NEW YORK ( TheStreet) -- Shares of Kindred Healthcare and its competitors tumbled late Friday after the Center for Medicare & Medicaid Services said it's reducing payments for skilled nursing facilities by $3.87 billion in fiscal 2012 from this year's levels.
In its statement, the CMS said the changed rates will "correct for an unintended spike in payment levels and better align Medicare payments with costs."
"CMS is committed to providing high quality care to those in skilled nursing facilities and to pay those facilities properly for that care," said CMS Administrator Donald Berwick. "The adjustments to the payment rates for next year reflect that policy."
Kindred's stock was last quoted at $15.15, down 20%, on volume of more than 170,000, according to Nasdaq.com.Other names being dragged lower included Skilled Healthcare (SKH - Get Report), down 20% to $7 on volume of around 40,000; Five Star Quality Care (FVE - Get Report) , off 9% to $4.49 on volume of more than 180,000; Sunrise Senior Living (SRZ), slipping 18% to $7.23 on volume of around 11,000; Brookdale Senior Living (BKD - Get Report), off 6% to $20.04 on volume of 20,000; Omnicare (OCR - Get Report), losing 4% to $29.26 on volume of 24,000; and Molina Healthcare (MOH - Get Report), falling 3% to $22 on volume of less than 10,000. Sun Healthcare (SUNH) also took a sizable hit, plunging 34% to $4.58 on volume of more than 340,000. The American Health Care Association called the change "unnecessary" in a statement. "The CMS rule makes reductions beyond what is necessary for budget neutrality," said Mark Parkinson, the association's president and CEO, in a statement. "This will threaten our ability to provide quality care to America's seniors. Coupled with changes in group therapy definitions, this drastic reduction will be especially challenging for skilled nursing facilities to manage." -- Written by Michael Baron in New York.
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