Public home health care companies saw immediate effects from a July 25 proposal by the Centers for Medicare & Medicaid Services (CMS) to overhaul the Medicare home health payment system. Along with a marginal reduction in reimbursement payments for 2018, the proposal also included the home health groupings model (HHGM)—a model home health care companies see as a threat and a major upheaval to business operations.
Amedisys (Nasdaq: AMED) CEO Paul Kusserow had some fighting words to say about the new groupings model during the company’s earnings call Thursday morning: “Please also remember, it ain’t over until it’s over.”
Kusserow’s words echo what industry groups have stated over the past few days since the proposal was introduced on Tuesday in CMS’ 2018 prospective payment system update. The payment update proposes to reduce Medicare home health spending by 0.4% in 2018. The groupings model would change the unit of payment for agencies from a 60-day episode of care to two 30-day episodes of care, which amounts to an estimated $950 million overall payment cut.
The groupings model also eliminates any incentive for home health care agencies to provide more therapy that comes with higher reimbursement rates—an area that has been flagged as ripe with fraud.
Kusserow expressed worry that doing away with these high reimbursement rates will effectively push home health care providers away from caring for higher acuity patients. The move is in opposition to health care system initiatives that have enabled home health care providers to care for higher acuity patients since the implementation of the Affordable Care Act (ACA).
“It’s going to push it into institutional settings and the cost [of care] will go up,” he said during the earnings call. “It will limit us in terms of patients we can take care of. We’re trying to move up the acuity scale, not down the acuity scale. It seems like the government is going backwards on this one.”
Amedisys, which has seen its stock price take a dive since Tuesday, is one company that has stated it will work with CMS and the Trump administration, and hopes to see a better solution than the groupings model.
Beyond upcoming challenges with the groupings model and further reimbursement cuts likely in store for the home health care industry and Amedisys, the company is also up against operational challenges heading into the second half of 2017.
For another consecutive quarter, Amedisys has seen weak growth in its Medicare home health admissions volume. For the first six months of 2017, same store Medicare home health admissions declined 2%, while total admissions grew just 1%.
“We expected tough results,” Kusserow said of the second quarter earnings related to the admissions volume. “We are hitting on all cylinders except for home health volume growth.”
Executives stated they expect these figures to improve in the second half of the year as new hires come on board.
With lower growth in this part of the business, but high growth in hospice and personal care, executives signaled they wouldn’t be focused on home health acquisitions first, particularly with the new payment system proposal hanging in the air.
The hospice segment saw another strong quarter, with 11% growth in admissions.
Overall, the company saw a net service revenue increase of $18.1 million to $378.8 million during the second quarter of 2017, compared to $360.7 million during the same three-month period last year.
As of mid-day trading Thursday, Amedisys’ stock was down more than 3%, hovering near $47. Since the beginning of the week, the stock has tumbled from above $59 per share.
Written by Amy Baxter