Home-health cos may take hit from unexpected govt proposal - Jefferies

Addus HomeCare

28/04/2023 13:56

** U.S. Centers for Medicare & Medicaid Services (CMS) late
on Thursday proposed a rule that requires at least 80% of
Medicaid payments for home- and community-based service (HCBS)
providers to be spent directly on compensation for care workers 
    ** Jefferies says the proposal from CMS is a "potentially
negative surprise", would put a margin cap on providers such as
Addus HomeCare Corp  ADUS.O , ModivCare  MODV.O  and Aveanna
Healthcare Holdings  AVAH.O   
    ** Brokerage adds that rolling out of this proposal "could
strain already stressed" profit and losses for most providers in
the space and could translate to reduced capacity 
    ** Says it expects strong pushback to the proposal over the
next few months, given how significant the changes can be
    ** HCBS provides opportunities for Medicaid beneficiaries to
receive services in their own home or community rather than
institutions or other isolated settings 
    ** So far this year, MODV shares are down ~21%, while ADUS
is up ~15% and AVAH is up 50% 

 (Reporting by Raghav Mahobe)
 ((Raghav.Mahobe@thomsonreuters.com;))