Kindred CEO Sounds Off on Home Health Payment Rule

Kindred Healthcare, Inc. (NYSE: KND) president and CEO Benjamin Breier sounded off on the proposed home health groupings model (HHGM), vowing to work with the industry and regulators to craft a solution that works for all parties.

“The home health industry is undeniably united in its negative view of the rule, and will take a united front,” Breier said on his company’s quarterly earnings call Friday morning.

Breier specifically criticized the Centers for Medicare & Medicaid Services (CMS) for not seeking industry input earlier in the process, and for proposing a payment model that doesn’t align with the government’s long-term intention of lowering the overall cost of care and institutional readmissions.

“Reducing payments to home health care runs directly counter to these policy goals,” Breier said.

Under the groupings model, announced late last month, home health providers could take a hit of $950 million in Medicare funding in 2019, the year the plan is scheduled to roll out.

“CMS’s proposal to revamp the home health payment system in a non-budget-neutral way is unprecedented and unwarranted,” Breier said.

Still, he struck an optimistic tone, citing the industry’s success in beating back pre-claim and CMS’s decision to give providers until 2019 to provide comment on the proposed rule.

“This provides significant time for the home health industry to work extensively with CMS to modify and change key provisions of the proposal,” he said, later adding that the company had already started conducting a “worst-case scenario” analysis but anticipates changes before the rule goes through.

“We’re still in the very early innings of how this game is going to be played,” Breier said.

Breier joins other industry leaders in criticizing the new law during earnings season, including Amedisys CEO Paul Kusserow, Encompass CEO April Anthony, and LHC Group CEO Keith Myers.

A home health future

Breier’s comments came amid generally sunny news for the Louisville, Ky.-based provider’s home health care arm, which will form the backbone of Kindred’s business as it exits from skilled nursing: Kindred at Home now represents about half of Kindred’s consolidated earnings, and the company is the largest home health provider nationally.

In the second quarter, Kindred at Home turned in revenues of $644.5 million, a 3.2% year-over-year revenue increase, along with an admissions increase of 2.8%. Labor costs, meanwhile, dropped 3.0% per visit from the previous year.

The health care giant reported overall revenues of $1.5 billion in the second quarter, beating analyst projections by $50 million despite a year-over-year drop of 5.0%.

Meanwhile, the plans to sell off its skilled nursing facilities — which once accounted for the lion’s share of the company — are proceeding as planned, Breier indicated on the earnings call.

After an early-morning spike, KND stock remained largely flat on Friday, ticking up $0.03 in mid-morning trading.

Written by Alex Spanko