Federal and state sanctions contributed to InnovAge’s $13.5 million loss during the fiscal fourth quarter, InnovAge said late Tuesday during a quarterly earnings call. However, executives expressed optimism that the sanctions in California and Colorado related to enrollment violations could soon be lifted for the Denver-based Programs for All-Inclusive Care for the Elderly (PACE).
During the call, CEO Patrick Blair outlined progress the company is making to address operational deficiencies that led the Centers for Medicare and Medicaid Services, as well as regulators in Colorado and California, to suspend enrollment in InnovAge’s PACE programs in Colorado and Sacramento earlier this year.
“Starting with Sacramento, we have achieved five consecutive months of target performance against key audit measures,” Blair said. “CMS and the state have acknowledged our progress and we are working closely to determine the remaining steps before entering the validation process. We don’t know the date when sanctions will be released, but we are confident we’re on the right path.”
Blair added CMS and Colorado regulators signed off separately on InnovAge’s action plan to correct deficiencies in its PACE programs there last spring and all parties are working towards the validation process.
InnovAge executives blamed the ongoing sanctions and continuing effects from the COVID-19 pandemic for the company’s disappointing fiscal fourth quarter, which ended June 30. On Tuesday, InnovAge reported a quarterly loss of $0.09 a share on revenues of $172.9 million. That compares to a profit of $0.05 a share on revenues of $171.6 million during the same period last year. For the full fiscal year, the company lost $0.05 a share on revenues of $698.6 million compared to a loss of $0.36 a share on $637.8 million in revenues.
Late last year, CMS froze enrollment at InnovAge’s PACE programs in Colorado and Sacramento, CA, after a federal audit found the programs were not providing enrollees with medically necessary items and services that are covered under PACE, a community-based program for dual eligible Medicare and Medicaid beneficiaries. The action led to the ouster of former CEO Maureen Hewitt, with Blair taking over leadership in January. Earlier this summer, investors filed suit against the firm, claiming it violated securities laws when it went public last year by aggressively putting enrollment for profit ahead of the health needs of PACE participants
Blair told analysts the company has since identified the root causes of the audit deficiencies and has outlined a number of objectives to address them, including hiring additional staff, improving staff training and building up payer capabilities.
“We believe excellence in these areas will not only reduce future compliance risk, but is also bedrock to a repeatable operating playbook,” he said.
