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Pennant Group CEO Brent Guerisoli welcomed a 2.4% aggregate payment increase in the 2027 Medicare home health final rule, but said it does not adequately address inflation or underfunding. He also supports efforts to combat fraud while warning that expanded enrollment rules could burden legitimate providers.
The Pennant Group welcomed the 2.4% aggregate payment increase in the 2027 Medicare home health final rule, but CEO Brent Guerisoli said the adjustment is not enough to protect access to care. He also said Pennant supports efforts by the Centers for Medicare & Medicaid Services to curb fraud, while warning that some new enrollment measures are too broad and could burden legitimate providers.
Guerisoli described the rate increase as a step in the right direction, but said reimbursement needs to reflect high inflation and adequately compensate providers delivering high-quality care, echoing concerns raised by other providers. He said Pennant will work with industry partners on policy and welcomed bills introduced in the House and Senate that call for action on what he described as persistent home health underfunding. The source report does not identify the bills or give their provisions.
The final rule includes fraud-focused changes that make Medicare enrollment revocations retroactive to the date noncompliance began and expand the grounds for revoking or denying enrollment. Guerisoli said Pennant is prepared to adapt, even as he objected to the breadth of some measures. CMS’s stated goal, as described in the report, is to root out fraud; Pennant’s concern is the effect of the rules on compliant organizations.
Pennant reported $302.3 million in third-quarter revenue, up 32% year over year. Its home health and hospice segment generated $239.8 million, a 38.2% increase. Home health admissions reached 28,479, up 39.4%, while hospice average daily census was 5,443, up 34.6%. The company also reported higher employee benefit expenses, which affected its service lines because it uses self-funded plans. Guerisoli said those costs were included in fourth-quarter projections and that Pennant remained on track to meet full-year guidance.
Payment and Compliance Pressures
The rule affects two pressures facing home health providers at once: Medicare reimbursement and the obligations tied to maintaining enrollment. Pennant’s response signals that a payment increase may not resolve provider concerns about whether rates keep pace with costs. At the same time, retroactive revocations and broader denial grounds could carry operational and financial consequences for agencies found noncompliant.
Pennant’s third-quarter growth provides company-specific context, but it does not establish how the rule will affect its future revenue, costs or access to care. The company has said it is prepared to adapt; the source report does not quantify the cost of implementing the new requirements or forecast their impact on patients. The policy’s practical effect will depend on how the rules are applied and how providers respond.
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Pennant’s Growth and Integration
The comments came alongside a period of expansion for Pennant. In the third quarter, it recorded higher revenue and activity across home health and hospice, with year-over-year increases in segment revenue, admissions and hospice census. These figures describe the company’s reported results; they do not show whether the growth was caused by the payment rule, which concerns 2027.
Pennant also said it completed the two largest and final waves of transitions in the third quarter as it integrated 54 locations acquired through UnitedHealth Group’s acquisition of Amedisys. The electronic medical record transition was completed on Oct. 31, but some transition work remained. Company leadership expected to finish the broader transition in the fourth quarter. Separately, elevated employee benefit expenses were an unexpected third-quarter headwind, and leadership said it would work to manage those costs more predictably.
Rule Effects Still Unmeasured
The source report does not specify when each fraud provision takes effect, how CMS will interpret the expanded grounds for revocation or denial, or what safeguards may apply to providers disputing a decision. It also gives no estimate of the rule’s financial effect on Pennant or the wider home health sector. Guerisoli’s comments reflect the company’s assessment; they do not establish that compliant providers will be penalized or that access to care will decline.
The report does not identify the House and Senate bills he referenced or say whether either has advanced. Pennant’s full-year guidance is not stated, and the expected completion of its remaining integration work was a company projection, not a reported completed milestone.
Implementation and Integration Milestones
CMS will implement the 2027 final rule, and providers will need to respond to its payment and enrollment requirements. The report gives no implementation schedule beyond the rule’s 2027 designation, so the specific effective dates and guidance available to providers remain to be confirmed.
Pennant said it was prepared to adapt to the fraud measures and expected to complete the remaining work on its 54-location integration in the fourth quarter. It also said its projections incorporated higher employee benefit expenses and that it remained on track for full-year guidance. Subsequent company updates should clarify whether the transition was completed, how benefit costs developed and whether the final rule changed Pennant’s operating plans.
Key Questions
What payment increase does the 2027 final rule include?
The rule includes a 2.4% aggregate rate increase for home health payments, according to the source report. The report does not provide further detail on how that aggregate figure applies to individual providers.
Why does Pennant say the increase is insufficient?
CEO Brent Guerisoli said reimbursement must account for high inflation and appropriately compensate high-quality providers. The company characterized the increase as a positive step but not enough to address what it calls persistent underfunding.
What fraud-related changes did Pennant question?
The rule makes Medicare enrollment revocations retroactive to when noncompliance began and expands grounds for revocation or denial of enrollment. Guerisoli said some measures are overly broad and could burden legitimate providers, while also saying Pennant supports efforts to combat fraud.
How did Pennant perform in the third quarter?
Pennant reported $302.3 million in total revenue, up 32% year over year. Its home health and hospice segment recorded $239.8 million in revenue, while home health admissions totaled 28,479.
What remains to be completed at Pennant?
The company said its electronic medical record transition was completed Oct. 31, but some work remained on integrating 54 locations acquired through UnitedHealth Group’s acquisition of Amedisys. Leadership expected the broader transition to be completed in the fourth quarter.
Source: homehealthcarenews.com
