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Home Health & Hospice Week

Industry Notes:

AMERICAN HOMEPATIENT BANKRUPTCY PLAN APPROVED

Published on Tue May 27, 2003

American HomePatient Inc. and its stockholders may be happy with a recent plan to emerge from bankruptcy, but its secured lenders aren't so sanguine about the deal.

AHP will pay off its lenders while stockholders retain equity in the company, according to a bankruptcy plan approved by federal court May 15. The plan, which will allow Brentwood, TN-based AHP to come out of Chapter 11 bankruptcy, calls for the company to continue its business operations uninterrupted under its current management team, AHP says in a release.

The durable medical equipment, respiratory and infusion company and its subsidiaries filed for reorganization bankruptcy last July.

The plan was hotly contested in April hearings by secured lenders, who protested their treatment under it, notes The Tennessean. The U.S. Bankruptcy Court for the Middle District of Tennessee approved the plan, but the secured lenders still may appeal it, points out AHP, which has 287 locations in 35 states.

And AHP reported promising earnings for the quarter ended March 31. The company saw net income of $4.3 million on revenues of $82.5 million, compared to a loss of $66.9 million on revenues of $79.8 million for the same quarter in 2002. The year-ago loss was mostly due to a change in accounting rules, the company notes.

  • The Centers for Medicare & Medicaid Services wants to add 19 more diagnosis-related groups to the list of DRGs that translate to less payment for hospitals when they discharge patients to home care and other postacute care services, CMS says in a May 19 Federal Register notice. The proposed DRGs range from 14 (Intercranial Hemorrhage and Stroke with Infarction) to 483 (Tracheo-stomy with Mechanical Ventilation 96 + Hours or Principal Diagnosis Except Face, Mouth, and Neck Diagnoses).

  • A federal judge May 8 sentenced Bayer Corp. after the company pleaded guilty to a felony charge connected with a private labeling scheme. Judge Richard Stearns ordered the company to pay a $5.6 million criminal fine. The company also will pay about $250 million to settle related civil claims.

    The Department of Justice maintains that Bayer engaged in "private labeling" for Kaiser Permanente. Bayer gave Kaiser a low price and affixed slightly different labels to the products it sold the HMO - labels that allowed the drugmaker to avoid reporting the discounted Kaiser prices to the federal government. That enabled Bayer to evade paying some of its rebates to Medicaid, which are designed to ensure that the government receives the lowest drug price offered to other purchasers.

  • Medicare managed care enrollees (32.4 percent) were more likely than fee-for-service Medicare beneficiaries (19.8 percent) to use hospice among people dying from cancer, says a study in the May 7 Journal of the American Medical Association. Length of stay also was longer for managed care patients, at 32 versus 25 days.

    Managed care plans are more successful than FFS providers at facilitating or encouraging hospice use.

    The finding suggests managed care plans are more successful than FFS providers at facilitating or encouraging hospice use, the JAMA study notes. While the high costs of end-of-life care give MCOs an incentive to transfer patients to the hospice benefit, the study found no evidence of inappropriate placement in hospice. To see the study abstract for free, go to http://jama.ama-assn.org/cgi/content/abstract/289/17/2238.

  • Fraud charges against a fiscal intermediary don't automatically mean that FI's data was faulty, a federal court says. Campbell's Personal Care, a home health agency in the Chicago area, filed suit after receiving an unfavorable Provider Reimbursement Review Board decision regarding visit numbers.

    Then-FI Blue Cross Blue Shield of Illinois failed to process all of CPC's claims for 1995 and therefore didn't reimburse the agency for all of its patients due to the faulty Provider Statistical & Reimbursement (PS&R) report, CPC argues in CPC v. Thompson (No. 01 C 5164). CPC's internal records showed it made 7,344 visits while BCBS IL paid it for only 5,769 visits, the agency claims in the suit.

    But the PRRB said the PS&R was the best evidence of CPC's 1995 visits, especially since the agency offered no explanation for why BCBS IL failed to pay the other claims. The court sides with the PRRB in its April 22 decision, deeming that CPC didn't bring forth enough evidence to prove its visit numbers over the PS&R numbers.

    CPC argued that BCBS IL's PS&R data should automatically be suspect because the FI was dismissed as a Medicare contractor due to claims fraud. However, the court notes those fraud allegations occurred in BCBS IL offices that didn't process CPC's claims, so the data still is reliable.

  • Veterans Affairs hospitals are woefully behind the curve on furnishing home care services and other non-institutional care for veterans, a General Accounting Office report set for release next month will say. Fifty-seven VA hospitals have seniors on home care waiting lists, and scores of other VA hospitals don't offer home care at all, reports the Sarasota (FL) Herald-Tribune.

  • Home care providers can dial in to a free CMS roundtable conference call on HIPAA implementation May 29 from 2 to 3:30 pm ET. To listen in on the call, which will provide information on electronic transactions and code sets as well as security, dial 1-877-381-6315 with ID number 42691 about 20 minutes before the call is set to begin, CMS says.

  • Gentiva Health Services Inc. plans to repurchase up to one million shares of its stock, the Melville, NY-based home nursing giant says. "Based on current market prices, we believe our stock is undervalued and we have an opportunity to buy back our shares at attractive levels," CEO Ron Malone says in a statement.

    Investors recently had been pressuring Gentiva management to use its high level of cash to make the stock buy-back (see Eli's HCW, Vol. XII, No. 17, Industry Notes).

  • Almost Family Inc.'s net income more than doubled over last year while its revenues were up a smidge, the Louisville, KY-based adult day care and home nursing provider reported. The company saw net income of $238,469 on revenues of $21.5 million for the quarter ended March 31, compared to net income of $110,318 on revenues of $20.6 million for the same quarter of 2002.

    Visiting nurse revenues grew from $7.4 million to $7.6 million in that period. Medicare and Medicaid reimbursement rate changes adversely impacted earnings, Almost Family said.

  • New York Health Care Inc. reported a net loss of $18.8 million for the quarter ended March 31, although its home care division generated net income of $156,000, the company says. The loss included a goodwill charge of $17.9 million taken on the home care business when NYHC merged with The BioBalance Corp.

  • VITAS Healthcare Corp. has opened three new locations, in Melbourne and Boynton Beach, FL, and Eatontown, NJ. "VITAS expects to announce further growth within the year," the Miami-based hospice chain says.

     

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