MedPAC Projects 11.8% Medicare Margins in Home Health for 2013

Medicare margins to home health agencies are projected to be about 11.8% in 2013, according to the Medicare Payment Advisory Commission (MedPAC) in its latest report to Congress, representing a decrease from previous years. 

Payments to home health agencies have consistently and “substantially” exceeded costs, according to MedPAC, with Medicare margins reaching 14.8% in 2011 and averaging 17.7% between 2001 and 2010.

Medicare payments to home health agencies declined by about 5% or $1 billion in 2011, despite a level volume of services. MedPAC attributes the decline in payments to a reduction in the Medicare base rate, with lower spending following several years of increased rates. Total spending between 2002 and 2011 increased by 92%, according to MedPAC.


MedPAC is sticking with its 2011 recommendation to rebase the home health prospective payment system, change the case-mix system, implement a copay for certain home health episodes, and investigate and stop fraud and abuse in areas with aberrant patterns of use of home health services. 

“Overpaying for home health services has negative financial consequences for the federal government and raises Medicare premiums paid by the beneficiary,” says the report. “Implementing the Commission’s prior recommendation for rebasing would reduce payments and better align Medicare’s payments with the actual costs of home health agencies.” 

The number of agencies participating in Medicare reached 12,199 in 2011, and 99% of the program’s beneficiaries have access to a Medicare-licensed home health agency. 


View MedPAC’s Report to the Congress: Medicare Payment Policy

Written by Alyssa Gerace