Volume 24.02
The National Association for Home Care and Hospice (“NAHC”) is initiating a landmark survey focusing on the operational and financial aspects of the relationship between home health agencies and Medicare Advantage (“MA”) plans. According to NAHC, the survey ties into early MA studies from NAHC that examined the relationships between 2014 and 2020. As such, the 2024 edition provides a crucial opportunity to compare today’s environment with those earlier benchmarks.
In 2024, MA enrollment is at its all-time high, exceeding 50% of Medicare enrollees nationwide, with some localities well more than 70%. The impact of MA on HHAs continues to grow each year. The data they seek in this survey is essential to their advocacy efforts on behalf of HHAs and helpful to HHAs in their own business decisions. The same survey in 2020 was completed in an average of 16 minutes.
Once the surveys are collected, NAHC will provide a webinar to review the data outcomes. An in-depth review will also be provided at the Financial Management Conference scheduled for July 2024 in Las Vegas.
We hope all home health agencies will take a few minutes and complete the survey. Survey participation does not require NAHC membership. The greater the participation, the increased recognition of those issues of importance for home health agencies when dealing with MA plans.
Previous NAHC analyses uncovered a significant need for home health agencies to subsidize the paymet rates of many MA plans to cover the cost of care provided to MA enrollees. The analyses also demonstrated higher administrative costs than incurred related to traditional Medicare beneficiaries.
MEDPAC RECOMMENDS CONGRESS REDUCE
HOME HEALTH PAYMENT RATES
The recently released Report to Congress by the Medicare Payment Advisory Commission (“MedPAC”) recommended that for calendar year 2025, Congress should reduce the 2024 Medicare base payment rates for home health agencies by seven (7) percent.
The MedPAC report, available here, acknowledges that the number of home health agencies has declined and the volume of 30-day episodes of care has declined. However, it is obvious that the recommendation is largely based on the following:
“FFS Medicare marginal profit—The Commission also assesses access by examining a measure of HHAs’ ability to cover their variable costs, excluding certain fixed costs, referred to as the FFS Medicare marginal profit. In 2022, freestanding HHAs’ FFS Medicare marginal profit—that is, the rate at which FFS Medicare payments exceeded providers’ marginal costs—was 23 percent, indicating a significant financial incentive for freestanding HHAs with excess capacity to serve additional FFS Medicare beneficiaries.”
“FFS Medicare payments and providers’ costs—In 2022, there was an increase of 4.0 percent 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 percent. This increase in 2022 was due to higher cost per visit, but it was offset by a reduction in the number of in-person visits per 30-day period. However, even with this increase in cost, payments remained at high levels, with FFS Medicare margins for freestanding agencies averaging 22.2 percent in 2022. These margins indicate that FFS Medicare payments in 2022 far exceeded costs. In aggregate, FFS Medicare’s payments have always been substantially more than costs: From 2001 to 2021, the FFS Medicare margin for freestanding HHAs averaged 16.8 percent. We project an aggregate FFS Medicare margin of 18 percent for 2024.”
“The Commission’s review indicates that FFS Medicare’s payments for home health care are substantially more than costs. Home health care can be a high-value benefit when it is appropriately and efficiently delivered, but these excess payments diminish that value. The Commission recommends that, for calendar year 2025, the Congress reduce the 2024 base payment rate for home health agencies by 7 percent.”