The home-based care industry’s payment models have become more complex, creating benefits for both providers and payers – but establishing alternative reimbursement models is far from straightforward.

To expand the role of value-based care in the industry, providers must “speak the payer’s language,” know which metrics to track – and know exactly who within the payer organization to engage.

The home-based care industry may have some misconceptions regarding value-based care, Luke Rutledge, president of Homecare Homebase, told Home Health Care News. Providers tend to equate value-based care with reduced visits, he said, but payers have more complex desires.

“When I now talk to the payers, because some of our customers are now payviders, they are really worried about the experience of the beneficiaries, because they’re getting a bunch of churn,” Rutledge said at Homecare Homebase’s 2025 Users Conference. “The reason why that’s happening is customers are just having bad authorization experiences, care journey experiences. So when I sit down with … [Humana] or Optum, they want to have this great experience but also move to value-based care, because they see so much opportunity to stop wasting money and help the patient go through the best care.”

Dallas-based Homecare Homebase is one of the largest technology and administrative services companies serving home-based care providers

Payviders have identified value-based care as a key differentiator and found that the model helps to reduce hospitalizations and save costs. 

For example, VNS Health’s value-based arrangements, made between the company’s health plan and provider arm, have benefits on both sides.

“We have a longitudinal care management program that our provider business operates,” John Burke, executive vice president and chief of health plans at VNS Health, said at HHCN’s FUTURE conference. “It takes care of high-risk [individuals], and they have a performance-based contract, so they get paid for the work. Then they get incentivized or penalized based on quality and total cost of care. It’s an opportunity for the health plan to perform better. It’s also an opportunity for the provider side to earn additional dollars.”

New York-based VNS Health is a full-service nonprofit home-based care organization.

To advance the role of value-based models in the at-home care industry, providers first have to negotiate with the correct representative. Often, providers are negotiating with a specific representative at the contract level – but this person is not the one who can make significant changes to value-based care, Rutledge said. Providers must reach the top levels of the payer organization to negotiate value-based models.

Additionally, vertically integrated payers often maintain separate infrastructures for benefit management and provider operations — and communication between those two sides is frequently limited. In order to move the needle on value-based care, the top layer of management at payer organizations must use data and determine what is best for patients, Rutledge said.

Missed metrics

One metric that providers often fail to track that could help with value-based care negotiations, according to Rutledge, is the risk adjustment factor (RAF).

“This is what the payer uses to identify your riskiest patient that may cost you $1 million plus,” he said. “We as providers or even EMR, have the ability to then look at that score and say, ‘We need an intervention here. We need to cover a gap in care.’ … The payer is so hungry to say, ‘Hey, how do we mitigate that together?’”

Risk adjustment is a method used by the Centers for Medicare and Medicaid Services to calculate what to pay a health provider based on a patient’s health, their likely use of health care services and the costs of those services, according to CMS’ website. Risk scores represent the predicted cost of treating a patient or group of patients compared to the average Medicare patient. 

Conversations regarding risk adjustments should be two-sided, Rutledge said, with providers presenting evidence that they can help create a better beneficiary experience and save money while explaining the need for higher rates.

Providers must prove the value of home-based care using data from electronic medical records (EMRs), demonstrating their ability to close gaps in care and create value-adds for payers.

“There’s definitely going to be a trade-off, and I think there’s a willingness to do that on the payer side,” Rutledge said. “We just have to stop talking to the wrong person at the payer level in order to make that happen [and] it’s gonna be leadership. It’s not the P&L person that’s trying to reduce your contract rate.”