Home health industry leaders are blasting a congressional advisory panel’s recommendation Tuesday to cut the Medicare base payment rate for home health agencies by 5% next year.
Calvin McDaniel, director of government affairs for the National Association for Home Care & Hospice, told McKnight’s Home Care Daily Pulse in an email the cuts the Medicare Payment Advisory Commission (MedPAC) recommended are unjustified at a time when home health providers are still struggling through the COVID-19 pandemic and a severe shortage of home health workers.
“MedPAC’s recommendation is based on faulty formulations that would make broad-based cuts with no regard for the diversity of provider makeup and the needs of the communities they serve,” McDaniel said. “Over the years NAHC has continuously worked with the Congress to paint a fuller picture of home health, the patients served, and the varied financial realities providers face in operating their business and providing patient care.”
Home Care Association of New York President Al Cardillo told McKnight’s Home Care Daily Pulse in an email the cuts would be an added blow to thousands of New York home health operators who are already losing money.
“Proposed new cuts on top of an already precarious financial position due to historical insufficient reimbursement, impacts of the pandemic, the increasing workforce crisis, inflation, rising transportation costs and more will further devastate an already struggling sector of the health care system at a time when unprecedented demand is continuing to rise, Cardillo said. “Many vulnerable patients will be unable to receive vital services.”
In MedPAC’s annual report to Congress issued Tuesday, the panel said while costs for a 30-day home health period increased 3.1% in the past year, profit margins for home health agencies averaged 20.2%. MedPAC said the high margins indicate Medicare payments are already exceeding costs. Its recommendation to slash the base payment rate to home health by 5% echoes its formal recommendation issued in January.
“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,” the report stated.
The report comes at a time when the home health industry is facing increased cost pressures from many directions. The nursing shortage and the recent spike in gasoline prices are both putting upward pressure on wages. On Wednesday, the Federal Reserve Board hiked short-term interest rates by a quarter of a percentage point, increasing borrowing costs for agencies. The Fed indicated there could be up to six more rate hikes throughout the year.
