CHE · 10-Q · 2026Q1 · Full report

Reimbursement and Payer Mix

CHEMED CORP · 2026-04-28 · Importance 51 · Surprise 50

VITAS experienced a geographically weighted average Medicare reimbursement rate increase of approximately 2.6% in Q1 2026, contributing to revenue growth alongside days-of-care gains. However, acuity mix shifts negatively impacted revenue growth by 120 basis points, and Medicare cap and other contra revenue changes reduced revenue growth by an additional 47 basis points. Contractual allowances (implicit price concessions) at VITAS increased year-over-year, affecting net revenue as noted in the operating statistics. These dynamics reflect a mix of favorable rate increases offset by patient acuity and contra-revenue pressures in the hospice payer environment.

Key facts

• VITAS implicit price concessions (contractual allowances) were $(5,077) thousand for the three months ended March 31, 2026 versus $(2,319) thousand in prior year (118.9% change shown)
• VITAS increase in service revenues was comprised primarily of a 2.2% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.6%
• VITAS acuity mix shift negatively impacted revenue growth by 120 basis points in the quarter when compared to prior year
• Implicit price concessions for consolidated net revenue were $(7,786) thousand for the three months ended March 31, 2026 versus $(9,327) thousand in prior year (16.5% decrease)
• The combination of Medicare Cap and other contra revenue changes decreased VITAS revenue growth by 47 basis points
• Roto-Rooter implicit price concessions and credit memos decreased 16.5% mainly related to the water restoration business
• VITAS Medicare cap adjustment for the three months ended March 31, 2026: $(2,375) thousand (2.2% change shown in table)

Impact estimates