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Home Health & Hospice Week

Industry Notes:

Gentiva, Apria Part Ways On $45 Million Contract

Published on Thu Jan 29, 2004

A big chunk of respiratory and durable medical equipment business may be up for grabs now that Apria Healthcare Group Inc. has pulled out of a contract with Gentiva Health Services' CareCentrix division.

Gentiva's managed care division now is selecting home care providers to fulfill its contracts regionally rather than nationally, the Melville, NY-based home health giant says in a release.

Lake Forest, CA-based DME giant Apria says it's not renewing the contract, which expired Dec. 31, 2003, because of an "inability of the parties to reach an agreement on contract terms for 2004 and beyond." The move will reduce Apria's 2004 revenue growth rate to the 5 to 7 percent range, the company says in a statement.

Both companies say they will work closely together to ensure continuity of care for existing patients who are transferred to other providers.

Analysts at investment firm Jeffries & Co. said "we applaud [Apria] management's decision to exit from this contract," which was worth about $45 million in annual revenues. "The profitability characteristics of the proposed contract were unacceptable," they judged.

And Jeffries urged Gentiva management to give "serious thought to diversifying its revenue base either through new managed care contracts or through an expansion of its Medicare business."

  • Some Medicare contractors got a taste of their own medicine when the HHS Office of Inspector General audited them for valid costs recently. The funds expended and reported to the Centers for Medicare & Medicaid Services by regional home health intermediary United Government Services in March 2003 passed muster, but the OIG did find some minor problems at the intermediary. "UGS misclassified certain reported amounts and did not always deposit cash receipts timely due to isolated internal control weaknesses," the OIG says in a summary of the report (A-01-03-00521).

    Meanwhile, the OIG found $370,602 of direct costs reported by DME regional carrier Cigna from 1996 to 2001 were unallowable, and $30.7 million of indirect costs were "considered unsupported and set aside for adjudication" by CMS (A-04-02-02022).

  • Tennessee home health agencies finally are seeing results from two lawsuits filed against the state's TennCare Bureau, which administers Medicaid. TennCare beneficiaries have received a letter explaining that they are entitled to medically necessary home care, reports the Tennessee Association for Home Care. "If you need home health care for a medical reason, TennCare pays for as much as you need. They keep paying as long as you need it," says the TennCare letter.

    Among other allegations, the lawsuits charged that TennCare prevented beneficiaries from receiving home care in order to push them into skilled nursing facilities, which were paid for out of a separate fund. The plaintiffs in the lawsuits and their attorney Gordon Bonnyman settled the suits last fall.

  • Medicaid beneficiaries in Kentucky soon may be able to participate in a consumer-directed care pilot program. Under the pilot, approved by the House Health and Welfare Committee Jan. 22, up to 1,000 participants would be able to use funds to buy medical supplies and hire whomever they wish to perform custodial home care duties, reports the Lexington Herald Leader. A counselor would help them make choices.

    The bill goes to the state's full House for consideration next, the paper says.

  • Louisiana is taking applications for its new home care program, brought about by the U.S. Supreme Court's Olmstead ruling. While the state has offered home care waiver programs before, this marks the beginning of its mainstream Medicaid home care program, reports the Associated Press.

    The program received federal approval in late December and is expected to cost $19 million. The state will send out an explanation letter about the program to about 200,000 beneficiaries soon.

    To come into fruition, the program had to triumph over opposition from the powerful nursing home lobby, AP notes. About 90 percent of the state's long-term care spending now goes to nursing homes.

  • Empire State HHAs will be hurting if Gov. George Pataki's (R) budget goes through as proposed. Pataki is calling for a 0.7 percent tax on agencies' gross revenues, according to press reports. But New York City Mayor Michael Bloom-berg (R) opposes the tax, saying it would cost the city's home care program too much money.

  • Publicly announced home health mergers and acquisitions decreased slightly in the fourth quarter of 2003 compared to the third - three versus four deals - reports New Canaan, CT-based Irving Levin Associates Inc. The figure was down from nine deals announced in the fourth quarter of the previous year, a 67 percent drop.

  • Another hospital is shedding its home care program. Ware, MA-based Mary Lane Hospital will close its Visiting Nurse Association's doors April 30, reports AP. "The decision to close these services was very difficult, but it was made for the sake of future financial strength of our hospital so that we continue to provide other services that benefit all residents of our communities," said a hospital official.

    Patients whose care hasn't wrapped up by the closure date will be transferred to other HHAs. The hospital is trying to find new positions for its 29 home care employees, AP says.

  • Nearly half of adults who expect to start providing care or companionship to an elderly relative in the next five years haven't started planning for the care, according to a new Harris Interactive study conducted for Home Instead Senior Care. Seventy-six percent of those haven't spoken with other family members about it, and 70 percent haven't spoken with the person who will need the care, the Omaha, NE-based private duty chain says.

    Home Instead has more than 400 offices in 45 states, employing 20,000 caregivers, it says.

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