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Policy Focus: Home Health Reimbursement

03.24.2019 | Ben Phillips, CFA

Policy In Focus - Home Health Reimbursement

The Policy in Focus series highlights a new policy driven investment theme (legislation or regulation) our team is monitoring. You can subscribe to the Weekly Market Recap to receive this report each week and visit www.EventSharesFunds.com for our investment solutions. 



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Background: Home Health Reimbursement


• The Centers for Medicare and Medicaid Services (CMS) finalized a proposed rule during October 2018 that changes the way post-acute care (e.g. home health) is reimbursed under the Patient Driven Groupings Model. The rule was a result of the Bipartisan Budget Act of 2018 and focuses on moving toward a values based payment system.

• The new rule finalized a controversial methodology for calculating reimbursement rates. The new approach applies a prospective behavioral adjustment to home health rates of -6.42%, which CMS estimated to account for changes by home health agencies in billing and coding to maximize payment rates.

• The new payment rates and methodologies are expected to be in place for fiscal year 2020.



Our Take & Timing: The Opportunity


This is a tough development for the home health industry, which had lobbied CMS aggressively to back off the -6.42% behavioral adjustment. However, CMS feels emboldened by Congress directing the agency to implement the new payment model. We expect the home health industry to continue pushing back against the new rule but are not confident they will be able to successfully lobby for its repeal.



LEARN MORE: This research is a byproduct of our active ETF.



Charts: Trading Range & Relative Performance


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Impacted Companies: Stocks to Watch


  • Home Health Companies: LHCG, AMED, CHE, ADUS
  • EventShares manages a portfolio of our best ideas.



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About EventShares


EventShares is an investment management firm dedicated to translating legislation and regulation coming out of Washington D.C. into real world investment solutions. The firm's goal is to provide its clients with attractive, long-term results by following a disciplined and differentiated approach to investing.

Headquartered in Newport Beach, CA EventShares serves individuals, financial advisors, as well as institutions and offers its sophisticated investment strategies through active ETFs and separately managed accounts (SMAs).


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