Annual Report on Medicare Financing Could Reduce the Immediate Impetus to Address Longstanding Issues
Healthcare Financial Management Association | By Nick Hut
Even though the latest actuarial analysis arguably diminishes the short-term urgency surrounding the program, stakeholders see ample reason to act quickly.
New data on the state of Medicare funding show short-term improvement while keeping the stakes high for ensuing decades.
The annual report from Medicare’s trustees shows the Hospital Insurance Trust Fund (i.e., Medicare Part A) has enough money to keep beneficiaries covered and providers paid through 2036. That’s an increase of five years from the 2023 report and eight years from the 2022 projection.
In the unlikely event policymakers ever allow insolvency to happen, providers would incur an immediate 11% reduction in Medicare payments. From there, “Medicare could pay health plans and providers of Part A services only to the extent allowed by ongoing tax revenues — and these revenues would be inadequate to fully cover costs,” the trustees’ report states. “Beneficiary access to healthcare services could rapidly be curtailed.”
The improved short-term outlook is based on higher income stemming from increases in the number of covered workers and in average wages. In addition, expenditures are lower than previously projected, in part because of a change instituted by CMS to constrain Medicare Advantage (MA) payments by excluding MA-associated medical education expenses from benchmark calculations.
Updated number-crunching also has resulted in lower projections for spending on inpatient care and home health services as the trustees phase out some of the mathematical adjustments that were applied during the COVID-19 pandemic.
Nonetheless, Medicare fee-for-service (FFS) inpatient payments are anticipated to rise by 2.3% this year, 2% in 2025, and then by 5.4%-5.5% per year through 2029. The jump during the latter part of that window partially would be linked to a projected deceleration in the shift from FFS to MA.
A drag on the economy
Medicare costs are projected to comprise 3.9% of GDP in 2025, up from 2.19% in 2000, although the 2025 number is down from a projected 4.13% in last year’s report. Within a decade, the figure is expected to reach 5.3%.
“I wouldn’t put that much stock in the trust fund number per se,” Michael Chernew, PhD, professor of healthcare policy at Harvard Medical School, said during a May 7 webinar hosted by the Committee for a Responsible Federal Budget (CRFB). “I think the bigger issue with Medicare is just the overall burden that the program is placing on the economy.”
That strain is expected to grow over the long term, reaching 6.2% at the end of the 75-year window examined in the latest report...
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New Episode Alert: Dive into Episode 4 of 'Home on the Go'
SEASON 1 EPISODE 4 - OUT NOW! 
Whether you’ve been a home health P.T. for 6 months or 20 years, a sense of burnout can happen along the way. Administrative requirements, productivity expectations, professional isolation, and patient/family social dynamics are just a few of the stressors P.T.s may experience while on the job. Responsibilities encountered outside of work such as caring for children or an aging parent may lead to a sense of being in fight-or-flight mode 24/7.
This podcast dives into the research behind burnout and concludes with strategies P.T.s can use to avoid exhaustion, depersonalization, and reduced personal accomplishment during their career.
Click Here to Listen Now! |
Debbie Stabenow, Susan Collins Advocate Against Home Health Payment Cuts In Letter To CMS
Home Health Care News | By Andrew Donlan
Sens. Debbie Stabenow (D-Mich.) and Susan Collins (R-Maine) recently sent a letter to Centers for Medicare & Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure, urging her and the agency to avoid cuts to home health payment as it nears time to release a proposed rule for 2025.
“We appreciate CMS’ commitment to helping people get the care they need, where they need it.
This must include home health services for people with Medicare,” the senators wrote. “As CMS proceeds to develop Medicare home health payment rates for 2025, we urge you to consider the value home health care provides to the Medicare program and its beneficiaries.”
Generally, the home health payment rule proposal comes out sometime in June, with the final rule coming out at some point in late October or early November.
Since the implementation of the Patient-Driven Groupings Model (PDGM) in 2020, home health providers have seen steep and permanent cuts to payment. For instance, over the last two years, providers have seen cuts of 2.890% and -3.925% materialize.
“We are concerned that CMS recently finalized home health payment methodology that has led to steep cuts, essentially canceling out market basket updates intended to help Medicare payments keep up with inflation,” the senators continued. “Under this methodology, Medicare home health payment rates have been stagnant over the past three years, and CMS has indicated that further cuts are planned.”
The Partnership for Quality Home Healthcare (PQHH) released a data brief to illustrate how severe the cuts’ impact would be over the next five years – if not mitigated – in late April.
On Friday, PQHH commended Stabenow and Collins for taking action.
