RehabCare Group Inc. CEO John Short said Tuesday proposed changes to the way therapy services are paid under Medicare would not fully cover the cost of care and would hurt operating earnings for the rehabilitation services provider.
Last week, the Centers for Medicare and Medicare Services announced proposed changes to the Medicare physician fee schedule.
Among the changes is a new rule for Medicare Part B therapy services that calls for a 50 percent reduction in reimbursement of practice expenses for secondary procedures when multiple therapy services are provided in the same day, RehabCare said.
That would result in a 10 percent rate reduction, net of a 2.2 percent rate increase to physician fees, for certain therapy services beginning Jan. 1.
Short said an internal analysis corroborated analyst estimates that the rule would lead to an annual drop of as much as $18 million on the operating earnings of RehabCare's skilled nursing rehabilitation services division.
That unit provides contract therapy services in skilled nursing facilities and derives about one-third of its revenues from Medicare Part B.
The impact on other divisions is not expected to be material, Short said.
"As we have done with every regulatory challenge, we will retool our operations, apply our advanced technology and prepare our clinicians to mitigate the operational impact of these changes without compromising our quality of care," Short said.
Shares of RehabCare slipped 19 cents to $22.57 on Tuesday.