MedPAC Unanimously Recommends Lower Home Health Care Fee

In a unanimous vote Thursday, the Medicare Payments Advisory Commission (MedPAC) recommended a 7% reduction in Medicare’s base rate of payment for home health care in 2024.

This recommendation is in line with the commission’s previous recommendations over the years.

The impact of the 7% cut would mean, among other things, a $750 million cut in government spending to $2 billion over one year, commission members said.

“In terms of the implications for beneficiaries and providers, we expect that access to care should remain adequate, and this should not affect the willingness of providers to serve beneficiaries,” Evan Christman, senior analyst at MedPAC, said during an open panel meeting on Thursday. “But it could increase pricing pressure for some suppliers.”

The Commission, created under the Balanced Budget Act of 1997, meets regularly as part of its mission to brief Congress on Medicare spending and policy.

In 2021, Medicare spent $16.9 billion on home health care services, according to MedPAC.

More than 11,400 agencies provided home health services to 3.3 million beneficiaries.

Elsewhere in its report, MedPAC suggested that access to home health care is adequate, citing that 98% of beneficiaries live in a zip code with two or more agencies in 2021.

“We saw a decrease in total volume, but an increase in volume per capita,” Christman said. “Agencies had a positive Medicare margin of 25.9% in 2021. In terms of access to capital, large commercial agencies continue to have adequate access to capital and we expect this to continue. The margin for all payers was positive in 2021 at 11.9%.”

Source: MedPAK

MedPAC was unable to measure the quality of care due to pandemic and public health emergency policies, Christman said.

The margin for Medicare and home health care costs was 24.9% in 2021, with a median margin of about 28%.

Overall, MedPAC has long been opposed to high home health margins, although the industry itself says the commission’s analyzes are deeply flawed and unfairly inflated.

Because of this, MedPAC has a history of home health care recommendations. Home health care providers strongly disagree with these recommendations, citing inflation, recruitment problems, required investment, and lower Medicare Advantage plan payments.

Source: MedPAK

In addition to home health care recommendations, MedPAC also voted to approve recommendations to reduce 2023 Medicare-based fee rates for qualified nursing facilities by 3%, the cumulative hospice limit by 20%, and inpatient rehab facility rates by 3%.

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