MedPAC Again Pushes for Home Health Payment Cuts, Highlights Higher Employment Levels

Staffing shortages remain a challenge in home health care. While that’s true, the overall employment pool in home health care is actually larger now than it was before the COVID-19 pandemic.

That’s according to the Medicare Payment Advisory Commission (MedPAC), which issued its March 2024 report to Congress on Friday. In addition to including information on home health employment levels, MedPAC’s report once again urged Congress to slash fee-for-service (FFS) Medicare home health payments.

MedPAC has repeatedly argued that home health agency (HHA) margins are too high and that providers have generally been overpaid.


“The Commission’s review indicates that FFS Medicare’s payments for home health care are substantially in excess of costs,” the March report states. “Home health care can be a high-value benefit when it is appropriately and efficiently delivered, but these excess payments diminish that value.”

Employment outlook

Home health agencies across the U.S. have struggled with staffing shortages across multiple roles.

The growing demand for in-home care services has partly contributed to the problem. Many reports have also highlighted how home health workers have left their posts for other professions – or retired from the health care workforce altogether.


Yet according to Department of Commerce data on the broader medical home care sector, total employment numbers were about 5% higher in July 2023 than compared to before the pandemic. It’s important to note, however, that the medical home care sector also includes hospice, private-duty nursing, pediatric home care agencies and more.

“While these data measure employment for a broader category of home care services than Medicare HHAs, the latter comprise a significant share of this sector,” MedPAC wrote in its report.

MedPAC notes that reports on home health staffing shortages may only “reflect local labor market conditions” or “other factors not observed in national labor force measures.”

MedPAC’s payment recommendation

When it comes to cutting home health payment, MedPAC is urging Congress to slash 2025 Medicare base payment rates by 7%.

This recommendation comes despite MedPAC recognizing how the cost of delivering home health services has increased.

“In 2022, there was an increase of 4% in the cost per 30-day period for freestanding HHAs, a reversal of the trend for 2021, when we observed cost per period decline by 2.9%,” MedPAC wrote in its report.

Broadly, MedPAC believes home health agencies can withstand payment cuts because their margins remain high. Home health industry stakeholders have often disputed that claim, describing it as a faulty and flawed calculation.

There has even been legislation introduced to change the way MedPAC looks at home health margins.

In addition to cuts and the industry’s employment outlook, MedPAC highlighted how home health utilization is declining. 

In 2022, the volume of 30-day home health periods in FFS Medicare declined by 7.5%, according to MedPAC.

That decline is likely tied to greater enrollment among beneficiaries in the Medicare Advantage program. It’s also likely linked to utilization of skilled nursing facilities (SNFs) returning to pre-pandemic levels.

“Before the pandemic, SNFs were the most frequent first post-acute care (PAC) destination among beneficiaries receiving formal PAC, with home health care services being the second most frequent PAC destination,” the report reads. “In 2020, the two services switched ranks in their share of use after an inpatient hospital stay. Home health care services became the most frequent first PAC service; the share receiving SNF services dropped to the second most frequent first PAC service. However, since 2020, the gap in shares between the two services has decreased.”

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