MedPAC Recommends Home Health Rate Cut

Situation Report | February 8, 2021

During a recent meeting last month, the Medicare Payment Advisory Commission (MedPAC) recommended to Congress a 5 percent 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 percent, and an all-payer profit margin nearing 6 percent. MedPAC forecasts a 14 percent Medicare profit margin for 2021. 

However, MedPAC’s analysis does not include margins from hospital-based agencies who traditionally have low or negative margins — an exclusion that HCA has repeatedly taken issue with.

The 5 percent base rate cut now being recommended is estimated to result in between $750 million to $2 billion in savings in 2022 and over $10 billion in savings over five years. 

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. 

MedPAC has consistently recommended rate reductions and other rate cuts to the home health program for years. HCA and the National Association for Home Care and Hospice (NAHC) have urged Congress to reject those recommendations. Accordingly, Congress has elected not to act on those recommendations.

HCA will continue to work with members of New York’s Congressional Delegation to demonstrate that a rate cut of 5 percent would unduly harm services and access to care provided by New York’s home health agencies.