MedPAC Calls for Home Health Payment Rate Reduction

Posted on Monday, December 21, 2020

The Medicare Payment Advisory Commission (MedPAC) met for numerous sessions to discuss recommendations that the panel will vote on in 2021 and present to Congress as formal recommendations for the various sectors of the Medicare program.

In the home health session, MedPAC shared that in 2019, home health spending under traditional fee-for-service (FFS) Medicare totaled $17.8 billion, accounting for about 4.4 percent of aggregate Medicare FFS spending. The number of active agencies was reported at over 11,300, providing 6.1 million episodes of care to 3.3 million beneficiaries. These figures represent slight decreases from 2018 and continue a slow downward trajectory.

MedPAC staff reported average Medicare FFS profit margin at 15.8 percent, and all-payer profit margins at 5.9 percent. Looking forward to 2021, MedPAC staff predict a 14 percent profit margin. which it based on a decreased base payment rate due to the PDGM behavioral assumptions and added personal protective equipment and other COVID-19 related expenses.

As a proposed recommendation, MedPAC staff suggested a 5 percent cut to the base payment rate, consistent with recommendations from many years past, except for this past year, when a 7 percent cut was recommended. While not specifically stated, the return to a 5 percent payment reduction is likely attributable to lower projected profit margins, the result of added COVID-19 expenditures. Commissioners voiced unanimous support for the proposed recommendation. A formal vote will follow in January 2021.

Source: NAHC Report

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