways for agencies to generate income, as they are billing their clients directly – no insurance claims, reimbursement delays, or complex billing requirements involved. Agencies that have a high quotient of private pay clients may also be able to offer a more diverse range of services, as they are not bound by what certain policies or programs can cover.
On the other hand, since families and patients shoulder the entire burden of paying out of pocket, affordability may limit an agency’s ability to grow their customer base. To attract a steady stream of patients and ensure they can afford the care being offered, agencies should focus on clear pricing structures, payment plans, and value-driven care.
Value-Based Care Programs
Value-based care programs aim to improve patient outcomes by shifting the focus away from volume-based services and toward quality-driven care. At the same time, they aim to keep costs as reasonable as possible. Home care agencies that adopt this methodology may receive financial incentives or bonuses based on meeting specific quality metrics, client satisfaction scores, or cost savings targets. In return, they are required to track and report key performance indicators, such as hospital readmission rates and patient health improvements.
While these programs can lead to higher reimbursement rates for agencies that do meet their KPIs, they also require rigorous data collection, adherence to best practices, and continuous performance monitoring.
Veterans Affairs
Home healthcare agencies also generate revenue by providing specialized services to veterans, funded through the Department of Veterans Affairs through a claims process. There are several different programs offered under the VA umbrella. While they can certainly represent a valuable payer source for agencies, they also have very specific requirements, authorization procedures, and billing protocols.
Partnerships and Collaborations
Collaborating with hospitals and healthcare systems can lead to referrals, shared resources, and access to a larger client population.
Using Home Health Care Software for Revenue Optimization
Home care software can significantly optimize revenue for home healthcare agencies, especially when it comes to revenue cycles. It’s all thanks to automation and organizing your information using a single hub.
Streamlining Operations
The main purpose of home healthcare software is to digitize administrative and operational tasks. From scheduling caregivers to enabling EVV via mobile apps, it dramatically improves efficiency and client care while reducing manual effort and errors. On the financial side, operational excellence is the foundation of a healthy revenue cycle: with functional workflows in place, agencies can serve more clients, boost caregiver productivity, and enhance their overall profitability.
Improving Billing and Reimbursement
These platforms significantly improve billing and reimbursement processes, ensuring accurate and timely claims. By integrating with existing billing systems, automating coding, and facilitating electronic claims submissions, they substantially reduce the risk of human error and, in turn, denied or delayed reimbursements.
Best Practices for Home Health Care Agencies
Managing revenue and profitability is heavily reliant on how agencies interface with their payers, but their client relationships are equally important. Without a robust client roster, there would be nothing to bill!
Enhancing Client Care and Outcomes
Home care software gives agencies the tools to manage client accounts easily. Its digital dossiers include clients’ complete medical histories, current care plans, prescribed medications, and even real-time vital signs, thanks to remote patient monitoring.
Centralizing this information creates a more in-depth and holistic picture of a client‘s health, ultimately leading to better diagnoses and treatment plans. Additionally, the software promotes continuity of care by allowing all relevant healthcare staff to access a client‘s information seamlessly – regardless of location – significantly reducing the risk of medical errors. The transparency of information among staff also leads to better collaboration, which ultimately results in better client outcomes.
Enhancing Patient Care & Retention
Home care best practices strike a balance between keeping processes efficient on the agency side while preserving a sense of personalization on the client side. Individualized care plans, consistent caregiver-client matching, and proactive communication are all made possible with home care software, which uses algorithms to intelligently manage scheduling and enables real-time chat via mobile app.
Agencies equipped with the tools to provide better and more continuous care can enjoy higher retention rates, which then support their financial stability. Acquiring new clients is usually more expensive than maintaining an existing roster, and satisfied clients are more likely to expand the scope of services needed, refer others, and leave positive reviews. All of these things contribute to steady revenue streams, and longer-term relationships reduce the administrative costs associated with frequent client turnover.
How AxisCare Helps Home Care Agencies Grow
Growing your revenue without the right software solution and billing support is an uphill battle. Use AxisCare to centralize your operations, reduce errors and delays when billing various payers, and provide outstanding care that will keep patients on your roster for the long haul. AxisCare can support your agency with VA Billing and Medicaid Billing, simplifying complex billing processes by handling everything from claim submission to follow-ups. This ensures accurate and timely payments while keeping your team focused on what matters most; providing quality care. Want to learn more? Book a live demo with our team.
