RehabCare Estimates Impact of Proposed Medicare Part B Therapy Rate Reduction
June 29 2010 - 6:54PM
Business Wire
RehabCare Group, Inc. (NYSE: RHB) has responded to changes to
the Medicare Part B therapy services included in the proposed
Medicare Physician Fee Schedule rule, which was released by the
Centers for Medicare and Medicaid Services (CMS) on June 25 and
could go into effect Jan. 1, 2011. The proposed rule calls for a
50% reduction in reimbursement of practice expenses for secondary
procedures when multiple therapy services are provided in the same
day. This would result in an approximate 10% rate reduction (net of
a 2.2% rate increase to the physician fee schedule) for Part B
therapy services in calendar year 2011.
John H. Short, Ph.D., RehabCare President and Chief Executive
Officer, commented, “These proposed changes took us and seemingly
everyone else in the industry by surprise. Successful
implementation of healthcare reform requires a transparent,
deliberative and collaborative process. In their proposed rule, CMS
has elected not to follow this process resulting in a policy that
is insufficient to cover the cost of care. We will be providing
comments to CMS that challenge this rate of reduction.”
Dr. Short said an internal analysis has corroborated recent
analyst reports that estimate a $17 to $18 million annual impact on
operating earnings in the Company’s Skilled Nursing Rehabilitation
Services (SRS) division, if the proposed rule is implemented
without changes or mitigations. The SRS division provides contract
therapy services in skilled nursing facilities and derives
approximately one-third of its revenues from Medicare Part B. He
added that the impact on other divisions is not expected to be
material.
“As we have done with every regulatory challenge, we will retool
our operations, apply our advanced technology and prepare our
clinicians to mitigate the operational impact of these changes
without compromising our quality of care. Similar to our mitigation
strategy for concurrent therapy changes that go into effect Oct. 1,
2010, this proposal will require us to utilize more group therapy
and investigate modality options that can supplement individual
therapy when clinically appropriate, to rely on our automated
clinical care pathways to track Part B costs and to moderate labor
costs,” said Dr. Short. “We will provide a further update on these
proposed changes and our strategies to offset them at our second
quarter earnings conference call on Aug. 4, 2010.”
Established in 1982, RehabCare (www.rehabcare.com), a St.
Louis-based company, is a leading national provider of post-acute
services, managing rehabilitation programs in partnership with over
1,270 hospitals and skilled nursing facilities in 41 states and
owning and operating 35 long-term acute care and rehabilitation
hospitals. RehabCare is included in the Russell 2000 and Standard
and Poor’s Small Cap 600 Indices.
This press release contains forward-looking statements that are
made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements are based
on the Company’s current expectations and could be affected by
numerous factors, risks and uncertainties discussed in the
Company’s filings with the Securities and Exchange Commission,
including its most recent report on Form 10-K, subsequent quarterly
reports on Form 10-Q and current reports on Form 8-K. Do not rely
on forward-looking statements as the Company cannot predict or
control many factors that affect its ability to achieve the results
estimated. The Company makes no promise to update any
forward-looking statements because of changes in underlying
factors, new information, future events or otherwise.
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