MedPAC Pushes 5% Home Health Payment Cut, Says Program Integrity Remains a Challenge

The Medicare Payment Advisory Commission (MedPAC) submitted its Medicare payment policy report to Congress on Friday, again recommending a 5% home health payment rate reduction for the coming year and maintaining its view that program integrity remains problematic.

MedPAC is required to report to Congress each March on the Medicare fee-for-service (FFS) payment systems, the Medicare Advantage (MA) program and the Medicare prescription drug program.

Its recommendation to cut the home health payment rate by 5% in 2020 follows similar recommendations in 2018 and 2017.


While MedPAC recommended rate cuts for home health, hospice and in-patient rehabilitation facility (IRF) payment systems, it suggested positive payment updates in 2020 for both traditional hospitals and long-term care hospitals (LTCHs), in addition to dialysis services. MedPAC recommended no updates to physician, skilled nursing facility (SNF) and ambulatory surgical center payment systems.

The recommendations from MedPAC should be no surprise to home health and hospice providers, National Association for Home Care & Hospice (NAHC) President William A. Dombi said in a statement provided to Home Health Care News.

“We disagree with those recommendations in all respects,” Dombi said.


Congress is not required to follow MedPAC’s recommendations. Payment cuts to the home health care space are often substantially less — or in complete contrast to — the recommended figure.

Although MedPAC recommended a 5% cut in 2019, for example, the Centers for Medicare & Medicaid Services (CMS) ultimately announced in October there would be a projected 2.2% home health payment rate increase for providers this year.

“As in past years, the report falls short of a full disclosure and presentation of the facts relevant to Medicare payment rates,” Dombi said. “While there are some improvements in the way data is presented, the report continues to rely on simple averages that do not display the wide range in financials for providers, gives short shrift to hospital-based providers, and essentially ignores the overall financial status of home health agencies and hospices.”

Apart from the 2020 payment cut recommendation, MedPAC once again urged Congress to consider a unified post-acute care payment system to replace the four indepndent models used today for SNFs, IRFs, LTCHs and home health care.

In 2017, FFS program spending on post-acute care services totaled $58.5 billion, according to MedPAC.

“Policymakers have long struggled to define the role of the home health benefit in Medicare,” MedPAC officials wrote in their report. “From the outset, there was a concern that setting a narrow policy could result in beneficiaries using other, more expensive services, while a policy that was too broad could lead to wasteful or ineffective use of the home health benefit.”

Despite efforts over the past few years to curb fraud, waste and abuse, program integrity also remains a challenge in home health care, according to MedPAC. To support that claim, the group pointed to the numerous criminal prosecutions for home health fraud that have occurred, most notably in Miami and Detriot.

PDGM and other home health highlights

In its new report, MedPAC officials did note that the home health industry is facing a major payment overhaul in the form of the Patient-Driven Groupings Model (PDGM), set to go into effect Jan. 1, 2020.

Under PDGM, payments in 2020 are projected to increase by 2.9% for nonprofit agencies and 3.9% for facility-based home health agencies, according to CMS. Meanwhile, payments are projects to fall by 1.2% for freestanding agencies and by 2.2% for for-profit home health providers.

Although large home health companies have widely touted their ability to succeed under PDGM, the overhaul is projected to increase payments to small providers and decrease payments for more sizeable ones. Specifically, payments would increase by 1.9% for home health agencies with less than 100 episodes in annual volume and drop 0.2% for larger agencies with more than 1,000 episodes per year.

In 2017, about 3.4 million Medicare beneficiaries received care from home health providers. Overall, the Medicare program spent about $17.7 billion on home health care services, with nearly 12,000 participating agencies.

Following a long period of growth, the number of home health agencies dropped in 2017. Access to home health care services, however, remains “adequate,” according to MedPAC.

Read the full report here.

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