Almost 50% of Home Health Care Agencies Will Lose Money in 2012 on Medicare Services

Despite claims by Medicare Payment Advisory Commission (MedPac) of high medicare home health care margins, a new report from an industry trade group estimates that nearly 50% of all agencies will experience negative Medicare margins in 2012.

The white paper was published by the National Association for Home Care and Hospice to explore the issues involved in rebasing payment rates for the Medicare home health benefit. As part of President Obama’s health care law, the U.S. Centers for Medicare and Medicaid is required to implement rebased health rates in 2014.

Using data gathered from 8,992 freestanding and hospital based agencies, NAHC found that 37.4% of the companies lost money from providing Medicare home health care services in 2010.

“Currently, the financial status of HHAs is unstable as evidenced by the wide range in Medicare margins,” said the report. “That range is primarily due to extreme visit cost variations with much of these costs outside the control of the HHA.”

These financial results occur partially as a result of the fact that Medicare’s base rate does not include all costs involved in delivering care. For example, the use of tele health services has grown significantly, but Medicare does not include it as an allowable cost when calculating the base rate.

NAHC says it estimates that the overall margin for Medicare participating home health agencies in 2010 is actually 3.15% when factoring all the costs associated with running a business in the industry. This comes after the MedPAC published a report earlier this year showing that home health agencies saw a margin of 19.5% on services paid by Medicare.

“The Medicare margins data only show a portion of the financial status of home health agencies,” said the report in response to MedPAC. “If hospital-based HHAs are included in the overall margin calculation, it is highly likely to be below zero as these HHAs generally have Medicare margins in the negative.”

If CMS moves forward without correcting the way it calculates Medicare’s base rate, “it will likely destroy access to care in many parts of the country,” said the report.

View the report here.

Written by John Yedinak

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