Barclays views proposed CMS rule as slight negative for hospitals

Barclays says the Centers for Medicare and Medicaid Services proposed an expansion of the supplemental Medicaid payment cuts. The limits on fee-for-service supplemental payments are the “most notable unanticipated element” and would reduce supplemental payments to certain practitioners by 11%-14%, the analyst tells investors in a research note. The CMS is applying policy changes to all state directed payments regardless of service line, while the reconciliation bill only specified limits for those supplementing hospital, nursing facility, and certain qualified practitioner services, adds Barclays. The firm’s first impression of the proposed rule is that it is consistent with how it expected state directed payment policies to be implemented and a neutral or slightly negative development for hospital stocks HCA Healthcare (HCA), Tenet Healthcare (THC), Universal Health (UHS), and Community Health (CYH). Tenet is leading the group lower, trading down 4% to $179.69 in afternoon trading.