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LHC Group Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 5, 2009 07:12AM
LHC Group (LHCG) filed Quarterly Report for the period ended 2009-09-30.
Highlight of Business Operations:
On July 30, 2009, CMS issued the calendar year 2010 proposed rule covering agency payment rates for home health services. The proposed rule provides for the following adjustments to the base rate: a 2.2% market basket increase, a 2.75% case mix creep decrease, and a 2.5% increase resulting from a modification to the current outlier policy. The new outlier policy proposes to cap outlier payments at 10% per agency and targets total aggregate outlier payments at 2.5% of total home health payments. The current aggregate target is 5.0% and there is no per agency limit. CMS also identified 1.81% in additional coding creep, leaving 6.89% in total cuts that could be implemented. The proposal lays out three scenarios for addressing the coding creep: 1) maintain the current 2.75% reduction for fiscal year 2010, 2) re-distribute it over two years (3.5% cut in both fiscal year 2010 and fiscal year 2011), or 3)accelerate the entire 6.89% in fiscal year 2010. Each of these scenarios would be offset by the 2.2% market basket increase and the 2.5% increase in the base rate for the outlier adjustment. This proposal goes into a 60-day comment period, and a final rule is expected out thereafter.
Hospice. On August 8, 2008, CMS issued the Hospice Wage Index for Fiscal Year 2009 Final Rule. This 2009 final rule provides for a payment increase consisting of a 3.6% market basket increase less a 1.1% decrease in the Budget Neutrality Adjustment Factor (BNAF). The 3.6% increase is applied to the national base rates from CMS Transmittal 1570 dated August 1, 2008, and the 1.1% BNAF reduction is applied to the geographically adjusted wage indices as indicated in the Federal Register dated August 8, 2008.
On August 6, 2009 CMS released its Final Fiscal Year 2010 Medicare hospice wage index rule, which will increase hospice rates by 1.4% in FY 2010. The rate increase reflects a 2.1% increase in the hospital market basket, offset by a 0.7% decrease resulting from the phase out of the hospice wage index budget neutrality adjustment factor (BNAF). CMS is phasing out the BNAF reduction over 7 years, with a 10% BNAF reduction in fiscal year 2010 and successive 15% reductions from fiscal year 2011 through fiscal year 2016. The rule is effective October 1, 2009.
To recap, the standard federal rate uses a 2.0% update factor based on a market basket update of 2.5% less an adjustment of 0.5% to account for changes in documentation and coding.
Home-Based Services. Net service revenue for home-based services for the three months ended September 30, 2009 was $116.7 million, an increase of $32.2 million, or 38.1%, from $84.5 million for the three months ended September 30, 2008. Total admissions increased 52.2% to 21,485 during the current period, versus 14,113 for the same period in 2008. Average home-based patient census for the three months ended September 30, 2009, increased 29.5% to 28,150 patients as compared to 21,733 patients for the three months ended September 30, 2008.
Net service revenue for home-based services for the nine months ended September 30, 2009 was $343.7 million, an increase of $114.4 million, or 49.9%, from $229.3 million for the nine months ended September 30, 2008. Total admissions increased 44.2% to 59,368 during the nine months ended September 30, 2009, versus 41,168 for the same period in 2008. Average home-based patient census for the nine months ended September 30, 2009, increased 39.6% to 28,454 patients as compared with 20,386 patients for the nine months ended September 30, 2008.