Home Health Overall Margins are Far Smaller than MedPAC- Calculated Margins

Posted on Friday, April 6, 2018 4:57 PM

A media outlet supported MedPAC’s recommendation to reduce Medicare reimbursement rates by 5% citing the high profit margin of 15 percent. 

The National Associate for Home Care and Hospice (NAHC) responded that MedPAC’s Medicare margin analyses over the years never have been accurate representations of the financial state of home health agencies.  The real profit margin is much closer to 2%. 

“As a calculation, MedPAC’s “Medicare margin” is accurate. However, it is not an accurate calculation of home health agencies’ true margins. First, MedPAC ignores over a thousand home health agencies that are classified as institution-based, i.e. those HHAs that are integrated into hospitals and nursing homes. These HHAs tend to have higher costs. Second, MedPAC discounts real clinical and business costs that are part of home health care. These other expenses include marketing, taxes, and additional clinical costs such as telehealth services, respiratory therapy, and nutrition assistance. These costs are excluded due to the continued use of an antiquated cost reimbursement model that has not been in operation in nearly 20 years while much has changed in health care over those two decades.”

NAHC sees a serious need to reform payment models of home health payers in order to stabilize the quality of care of millions of people. They will continue to work with CMS and other organizations to develop a payment system that improves care provisions across all patients.

Source: NAHC Report

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