Home health operators and the Medicare Payment Advisory Commission (MedPAC) continue to see appropriate reimbursement quite differently.
That was apparent Thursday as MedPAC, which advises Congress on Medicare payment issues, voted to recommend cutting the 2024 Medicare home health base payment rate by 7% in CY 2025.
Ironically, just the day before, in a podcast with McKnight’s Home Care, David Grams, CEO of home health and hospice provider Compassus, talked about how underfunding home health is forcing agencies to closely monitor staffing and capacity usage.
“We as a society are under-resourcing our space, and it concerns me,” he said. “We need integrated home-based care. We need ourselves to succeed. We need our peers and other leaders in this space to succeed, and we are under-resourcing this opportunity. And so it is not easy. It is not easy. We are trying to find ways to adopt processes and tools to allow us to be more efficient so that we have the right resources to attract and retain the caregivers.”
It’s important to recognize why MedPAC (which also voted Thursday to recommend eliminating a payment update for hospices in fiscal year 2025) voted to recommend cutting home health payments. It bases its payment recommendations on four indicators: beneficiaries’ access to care, quality of care, access to capital, and Medicare payments and costs.
All four areas in the home health arena are robust, MedPAC argued. Take access to care: 98% of beneficiaries live in a zip code with two or more home health agencies. Also, the share of hospital discharges to home health is comparable to prior years. Regarding quality of care, the fee-for-service Medicare beneficiaries’ risk-adjusted discharge to community rate declined but remained high, MedPAC said. Access to capital? The 2022 all-payer margin was 7.9%. And under the heading of Medicare payments and costs, the fee-for-service Medicare margin in 2022 was 22.2%.
Two opposing views
So is home health financially healthy or not? Most likely, the answer falls somewhere in-between. Numbers don’t lie so, yes, access seems strong and margins look good. But dig into the data a bit deeper, and the plot thickens: Questions arise, such as how many of those numerous agencies are not able to take Medicare discharges due to staffing capacity? What about the staffing shortage in rural areas? And as the National Association for Home Care & Hospice continually points out, to what extent are Medicare margins compensating for shortfalls in Medicare Advantage and Medicaid payments?
No question MedPAC is a group of undisputed healthcare policy experts who have all the comprehensive data at their disposal and understanding of industry nuances. But providers have to operate in the reality of Medicare cuts every day. I say you have to trust the people and players actually on the ground. Their perspective is a bit more sobering.
Liza Berger is editor of McKnight’s Home Care. Email her at [email protected].