Florida Projects Steep Margin Decline for Medicare Home Health

Provisions within the proposed payment rule looks to negatively impact margins for Florida’s home health sector, according to analysis by the Home Care Association of Florida (HCAF) and the Partnership for Quality Home Healthcare.  

Using the Medicare Payment Advisory Commission (MedPAC) methodology to calculate margins, Florida’s medicare home health margin will fall to 5.2% by 2017 under the Home Health Prospective Payment System (HHPPS).

The current trajectory of Medicare home health reimbursement is on track to produce negative margins by 2017 in 10 states, even if home health payments are not subjected to further legislative and regulatory reductions, notes the analyses developed by Dobson DaVanzo and Associates and Avalere Health.

The decline is due to the impact of an estimated total of $72.5 billion in Medicare home health payment cuts—equivalent to a 22% reduction—made since 2009 through legislative and regulatory changes. 

“Home healthcare is a valuable and clinically-effective healthcare service to the seniors of Florida, who will be put at risk if home healthcare is subjected to more Medicare funding cuts,” said Bobby Lolley of HCAF. “Our community has been impacted by significant cuts in the last four years, which data show will put Florida Medicare margins at an all-time low.”

Under the Affordable Care Act (ACA), the Centers for Medicare & Medicaid Services (CMS) is directed to rebase home health payments between 2014 and 2017 by a percentage determined by the Secretary. 

This percentage is to be implemented in equal increments during each year from 2014 through 2017. 

The analyses illustrates the impact of cuts projected under multiple rebasing scenarios for Florida and the greater U.S. 

For example, if payments are rebased at 0.5% per year, the national average Medicare margin would fall to 2.7% in 2017. As a result, 18 states would have negative Medicare home health margins. 

If payments are rebased to the maximum of 3.5% per year, the national average margin for Medicare would enter negative territory beginning in 2015 and plummet to -11.4% in 2017. Under this scenario, every state in the nation would experience negative Medicare margins. 

Instead of more cuts, industry advocates encourage lawmakers to embrace pro-patient solutions that ensure beneficiary access to home healthcare services for all seniors. 

“We urge decision-makers to consider the economic we are already operating in before further reducing needed Medicare funding,” said Eric Berger, CEO of the Partnership for Quality Home Healthcare.

Across Florida, 342,570 Medicare beneficiaries receive skilled home healthcare from 1,342 home health agencies employing more than 64,000 professionals. 

Written by Jason Oliva