“Senators Stabenow and Collins are true champions for Medicare home health, and we applaud their continued leadership to protect the Medicare benefit and access to home-based healthcare for older Americans,” PQHH CEO Joanne Cunningham said in a statement. “We urge CMS to listen to the Senators’ advice to ensure beneficiary access to home health is prioritized in their rulemaking.” |
Medicare Go-Broke Date Extended to 2036, but Warning Bells Continue Ringing
Healthcare Dive | By Pifer
The Medicare trustees’ new projection for insolvency is five years later than previous forecasts, but budget hawks warned action is still needed to shore up the insurance program’s finances.
Dive Brief:
- A key trust fund underpinning the massive Medicare program has a new insolvency date: 2036, according to a new report from the Medicare trustees.
- That’s five years later than the go-broke date in last year’s report, thanks to more workers being paid higher wages causing more revenue to flow into the trust fund’s coffers, along with lower spending on pricey hospital and home health services.
- Still, looming insolvency absent action in Washington remains a serious source of concern for the longevity of Medicare, which covers almost 67 million senior and disabled Americans, according to budget hawks.
Dive Insight:
Dire predictions in the annual Medicare trustees report have varied in the past few years. In 2020, in the early throes of COVID-19, the board predicted the Hospital Insurance Trust Fund fund would run out by 2026. That deadline was pushed back to 2028 and then 2031 in subsequent years’ reports, amid a broader economic rebound and more care shifting to cheaper outpatient settings.
Now, the trustees — a group comprised of the Treasury, Labor and HHS secretaries, along with the Social Security commissioner — are forecasting an additional five years of breathing room for Medicare solvency.
Along with the healthier economy, that’s in part due to the Inflation Reduction Act passed in 2022, which restrains price growth and allows Medicare to negotiate drug prices for certain Part B and Part D drugs, and should lower government spending in the program overall, according to the report.
The Hospital Insurance Trust Fund, which pays hospitals and providers of post-acute services, and also covers some of the cost of private Medicare Advantage plans, is mostly funded by payroll taxes, along with income from premiums.
The HI fund is separate from another trust fund that covers benefits for Medicare Parts B and D, including outpatient services and physician-administered drugs. That Supplemental Medical Insurance trust fund is largely funded by premiums and general revenue that resets each year and doesn’t face the same solvency concerns.
In 2023, HI income exceeded spending by $12.2 billion. Surpluses should continue through 2029, followed by deficits until the fund runs out entirely in 2036, according to the report.
At that point, the government won’t be able to pay full benefits for inpatient hospital visits, nursing home stays and home healthcare.
Spending is projected to grow substantially in Medicare largely due to demographic changes…
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What Home-Based Care Providers Need To Do To Comply With DOL’s Overtime Rule
Home Health Care News | By Joyce Famakinwa
Last month, the U.S. Department of Labor (DOL) unveiled its final overtime rule, which is set to go into effect this summer. The rule increases a minimum salary threshold for millions of workers across the country, and could impact home health and home care providers.
Broadly, the DOL has increased the salary threshold for the minimum compensation necessary for an individual to be exempt from overtime under the Fair Labor Standards Act.
“For federal purposes, that minimum salary threshold will increase as of July 1 of this year, and then increase again at the beginning of 2025, and then continue to increase every three years, so that the salary threshold doesn’t become out of date with actual compensation,” Angelo Spinola, the home health, home care and hospice chair at the law firm Polsinelli, told Home Health Care News.
Specifically, the salary threshold will rise to the equivalent of an annual salary of $43,888, and will increase to $58,656 on Jan. 1.
Currently, the annual salary threshold is $35,568.
“This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time,” Julie Su, acting secretary of labor, said in a press statement. “Too often, lower-paid salaried workers are doing the same job as their hourly counterparts, but are spending more time away from their families for no additional pay. That is unacceptable.”
Once it begins, the rule could impact both home care and home health providers in a variety of ways.
“For office staff that typically are not compensated all that highly, the new salary level may result in a requirement to increase their salaries, or to move them to non-exempt status and pay them overtime,” Spinola said. “I am expecting to see a lot of reclassification.”
For home health providers, the rule also means that clinicians who are paid per visit may need their rates adjusted to align with the new minimum salary equivalent. Providers that aren’t paying high enough visit rates run the risk of clinicians’ being found to be misclassified as exempt.
On the flip side, the rule’s impact is very dependent on what is going on at each individual company. Some providers might see any effect at all, according to William A. Dombi, president of the National Association for Home Care & Hospice (NAHC).
“That could mean at some health care companies, they have everybody above the minimum salary level to begin with and will continue to be above that on January 1 of 2025, and nothing then occurs as an impact,” he told HHCN.
Though there’s a possibility that some companies will see no impact at all, Dombi doubts that this will be the case for the majority of providers…
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