MedPAC’s March 2023 Report to Congress included the following recommendation:
“Our review of payment adequacy for Medicare home health services indicates that access is more than adequate in most areas and that Medicare payments are substantially in excess of costs. Home health care can be a high-value benefit when it is appropriately and efficiently delivered. Medicare beneficiaries often prefer to receive care at home instead of in institutional settings, and home health care can be provided at lower costs than institutional care. However, Medicare’s payments for home health services are too high, and these excess payments diminish the service’s value as a substitute for more costly services. On the basis of these findings, the Commission recommends that, for calendar year 2024, the Congress should reduce the 2023 base rate by seven percent (7%).”
The recommendation is largely justified by MedPAC on the basis that in 2021 the average cost of a thirty (30) day episode of care decreased by 2.9%, Medicare’s payment per in-person visit increased by 17.6%, and the Medicare margin for freestanding agencies averaged 24.9%, a historical high.
MedPAC acknowledges that home health care can be provided at lower costs than institutional care; however, the excess payments diminish the service’s value as a substitute for more costly services.
Amazingly, the number of home health agencies continues to decline as follows:
- 2018 11,699
- 2019 11,569
- 2020 11,556
- 2021 11,474
Since 2013, the number of home health agencies has decreased by over 10%. In fact, not only have the number of agencies declined, the number of Medicare fee-for-service (“FFS”) beneficiaries using home health services has declined as well. MedPAC describes the reduction as follows:
“More Medicare beneficiaries are enrolling in Medicare Advantage, reducing the demand for FFS Medicare services. In addition, aggregate and per capita hospitalizations, which are a common source of referrals to home health care, have declined in recent years.”
The Report briefly discusses the increase in the use of telehealth services. CMS is now requiring agencies to report telehealth services.
In 2023, CMS implemented a permanent reduction to the thirty (30) day period base rate of 3.925%, half of the amount calculated to maintain budget neutrality. Even if the base rate is reduced by an additional 3.925%, MedPAC believes additional decreases to the base payment rate are needed due to the margins being reported by agencies.
The MedPAC Report is available here.
NAHC AND NHPCO EXPLORING COLLABORATION OPPORTUNITIES
The Health Group, LLC has been a member of both the National Association for Home Care & Hospice and the National Hospice and Palliative Care Organization for many years. We are pleased to reprint the public news release issued by both organizations. We see benefits to members of both organizations that could result from collaborative efforts.
“For many years, the National Association for Home Care & Hospice (NAHC) and the National Hospice and Palliative Care Organization (NHPCO) have often worked together to advance projects and initiatives in our common interest. The Boards of Directors of both NAHC and NHPCO believe the time is right to explore how a stronger, unified, and more intentional approach to collaboration could accelerate the impact of work around our respective missions and on behalf of our members. To that end, the organizations have formed a joint exploratory committee to assess how to best enhance collaboration, partnership, efficiency, and effectiveness between our two organizations.
These discussions follow naturally from our history of collaboration and are rooted in our shared belief that the more united our voices and actions are, the more we will serve and benefit our respective members and the patients and families they serve. Leadership of both NAHC and NHPCO are enthusiastic about the possibilities afforded by these conversations and are fully supportive of exploring options that strengthen impact and alignment across the sector.
While these discussions are taking place, both organizations are evaluating key positions and the timing for hiring and/or replacement. Both organizations have agreed to suspend their executive recruitment and succession planning for the duration of these discussions.
The NAHC and NHPCO boards have great confidence in their respective leadership teams and their ability to meet the needs of members as we explore this unique and exciting opportunity.
NAHC and NHPCO have jointly retained the association consulting firm McKinley Advisors to help support the process and provide an objective analysis of potential opportunities to strengthen the ties between the two organizations. As part of this evaluation, McKinley will be conducting in-depth interviews with industry stakeholders over the next several weeks and will report findings and recommendations to the Boards of both organizations. The exploratory committee expects to issue additional communications about these findings and our collective next steps regarding the collaboration opportunities in May.”