• By TED GRIGGS
• Advocate business writer
• Published: Jul 16, 2010 - Page: 6B

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Embattled home health provider Amedisys Inc. issued a 21-page letter to shareholders Thursday defending the company’s therapy practices, which became the subject of federal investigations after The Wall Street Journal questioned those methods.

In the letter, issued after markets closed, Amedisys Chairman and Chief Executive Officer William Borne repeated earlier assertions that the Journal analysis was based on “an inaccurate understanding of a very complex industry.”

Borne says the Journal story apparently assumed patient populations remained static from 2007 to 2008, when in fact many of Amedisys’ patients are “increasingly sicker and debilitated.”

Those patients required more therapy visits, Borne says.

The Journal found that home health firms apparently boosted visits to patients in order to trigger a $2,200 bonus from Medicare. The bonus kicked in at the 10-visit mark.

The Senate Finance Committee, which cited the Journal story, said between 2000 and 2007, Amedisys had three times as many patients that needed 10 visits than patients who had gotten nine visits. The Securities and Exchange Commission has also begun investigating Amedisys and other publicly traded home health firms.

Borne says Amedisys’ therapy visits are consistent with industry standards and medically necessary.

The company did more unpaid therapy visits — Medicare payments stop after a certain number of visits — than the industry did nationally, Borne says. In 2006 and 2007, Amedisys provided 3 percent more free visits than the industry as a whole; in 2008 and 2009, Amedisys provided 9 percent more free visits than the industry as a whole.

Providing those visits for no pay cost Amedisys more than $95 million.

In addition, only licensed therapists may recommend therapy and only physicians may approve it, Borne says. Amedisys’ physician consultants are not paid for referrals; the average physician consultant was paid no more than $2,600 in 2009.

Borne says Amedisys has actually been singled out for its quality care by the Centers for Medicare and Medicaid Services. In May, CMS awarded Amedisys $3.4 million based on its performance in the Medicare Home Health Pay for Performance demonstration program.

Shares of Amedisys, which closed up $1 to $26.76 Thursday, have fallen to less than half of the price they were before the Journal story and are now at their lowest level since 2006.

Michael Snow, Amedisys’ chief operating officer, said the shareholder letter gave the company a chance to tell its story.

The company has been purposefully quiet since the Journal story and investigations began, Snow said. Amedisys has provided all the information requested by the Senate Finance Committee and begun the process with the Securities and Exchange Commission, and it’s a good time to share some of that data with investors, it said.

Snow said there’s no timetable for the investigations, but Amedisys hopes the shareholder letter will remove some of the unknowns.

“The more uncertainty there is the more it’s reflected in investor sentiment, and that’s kind of what we’re seeing right now,” Snow said. “We’re hopeful that this will provide level of insight and help shareholders understand what’s going on.”

Eugene Goldenberg, an analyst with BB&T Capital Markets, said there was little new in the letter, and he’s doubtful that the letter can reverse the slide in Amedisys’ share prices.

Amedisys would have been better served by providing the information to shareholders earlier, say shortly after the data went to the Finance Committee on June 25, Goldenberg said. That might not have made a difference, but it would have been better than waiting until now.