Addus HomeCare may exit states if CMS advances Medicaid wages rule


Addus HomeCare may pull out of states with low Medicaid reimbursements if the Centers for Medicare and Medicaid Services moves forward with a proposal requiring states to spend 80% of home- and community-based services funding on caregiver wages.

Chair and CEO Dirk Allison challenged the federal government’s authority to dictate caregiver wage percentages to states and said a one-size-fits-all mandate would create an administrative nightmare for providers operating across multiple states. Addus HomeCare offers personal care, home health and hospice services in 22 states.

CMS announced the Ensuring Access to Medicaid Services rule in April, pitching it as an effort to boost pay for home care workers, promote recruitment and improve access to home-based services. The regulation followed a related executive order President Joe Biden issued days before.

If CMS finalizes the rule as proposed, Frisco, Texas-based Addus HomeCare “would move out of some states if necessary and grow in markets where the rule works,” Allison said during a call with investors about the company’s second quarter financial results.

Net income increased 31.9% to $14.9 million in the second quarter, or $0.91 per diluted share, as revenue rose 9.7% to $260 million. Addus HomeCare shares opened at $94.55 on the Nasdaq stock exchange Monday, up 3.3% from Monday’s close.

Despite the strong quarter, executives said the home care industry is struggling to navigate the crosscurrents of rising demand, a labor shortage and new regulations.

In addition to the caregiver wages plan, CMS proposed a 2.2% cut in Medicare reimbursements for fiscal 2024 in June. Last month, the National Association for Home Care and Hospice filed suit against CMS over the regulation. On Monday, that organization and the Partnership for Quality Home Healthcare wrote CMS arguing a rate reduction could drive home health agencies out of business and limit access to care.

Allison told investors that these regulatory challenges nevertheless don’t alter the company’s long-term growth perspective or its pursuit of home care acquisitions. “We think these changes indicate that you need to be larger as a company so that when you sit across the table from Medicare Advantage payers and others, you have something that they need, which is size and quality of operation,” he said.

On Tuesday, the company announced it completed its $40 million acquisition of Parsons-based Tennessee Quality Care, a home health, hospice and private duty nursing provider formerly owned by Franklin, Tennessee-based American Health Partners.


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