Medicare Advantage Hits 55.4% in 2025, Driving Down Home Health Utilization in PPO Plans
With Medicare Advantage surpassing 55% enrollment, post-acute providers must urgently realign care models, partnerships, and payment strategies or risk losing market relevance.(Source: Fotor AI)
Trella Health’s 2025 Post-Acute Care Industry Trend Report reveals a pivotal transformation underway in the U.S. post-acute care ecosystem. Driven by the sustained rise of Medicare Advantage (MA), evolving insurance mix, and shifting care utilization patterns, the sector faces both growth opportunities and significant operational challenges.
According to the report, based on the latest Medicare Part A and B claims data and Medicare Advantage enrollment trends, providers across home health, hospice, and skilled nursing facilities (SNFs) must rapidly adapt to a landscape increasingly defined by value-based reimbursement, patient outcome metrics, and payer-led care management models.
Key Industry Shifts and Strategic Implications
1. Medicare Advantage Becomes the Dominant Payer
As of February 2025, 55.4% of Medicare beneficiaries are enrolled in Medicare Advantage plans, with 30 states surpassing 50% penetration. This marks a critical inflection point, making MA the majority payer in the post-acute care space. Providers must now navigate narrower networks, increased utilization oversight, and tighter cost controls dictated by MA organizations.
2. PPO Enrollment Outpaces HMO—A Red Flag for Home Health
Preferred Provider Organization (PPO) enrollment grew by 19.8% year-over-year, compared to just 4.3% for Health Maintenance Organizations (HMOs). Given that PPO plans typically exhibit lower home health utilization, this shift signals potential volume pressure for home health agencies unless they can demonstrate superior care outcomes and cost-effectiveness.
3. Incremental Gains in Home Health Referrals After Years of Decline
For the first time since 2020, the share of Fee-for-Service (FFS) inpatient discharges referred to home health rose to 22.6% in Q4 2024, up from 22.1% the previous year. This marginal increase may indicate growing recognition of home-based care's role in cost containment and recovery support, particularly under value-based care models.
4. Hospice Admissions Rebound Post-Pandemic
Hospice admissions rose by 3.7% between 2023 and 2024, reaching 1.61 million patients. More than 50% of Medicare mortalities now occur under hospice care, underscoring its increasing acceptance and integration into end-of-life care pathways.
5. Clinical Adherence Linked to Readmission Reduction
Patients who adhered to home health discharge instructions had a 30-day hospital readmission rate of 12.7%, compared to 15.1% among those who did not. This 2.4-point difference reinforces the financial and clinical case for investing in care coordination, patient education, and adherence monitoring tools.
6. Geographic Disparities in Post-Acute Utilization Persist
State-level differences in care utilization remain substantial. Home health FFS usage varies by 25.1 percentage points across states, while SNF utilization ranges by 22.6 percentage points. These disparities suggest underlying structural inequalities in post-acute care access, referral behaviors, and network availability.
7. Regulatory Headwinds and Workforce Constraints Intensify
The report also highlights the impact of emerging policy frameworks, such as the proposed TEAM (Transforming Episode Accountability Model), and ongoing challenges in workforce capacity, reimbursement rates, and digital infrastructure. These factors are expected to accelerate consolidation, tech adoption, and payer-provider alignment across the sector.
Industry Outlook: Strategic Imperatives for 2025 and Beyond
Provider-Payer Integration: As MA plans increasingly dictate the care pathway, post-acute providers must adopt data-driven negotiation strategies and network alignment to secure patient volume and reimbursement.
Value-Based Infrastructure: Investments in care coordination platforms, outcome tracking, and predictive analytics will be key to meeting payer expectations and optimizing patient pathways.
Regional Customization: Understanding state-specific market dynamics and regulatory nuances will become essential for sustainable growth, especially for multi-state operators and national networks.
2025 Post-Acute Care Market Trends Snapshot
| Trend Indicator | Latest Metric (2024–2025) | Year-over-Year Change | Strategic Relevance |
|---|---|---|---|
| Medicare Advantage Enrollment Rate | 55.4% (National Avg.) | ↑ Continued Growth | Signals shift in payer control and contracting power |
| PPO vs HMO Enrollment Growth | PPO ↑ 19.8%, HMO ↑ 4.3% | PPO dominance rising | May reduce home health utilization in favor of SNFs |
| Home Health Referrals from FFS Discharges | 22.6% (Q4 2024) | +0.5 percentage points | First uptick since 2020; potential rebound for HHAs |
| Hospice Admissions | 1.61M patients | ↑ 3.7% | Growth signals mainstream adoption in end-of-life care |
| Readmission Rate: Adherent vs Non-adherent | 12.7% vs. 15.1% | -2.4 percentage points difference | Highlights ROI of patient compliance initiatives |
| State Variation in Home Health Utilization | 25.1 percentage point range | High disparity persists | Indicates fragmented care access and practice norms |
| State Variation in SNF Utilization | 22.6 percentage point range | Significant variation | Reflects localized discharge behavior and market supply |
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