MedPAC Flags Home Health Referral Problems in Report to Congress

The Medicare Payment Advisory Commission (MedPAC) has alerted Congress to how rarely home health patients pick their neighborhood’s highest quality provider after being discharged from the hospital.

MedPAC compiles its regular report to advise Congress on payments to health plans participating in the Medicare Advantage program and providers in Medicare’s traditional fee-for-service program, but lawmakers are not required to follow its recommendations. The commission issues its reports in March and June. The latest report, issued last Friday, addresses home health-related topics that MedPAC previously discussed during public meetings, including the issue of people choosing low-quality post-acute providers. It also tackles the issue of how a unified post-acute payment system might handle subsequent stays.

Medicare policy places a premium on protecting a patient’s ability to choose a post-acute care (PAC) provider, but does not encourage them to pick the best one. As a result, more than 94% of beneficiaries who use home health agency services after a discharge have at least one provider within a 15-mile radius with a higher quality score than the provider from which they receive services, a MedPAC review of referral patterns revealed. About 70% of beneficiaries have five or more home health agencies in their area known to provide better quality care.


The difference in quality of care is often not even close, according to MedPAC.

“The magnitude of the quality difference between the higher performing nearby providers and the provider selected was substantial in many cases,” MedPAC observed in its report.

There are several possible explanations as to why patients don’t always pick providers with the highest quality ratings, according to MedPAC. In some cases, patients who are hospitalized may be too distracted or sick to conduct a thorough investigation into their post-acute care provider options. Similarly, family members may also be too worried or stressed to fully explore options on their behalf.


Medicare discharge planning regulations place responsibility with hospitals for connecting patients with post-acute care providers and educating them about available options. Hospitals, however, are prohibited from recommending specific providers.

“Concern about protecting patient choice … makes some discharge planners cautious in the assistance they provide, even when patients ask for their opinion,” stated MedPAC. “Hospital and health system representatives have been concerned that [CMS’ conditions of participation] do not adequately define permissible educational activities that respect the beneficiary’s freedom to select a PAC provider.”

Helping beneficiaries to identify better quality PAC providers should be a goal in a reformed discharge planning process, as should the ability for hospital discharge planners to recommend specific providers, according to MedPAC. As part of such reform, though, policies would need to be implemented that safeguard against potential conflicts of interest where planners recommend specific providers for factors other than quality of care, the commission argued.

Home Health Compare has had little impact 

Emerging evidence also suggests that Medicare’s Nursing Home Compare and Home Health Compare data have had little impact in motivating patients to pick high-quality providers, the MedPAC report found.

Since home health data became available on, top-performing agencies have, on average, increased their market share by less than 1%.

“While provider quality information can be useful for consumers, it has had limited or minimal success in getting beneficiaries to select higher quality providers,” MedPAC stated.

Paying for home health stays in a unified PPS

Medicare currently uses separate prospective payment systems to pay for stays across the post-acute care landscape, made up of skilled nursing facilities, home health agencies, inpatient rehabilitation facilities and long-term care hospitals. MedPAC, mandated by Congress, described a possible unified PAC payment system last June and recommended a corresponding implementation in 2021.

Under such a unified PAC payment system, payments to home health agencies would decrease over the course of a sequence of stays, but costs of those stays would decline even more, making later home health stays in a sequence more profitable than earlier stays, MedPAC found in its latest report.

“The higher profitability for later home health stays suggest the need for an adjustment to payments based on the timing of the stay to more closely align payments with costs,” MedPAC stated. “Otherwise, [home health agencies] could generate additional profits by referring beneficiaries for additional home health care, assuming the beneficiary continued to meet coverage rules.”

Read the full report here.

Written by Robert Holly

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