Oppenheimer on Healthcare: CMS Issues FY2013 Home Health Proposal - Modest Positive for AMED, LHCG & GTIV
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Rating Summary:
0 Buy, 11 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 35 | New: 23
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Oppenheimer on Healthcare: CMS Issues FY2013 Home Health Proposal
Analyst, Michael Wiederhorn, said, "CMS issued the FY2013 Medicare home health proposed rule, which would decrease Medicare rates by 0.1% in 2013, slightly better than our estimate. The components of the decrease are a 2.5% market basket increase, a 1.0% reduction mandated by the ACA, a 1.3% coding creep reduction that was carried over from last year, and a 0.3% reduction related to the wage index update. This proposal is 40 bps better than the rate assumptions in our home health estimates (we assume a 2.5% decrease, but include the 2.0% sequestration reduction not in the proposal). As a result, we believe this rule is modestly positive for all the home health companies (Amedisys (Nasdaq: AMED), LHC Group (Nasdaq: LHCG), Gentiva Health Services (Nasdaq: GTIV))."
"CMS also breaks out the impact by agency type, although agency-specific exposure tends to vary. By facility type, proprietary (for-profit) agencies are expected to see an overall decline of 0.2%, which is fractionally worse than the overall impact. Rural agencies are expected to see a -0.5% impact while urban agencies are projected to be held roughly flat. This could be slightly more negative for LHCG than for AMED and GTIV."
"Each 1% change in Medicare rates affects the public companies' 2013 EPS (and as a % of '13 EPS) as follows: AMED: $0.22 (23% of '13 EPS est.), LHCG: $0.13 (9%), GTIV: $0.14 (17%), and ADUS: $0.02 (3%)."
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Analyst, Michael Wiederhorn, said, "CMS issued the FY2013 Medicare home health proposed rule, which would decrease Medicare rates by 0.1% in 2013, slightly better than our estimate. The components of the decrease are a 2.5% market basket increase, a 1.0% reduction mandated by the ACA, a 1.3% coding creep reduction that was carried over from last year, and a 0.3% reduction related to the wage index update. This proposal is 40 bps better than the rate assumptions in our home health estimates (we assume a 2.5% decrease, but include the 2.0% sequestration reduction not in the proposal). As a result, we believe this rule is modestly positive for all the home health companies (Amedisys (Nasdaq: AMED), LHC Group (Nasdaq: LHCG), Gentiva Health Services (Nasdaq: GTIV))."
"CMS also breaks out the impact by agency type, although agency-specific exposure tends to vary. By facility type, proprietary (for-profit) agencies are expected to see an overall decline of 0.2%, which is fractionally worse than the overall impact. Rural agencies are expected to see a -0.5% impact while urban agencies are projected to be held roughly flat. This could be slightly more negative for LHCG than for AMED and GTIV."
"Each 1% change in Medicare rates affects the public companies' 2013 EPS (and as a % of '13 EPS) as follows: AMED: $0.22 (23% of '13 EPS est.), LHCG: $0.13 (9%), GTIV: $0.14 (17%), and ADUS: $0.02 (3%)."
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