Providence Service comments on the landmark healthcare legislation passed by the Senate

The Providence Service Corporation (Nasdaq: PRSC) today commented on the landmark healthcare legislation that was passed last week by the United States Senate. The Senate Bill, which still needs to be merged with the House Bill and therefore could still undergo substantial changes, has a number of features that are expected to add funding for many of the types of home and community based social services that Providence provides to Medicaid eligible populations. While the Senate's version of the bill also implements some cuts and cost saving measures, primarily to out of home care providers and hospitals' "Disproportionate Share" programs, the cuts are not expected to affect the Company's services.

Included in the Patient Protection and Affordability Act are:

• An increase in the eligibility for Medicaid to 133% of the federal poverty level. This is estimated to add approximately 15 million to the roles of Medicaid. The House version of the bill is even more generous and increases eligibility to 150%. This increase is designed to be effective in 2014 but the bill also provides incentives for states that are identified as early implementers.
• An increase in the percentage of state's Medicaid costs paid by the federal government, known as the state's FMAP.
• Expansion of the State Children's Health Insurance (SCHIP) Program. The expansion of SCHIP will include eligibility for foster care kids that previously were aging out of the system.
• Streamlined Medicaid enrollment, online enrollment, and new outreach services, for which $10 billion is provided over five years.
• Expanded community and home based services, with financial incentives for states to expand home based services and penalties for states that do not.
• The Community Living Assisted Support and Services Act (CLASS). CLASS, which is in both the Senate and House bills, mandates that states develop incentives for community and home based programs, requires outcome data, and provides preferential treatment to community health centers. This is well aligned with Providence's own mission statement to provide services in the home and community.
• Insurance Company Services Requirement. The Senate bill also includes a requirement that insurance companies spend 85% of revenues in services. This along with the requirement that everyone obtain insurance would make a whole new market available to the Company that has not been insured previously.

"After years of operating under the Medicaid waiver and continuing to demonstrate the value of home and community based services we are pleased that Congress is recognizing that preventative and home based care may be the best use of Medicaid dollars," said Fletcher McCusker, Chairman and CEO.

The bill will now go to a committee combined of House and Senate members to reconcile the differences in the two pieces of legislation. There could be substantial changes to the current draft and the benefits outlined above are contingent on the passage of a final bill.