Following the recommendation for a 7% reduction in home health, MedPAC issues an annual report to Congress

Back in January, the Medicare Payment Advisory Commission (MedPAC) voted unanimously to recommend a 7 percent cut in payments to home health agencies in 2024. The commission officially released its report to Congress on Wednesday.

Overall, the report covers Medicare payment policy, including Medicare fee-for-service payment systems for home health care.

An estimated 3 million fee-for-service Medicare beneficiaries received care in 2021, and the program spent $16.9 billion on home health services, according to the report.

A total of 11,474 home health organizations were part of the Medicare program.

MedPAC deemed access to home health care appropriate in 2021.

Specifically, more than 98% of Medicare beneficiaries lived in a zip code where there were at least two home health agencies serving the area. Also, 87.6% of beneficiaries lived in a zip code where five or more agencies served the area.

From 2020 to 2021, there was a 0.8% decline in the number of agencies, which is a lower rate than previous years.

“The slower decline in the supply of [home health agencies] suggests that neither the coronavirus pandemic nor the major revisions to the home health prospective payment system introduced in 2020 have had a significant impact on [home health agency] delivery,” MedPAC wrote in its report.

When looking at the volume of services, the number of fee-for-service beneficiaries who received home health care declined by 1.1%. Volume in the 30-day periods also declined by 2.9%.

Overall, fee-for-service saw enrollment decline due to more beneficiaries enrolling in Medicare Advantage.

“As a result, the number of 30-day periods per 100 [fee-for-service] beneficiaries increased by almost 1% in 2021, and the share of [fee-for-service] beneficiaries using home health care increased to 8.3%,” MedPAC wrote. “The average number of in-person visits in a 30-day period decreased 4%, but some of the decline could be offset by greater use of virtual visits through telehealth.”

In terms of quality of care, in 2021 the average successful discharge rate to the community from home health agencies was 52.2% and the average hospitalization rate was 18.2%.

“The pandemic and policies related to the public health emergency confound our assessment of trends in both quality measures,” MedPAC wrote. “Additionally complicating assessment, the home health payment system now uses a shortened payment unit—a 30-day unit instead of 60 days—which changes the period used in the post-discharge hospitalization measure.”

The average price per 30-day period decreased by 2.9% in 2021, indicating a decrease in the number of visits per 30-day period. At the same time, Medicare payment for an in-person visit jumped 17.7%.

Also, in 2021, Medicare margins for stand-alone agencies averaged 24.9%, compared to 20.2% in 2020 and 15.4% in 2019. This was an all-time high.

“These high margins indicate that the increase in payments in 2021 far exceeds the increase in costs,” MedPAC wrote. “Overall, Medicare payments have always been significantly more than costs: From 2001 to 2019, the Medicare margin for self-employed [home health agencies] average 16.4%’.

Estimated margin for 2023 is 17%.

Ultimately, MedPAC found that access to Medicare home health services was adequate in most areas and that Medicare payments were “significantly above costs.”

“Medicare payments for home health services are too high, and these overpayments reduce the value of the service as a substitute for more expensive services,” the organization wrote. “Based on these findings, the Commission recommends that the [the] calendar year 2024, Congress should cut the base rate for 2023 by 7%.”

Leave a Comment

Your email address will not be published. Required fields are marked *