After adding 23 home health locations and 22 hospice locations in 2018, Encompass Health (NYSE: EHC) plans to spend tens of millions of dollars to further bolster those areas in 2019. Preparing for 2020 regulatory changes will also remain top of mind for the company in the year ahead.
“If you think about our priorities for 2019, they continue to be focused on growth,” Encompass Health President and CEO Mark Tarr said during a presentation at the 37th Annual J.P. Morgan Healthcare Conference in San Francisco Tuesday.
Birmingham, Alabama-based Encompass Health is the largest owner and operator of inpatient rehabilitation facilities (IRFs) and the fourth-largest provider of Medicare-certified home health services in the United States.
Currently, it operates 130 IRFs and 220 home health locations, as well as 58 hospice locations — which increased nearly 60% in 2018 with the acquisition of Camellia Healthcare.
In 2019, Encompass Health plans to spend $50 to $100 million to grow and acquire new home health and hospice locations, but has no immediate plans to enter that personal care market, Tarr said during the presentation.
Earlier this year, Tarr told Home Health Care News about the company’s playbook to drive more collaboration between its IRFs and home health agencies. Adding more agencies near IRFs further increases that integration, with the premise being that the health care system overall is demanding more coordinated care. Medicare specifically is moving toward episodic, site-neutral payments.
Preparing for regulatory changes from the Centers for Medicare & Medicaid Services (CMS) — such as the Review Choice Demonstration (RCD) and Patient-Driven Groupings Model (PDGM) — will also remain paramount for Encompass Health in 2019.
For example, Encompass Health will continue to push back on certain aspects of PDGM, namely its widely opposed behavioral adjustments.
“The area we will continue to work with CMS in terms of our communication and our disagreement essentially of the approach is the 6.4% reduction of the base rate in terms making this a budget neutral roll-out from a regulatory standpoint,” Tarr said.
Set to be implemented Jan. 1, 2020, PDGM is intended to remove current incentives to over-provide therapy services and cut the 60-day episode of care unit of payment to 30 days, according to CMS.
“When you look at the 6.4% behavioral offset to bring this to a budget neutrality proposition, that 6.4% is about three times what we’ve seen in terms of historical behavioral adjustment, so it’s not only the fact that they’re rolling it out, but the fact that it is such a high percentage,” Tarr said. “It’s just unreasonable to think that that will go in place on day one in terms of all these behavioral offsets that they are anticipating.”
Other 2019 goals for Encompass Health include adding at least four news IRFs, continuing to grow its post-acute solutions and building out its stroke patient market share.
Encompass Health’s home health and hospice segment revenues totaled $242 million in the third quarter of 2018, up more than 22% on a year-over-year basis.
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