Is Rebasing Home Health Care to Reduce “Very” High Margins Long Overdue?

The Medicare payment system for home health care needs to change in order to reduce “very, very high” margins, said the chairman of the Medicare Payment Advisory Commission (MedPAC) in a June 19 hearing before the House Ways and Means Health Subcommittee.

Finding ways to control the costs of the Medicare program is a key element of MedPAC’s purpose, and the June 2012 report to Congress was focused on “key design issues” surrounding how to restructure cost-sharing and payment under the current fee-for-service system. The commission covered three topics: reforming Medicare’s benefit design, care coordination in fee-for-service Medicare, and care coordination programs for dual-eligible beneficiaries.

“Given the current fiscal issues facing the Medicare program, it is critical that the Committee ensures that taxpayer and beneficiary dollars are being spent appropriately.  MedPAC’s thoughts on reforming Medicare’s benefit design are important as the Committee considers much needed and long-overdue structural improvements to the program,” said House Ways and Means Health Subcommittee Chairman Wally Herger (R-Calif.) leading up to the hearing.  

Providers need to be incentivized to maintain access to care while improving quality and efficiency, in light of “limited financial resources,” says MedPAC. One way to improve payment systems to to make sure the Medicare program reimburses adequately, but not too much.

“Our analysis shows margins are very, very high in home health care. We recommend a series of changes in the home health system,” said MedPAC Chairman Glenn Hackbarth during the hearing.

Medicare needs to rebase the rates and improve the case mix system, so that payment for any episodes doesn’t just depend on the base rate, but can also be adjusted for the patient’s condition, he said. 

Both the Centers for Medicare & Medicaid Services (CMS) and Congress are responsible for following MedPAC’s recommendations and adjusting base rates for reimbursement, said the MedPAC chairman.

Written by Alyssa Gerace

Alyssa Gerace

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