Modivcare CEO Strikes Optimistic Tone On Personal Care Segment, Final 80-20 Provision

Modivcare Inc. (Nasdaq: MODV) is currently facing financial hurdles, but believes its “wins will outpace the losses” by the end of 2024.

Without some contract wins being reflected until later quarters, contract losses are overshadowing gains, according to the company’s leaders.

Its personal care segment has been steady thus far at least, growing 5% year over year. But earnings results were dragged down by higher operating costs, which Modivcare CEO Heath Sampson said will eventually be neutralized by better platform efficiencies.


“Shifting to personal care, the first quarter results were impacted by higher than expected wage increases and higher centralized costs that will be synergized this year,” Sampson said on the company’s first-quarter earnings call Friday.

Modivcare’s service revenue totaled $684.5 million, a 3.3% year-over-year increase. But the company also posted a net loss of $22.3 million in the quarter.

Sampson also struck an optimistic tone when touching on the Medicaid Access Rule, which was released last week by the Centers for Medicare & Medicaid Services (CMS), with the 80-20 provision included.


The 80-20 provision would mandate that all home- and community-based services (HCBS) providers direct 80% of reimbursement to direct care workers.

“Last week, CMS issued the long awaited final rule, ensuring access to Medicaid services, otherwise known as the 80-20 rule for personal care services,” Sampson said. “While the 80% provision was maintained in the final rule, we are pleased that the clinical nursing cost will be included in the 80% calculation. We were also pleased that the implementation timeline increased from four to six years before it goes into effect.”

If and when the 80-20 provision does take shape as finalized, Modivcare believes it will be able to offset the effects of it with the benefits of scale.

Sampson reiterated the positives of the extended timeline and the inclusion of clinical nursing costs in the 80% throughout the call.

But he, like other HCBS leaders, believed that there was a chance the 80-20 provision never took shape at all – at least in its current form.

“Ultimately, we anticipate legal challenges and legislation could change the rule,” Sampson said. “However, we expect to be able to offset any impact with operating efficiencies and growth.”

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