MEDPAC Recommends Substantial Reduction to Home Health PaymentsThe Health Group, LLC MedPAC’s March 2023 Report to Congress included the following recommendation: “Our review of payment adequacy for Medicare home health services indicates that access is more than adequate in most areas and that Medicare payments are substantially in excess of costs. Home health care can be a high-value benefit when it is appropriately and efficiently delivered. Medicare beneficiaries often prefer to receive care at home instead of in institutional settings, and home health care can be provided at lower costs than institutional care. However, Medicare’s payments for home health services are too high, and these excess payments diminish the service’s value as a substitute for more costly services. On the basis of these findings, the Commission recommends that, for calendar year 2024, the Congress should reduce the 2023 base rate by seven percent (7%)." The recommendation is largely justified by MedPAC on the basis that in 2021 the average cost of a thirty (30) day episode of care decreased by 2.9%, Medicare’s payment per in-person visit increased by 17.6%, and the Medicare margin for freestanding agencies averaged 24.9%, a historical high. MedPAC acknowledges that home health care can be provided at lower costs than institutional care; however, the excess payments diminish the service’s value as a substitute for more costly services. Amazingly, the number of home health agencies continues to decline as follows:
Since 2013, the number of home health agencies has decreased by over 10%. In fact, not only have the number of agencies declined, the number of Medicare fee-for-service (“FFS”) beneficiaries using home health services has declined as well. MedPAC describes the reduction as follows: “More Medicare beneficiaries are enrolling in Medicare Advantage, reducing the demand for FFS Medicare services. In addition, aggregate and per capita hospitalizations, which are a common source of referrals to home health care, have declined in recent years.” The Report briefly discusses the increase in the use of telehealth services. CMS is now requiring agencies to report telehealth services. In 2023, CMS implemented a permanent reduction to the thirty (30) day period base rate of 3.925%, half of the amount calculated to maintain budget neutrality. Even if the base rate is reduced by an additional 3.925%, MedPAC believes additional decreases to the base payment rate are needed due to the margins being reported by agencies. The MedPAC Report is available here. |