Pennant Welcomes Home Health Payment Increase, Warns Of Fraud Rule Burdens

The Pennant Group’s (Nasdaq: PNTG) CEO Brent Guerisoli said the 2027 home health final rule’s payment increase is a welcome change, but warned that it falls short of protecting access to care.

Guerisoli said that the 2.4% aggregate rate increase included in the final rule is a step in the right direction, but insufficient.

“Home health reimbursements must account for the impacts of high inflation and must appropriately compensate high-quality providers,” Guerisoli said. “We will continue to work with our industry partners to advance positive home health policies, and we are encouraged to see the introduction of bills in the House and the Senate that call upon those bodies to redress the persistent underfunding of home health.”

Guerisoli said that Pennant supports the Centers for Medicare & Medicaid Services’ (CMS) efforts to root out fraud, but that several of the new fraud reduction measures included in the final rule are unnecessarily broad and will impose burdens on legitimate providers. Still, he said the company is prepared to adapt to the changes.

Among the final rule’s fraud-focused measures are a policy making all Medicare enrollment revocations retroactive to the date that noncompliance began and expanded grounds for revocation or denial of enrollment.

Pennant hauled in $302.3 million in total Q3 revenue, a 32% increase year-over-year. The company’s home health and hospice segment came in at $239.8 million, an increase of 38.2% year-over-year.

In Q3, the company recorded 28,479 home health admissions, a 39.4% increase year-over-year. Its hospice arm’s average daily census for the third quarter was 5,443, an increase of 34.6%.

The company faced unexpected headwinds from elevated employee benefit expenses in Q3. Pennant has self-funded plans, so the expenses affected all of the company’s service lines. Leadership said that the company would work to more predictably manage those costs in the future. Guerisoli said Pennant incorporated expectations for those expenses into Q4 projections, but that the company is still on track to achieve its full year guidance.

The company said it completed the two largest and final waves of transitions in Q3 as it integrated 54 locations it acquired through UnitedHealth Group’s (NYSE: UNH) acquisition of Amedisys. The electronic medical record transition was completed Oct. 31, though some transition work remains. Leadership anticipates that the company will complete its transition in Q4.

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