Wall Street Interest in Home Care Grows After Medicare Fix

Home health leaders largely applauded Congress after legislation to replace Medicare’s controversial Sustainable Growth Rate (SGR) was recently signed into law. And already home care industry groups are seeing positive results from the Medicare Access and CHIP Reauthorization Act, or permanent “doc fix,” according to new data.

Among Investor’s Business Daily’s 197 industry groups, its Medical-Outpatient/Home Care industry group jumped from a No. 10 ranking on Friday to a No. 8 ranking as of Tuesday, according to IBD’s Industry Sub-Group Rankings. An IBD article focuses on the steadily improving performance of companies in this group, and states that the recently passed legislation should further consolidate the attractiveness of home care and related companies to investors.

The IBD 197 tracks the price performance of shares over the past six-month period, and is meant to give a snapshot of the state of the various industries represented. While the companies within the IBD Medical-Outpatient/Home Care industry group are diverse, all “provide services outside the traditional settings of hospitals or physicians’ clinics,” IBD says in a recent article.

The recent legislation limits Medicare reimbursement increases to home health providers scheduled for 2018 to just 1%, the IBD article notes. When compared to the typical 3.2% annual reimbursement increase, this market basket reduction will result in a cut of $3.4 billion over a 10-year period, according to the Partnership for Quality Home Health Care. However, the law also creates more stability in the sector, as providers no longer will face unpredictable payment reductions needed to keep doctor reimbursements steady.

In addition, companies such as home health and hospice care providers Amedisys, Inc. and LHC Group stand to benefit from federal government incentives to lower cost, including the Bundled Payments for Care Improvement Initiative, Piper Jaffray analyst Kevin Ellich tells IBD.

Through Medicare’s payment shift, home health care providers might also see increased admissions of post-acute patients, Ellich says.

“Where now those patients may be in skilled-nursing facilities or inpatient rehab (hospitals), I think you could see shifts in the site of care” to in-home care, reducing time spent in the costlier settings by a day or two, Ellich tells IBD.

Read the IBD article here.

Written by Cassandra Dowell



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