MedPAC Recommends Home Health Rate Cut

WASHINGTON, D.C. (February 2, 2021)—During their recent Jan. 14-15 meeting, the Medicare Payment Advisory Commission (MedPAC) recommended to Congress a 5% base rate cut for home health services.

The recommendations follow the base rate discussions held during MedPAC’s previous meeting in December 2020. 

Prior to the vote, commissioners received a presentation from MedPAC staff on the current state of the home health program. In 2019 Medicare home health spending totaled $17.8 billion. Approximately 11,300 certified providers participated in the program providing care to 3.3 million beneficiaries across 6.1 million episodes of care. Ninety-nine percent of Medicare beneficiaries live in a zip code serviced by at least one home health provider. The presentation further revealed an average profit margin of 15.8%, and an all-payer profit margin nearing 6%.

MedPAC forecasts a 14% Medicare profit margin for 2021.

Concluding the presentation was a recommendation of a 5% base rate cut, consistent with what was discussed in the December meeting. This is estimated to result in between a $750 million – $2 billion in savings in 2022 and over $10 billion in savings over five years.

Following the presentation, a roll call vote among the commissioners was held resulting in unanimous approval of the 5% rate cut recommendation. This recommendation will be among a series that touch every aspect of the Medicare program. Combined, they will be presented to the Congress in March 2021.

MedPAC has consistently recommended rate reductions and other rate cuts to the home health program for years and for years the National Association for Home Care & Hospice (NAHC) has urged Congress to reject those recommendations. Accordingly, Congress has elected not to act on those recommendations. NAHC will continue to work with members of Congress to demonstrate that a rate cut of 5% would harm patients, as well as providers.

—via NAHC