MedPAC Calls for Up to $2 Billion in Home Health Cuts for 2020

The Medicare Payment Advisory Commission (MedPAC) is once again calling for steep cuts to the Medicare base payment rate for home health agencies.

MedPAC’s recommendation comes despite the U.S. health care system’s steady march into the home and the fact more care is being delivered in residential settings.

Specifically, MedPAC officials are recommending that Congress should reduce the calendar year 2019 Medicare base payment rate for home health agencies by 5% in 2020. The commission made the recommendation during a public meeting held earlier in January.  

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If carried out, the cut would lower home health spending by $750 million to $2 billion in 2020, MedPAC estimates. Projected out even further and at a similar level, the cut could lead to $5 billion to $10 billion in savings over a five-year period.

“The impact to beneficiaries should be limited, and we do not expect it to affect beneficiary access to care,” MedPAC officials stated during the meeting, a public transcript shows. “And it should not affect provider [willingness] to serve beneficiaries.”

MedPAC made a matching recommendation for a 5% cut to in-patient rehabilitation facilities (IRFs) as well.

MedPAC’s recommendation is in contrast to steps the Centers for Medicare & Medicaid Services (CMS) has taken to increase funding for home health care services. In October, for example, CMS finalized a 2.2% Medicare payment rate bump for home health agencies in 2019 estimated at about $420 million.

MedPAC’s mandate is to advise Congress on Medicare payment practices, but the legislative branch is not required to heed the commission’s recommendations.

CMS’ reimbursement rate increase was the first the home health industry had seen in roughly a decade.

For context, Medicare spent about $17.7 billion on home health services in 2017, with roughly 11,800 agencies that provided about 6.3 million episodes of care to 3.4 million beneficiaries. About 8.8 million fee-for-service beneficiaries used home health services in 2017, according to MedPAC.

In terms of quality measures, hospitalization rates and emergency department use have generally remained unchanged over the past few years, commission officials noted.

The issue of a unified post-acute payment system was also brought up during MedPAC’s January meeting.

Medicare currently uses separate prospective payment systems to pay for stays across the post-acute care landscape, made up of skilled nursing facilities (SNFs), home health agencies, IRFs and long-term care hospitals (LTCHs). MedPAC has long been considering how a unified post-acute care payment system would work.

“When we think about the unified PAC PPS, I think about the IRFs and the SNFs and home health as being a pretty clear continuum, and I do like the idea of trying to base it on what the patient needs are,” MedPAC Commissioner Jonathan Jaffery stated. “But I still wonder if LTCHs … the level of care for patients who go to LTCHs is actually pretty close to acute care hospitals [more] than these other areas.”

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