MedPAC Unanimously Recommends Home Health Payment Rate Cuts

In a unanimous vote Thursday, the Medicare Payment Advisory Commission (MedPAC) recommended that the Medicare base payment rate for home health care be reduced by 7% for CY 2024.

This recommendation is in line with previous recommendations by the commission over the years.

The implications of a 7% reduction would mean, among other things, a decrease in government spending by $750 million to $2 billion over one year, according to the commission’s members.


“For beneficiary and provider implications, we expect that access to care should remain adequate and it should not affect the willingness of providers to serve beneficiaries,” Evan Christman, a senior analyst for MedPAC, said during the commission’s public meeting Thursday. “But it may increase cost pressure for some providers.”

The commission — established by the Balanced Budget Act of 1997 — regularly meets as part of its mission to inform Congress on Medicare spending and policy.

According to MedPAC data, Medicare spent $16.9 billion on home health services in 2021.


There were over 11,400 agencies providing home health services to 3.3 million beneficiaries.

Elsewhere in its report, MedPAC suggested that access to home health care is adequate, citing that 98% of beneficiaries live in a zip code with two or more agencies in 2021.

“We saw a total volume decrease but a per capita volume increase,” Christman said. “Agencies had a positive Medicare marginal profit of 25.9% in 2021. For access to capital, the large, for-profit agencies continue to have adequate access to capital and we expect this to continue. The all-payer margins were positive in 2021 at 11.9%.”

Source: MedPAC

MedPAC was not able to measure the quality of care, Christman said, due to the pandemic and public health emergency-related policies.

Margins for Medicare payment and home health costs were 24.9% in 2021, with a median margin of about 28%.

Broadly, MedPAC has long pushed back against high home health margins, though the industry itself says the commission’s analyses are deeply flawed and unfairly inflated.

Because of that, MedPAC has a history of recommending home health cuts. Home health providers vehemently disagree with those recommendations, noting inflation, recruitment woes, needed investments and lesser payouts for services from Medicare Advantage plans.

Source: MedPAC

Apart from home health recommendations, MedPAC also voted to approve recommendations to reduce the 2023 Medicare-based payment rates for skilled nursing facilities by 3%, the hospice aggregate cap by 20% and inpatient rehabilitation facilities rate by 3%.

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