The Medicare Payment Advisory Commission (MedPAC) unanimously voted Thursday to recommend cutting the home health base payment rate and eliminating the update for hospices in 2025.
The votes were somewhat of a formality as MedPAC, which advises Congress on Medicare payment issues, released draft recommendations on these reductions in December. Per the draft recommendations, the body agreed to put forth cutting the 2024 Medicare home health base payment rate by 7% in calendar year 2025 and freezing the update to 2024 Medicare hospice base payment rates for fiscal year 2025.
William Dombi, president of the National Association for Home Care & Hospice, who reacted negatively to the December draft recommendations, expressed disappointment in the vote on the home health rate.
“That recommendation is based on an antiquated methodology of assessing whether the rates are sufficient to provide beneficiaries with access to care,” he told McKnight’s Home Care Daily Pulse in a statement Thursday. “Given that the current rates are insufficient, the cut recommended today would essentially destroy the primary Medicare benefit that actually saves Medicare expenditures through a reduction in more costly care. We call on Congress to see the true picture that home health care needs more support rather than less.”
Regarding the recommendation to freeze hospice rates in FY 2025, the commission “was a bit easier on hospice,” Dombi said.
“This recommendation is offered at a time when hospice care costs have risen faster than any inflation update provided by CMS [Centers for Medicare & Medicaid Services].” he said. “A rate freeze would interfere with the progress made through hospice wherein highly patient-centered care, controlled by the patient at the most important point of an individual’s life, offers Medicare with significant financial savings while providing incredible end-of-life care.”
Spending would fall considerably as a result of the cuts, according to written presentations provided by MedPAC Thursday. With the home health rate decreases, spending would tumble between $750 million and $2 billion in one year and between $5 billion and $10 billion over five years.
Meanwhile, hospice spending would decrease between $250 million and $750 million over one year and between $1 billion and $5 billion over five years if the rate freeza takes effect.
The overriding arguments for cutting rates in both segments were favorable payment environments, MedPAC explained. Factors affecting the environments include profits and access to capital. The CY 2022 Medicare fee-for-service for home health was 22.2%, while the FY 2021 fee-for-service Medicare margin for hospice was 13.3%, MedPAC determined.
