Home Health & Hospice Week

Lawsuit, DOJ take bites out of VITAS and Odyssey earnings.

The backlash against the booming hospice industry seems evident in two recent settlements.

Miami-based VITAS plans to settle a class action Fair Labor Standards Act Wage and Hour lawsuit pending in California for $13.1 million, while Dallas-based Odyssey HealthCare Inc. plans to pay $13.0 million to settle a previously announced Department of Justice investigation.

VITAS has tentatively agreed to the lawsuit settlement in light of "a significant increase in litigation, high settlements and unfavorable verdicts against companies involving wage-hour claims in California," Cincinnati-based parent Chemed Corp. says in a release.

Sparked by two whistleblower lawsuits against Odyssey, the DOJ has investigated "the clinical eligibility of long-length of stay patients during a five year period from 2001 through 2005," Odyssey CEO Robert Lefton says in a release. "We are settling this matter to resolve the substantial uncertainties, delays, distractions and costs associated with litigating complex regulatory matters, thereby permitting our management team to focus its complete attention on patient care, operations and business development."

Odyssey won't admit any wrongdoing in the settlement, which will complete the DOJ's investigation. The company will enter into a corporate integrity agreement with the HHS Office of Inspector General.

VITAS reported $2.5 million in net income on $169 million in revenues for the quarter ended Dec. 31, compared to a $10.7 million profit on $142.3 million in revenues for the same quarter in 2004.

Odyssey reported a $1.8 million loss on $101.8 million in revenues for the quarter, compared to an $8.8 million profit on $91.3 million in revenues for the year-ago quarter. Hurricanes Katrina and Rita and Medicare cap exposure also contributed to the loss, Odyssey said. • HHAs may already be seeing their January claims reprocessed. Regional home health intermediary Palmetto GBA expects to begin reprocessing home health claims affected by the Deficit Reduction Act rate change by Feb. 24, a spokesperson tells Eli. CMS has issued a Medlearn Matters article about the payment rate change at www.cms.hhs.gov/MedlearnMattersArticles/downloads/MM4282.pdf.

• There may be more bad news for home health agencies' hopes for a Medicare payment rate increase in 2007. Medicare spending on home health grew 15.2 percent in 2005, projects the Centers for Medicare & Medicaid Services Office of the Actuary. That's the fifth consecutive year of double-digit growth, CMS notes in a release.

CMS expects Medicare home health spending to increase an average of 6.9 percent annually from 2007 to 2015. Medicaid home health spending grew 18.6 percent in 2005, CMS estimates, and will continue to increase an average of 10.9 percent a year from 2007 to 2015. More information is at www.cms.hhs.gov/NationalHealthExpendData/03_NationalHealthAccountsProjected.asp. • Providers have received two cash flow-reducing instructions from CMS. The payment floor for paper claims [...]