Home Health & Hospice Week

Amedisys settles fraud and self-referral charges for $150 million.

Medicare rate reductions took their toll on publicly traded home care chains in the third quarter. Three of the four chains saw profits drop, while two of them saw revenues dip.

Baton Rouge, La.-based Amedisys Inc. re-ported a whopping $91.8 million loss due to a newly announced settlement of fraud charges with the Department of Justice. "During the third quarter of 2013, we recorded an accrual of $150 million related to the tentative settlement of both the U.S. Department of Justice investigation and the Stark Law Self-Referral matter," the chain says in a re-lease. "We have agreed to this tentative settlement without any admission of wrongdoing in order to resolve these matters and to avoid the uncertainty and expense of protracted litigation." Amedisys will also enter into a Corporate Integrity Agreement with the HHS Office of Inspector General.

Amedisys saw revenues dip significantly as well, reporting $301.6 million in net revenues for the quarter ended Sept. 30, as opposed to $364.3 million in the year-ago quarter. The company reported a profit of $10.0 million in the third quarter of 2012.

"We reported results for the quarter that were below expectations," CEO Bill Borne says in the release. "Results were impacted by soft volume in both our home health and hospice business units and higher costs."

Amedisys Plans To Close Underperforming Locations

In a conference call discussing the results, Borne said Amedisys will close or merge 19 underperforming locations, Reuters reports. It’s also targeting for growth 35 locations that currently are too small to be profitable. Amedisys will have 450 locations after the 19 closures, according to the news service.

While Amedisys’ loss was the most spectacular, Lafayette, La.-based LHC Group and Louis-ville, Ky.-based Almost Family Inc. both saw profits drop in the quarter. LHC net income went from $7.9 million in the third quarter of 2012 to $6.9 million in the latest quarter, while Almost Family’s net income dropped from $4.1 million to $2.1 million in the same time period.

Gentiva Health Services Inc.’s net income increased from a $375,000 loss to a $3.8 million profit in that timeframe, but the Atlanta-based company cited "the 2013 home health Medicare rate reduction [and] the 2 percent sequestration rate cut on our Medicare-based revenues" as reasons that revenues fell from $424.4 million to $410.5 million in the time period.

LHC’s net revenues increased from $158.9 to $164.7 during that timeframe, while Almost Family’s increased from $83.9 million to $88.8 million.

"There’s clearly pressure on the top-line from rate cuts," CRT Capital analyst Sheryl Skol-nick said about Amedisys, according to Reuters. "Their revenue per episode (of care) continues to decline due to cuts that went into effect on January 1, sequestration being the largest."

Don’t expect things to get easier for home care providers any time soon. "The outlook for reimbursement is not better next year. In fact, it’s worse," Skolnick said.

The industry is seeing "continuing headwinds," acknowledged Almost Family CEO Bill Yarmuth, in the company’s earnings release.