MedPAC Commissioners Discuss Home Care Recommendations to Congress

The Medicare Payment Advisory Commission MedPAC met on January 10, 2013 to review the adequacy of current payments to home health agencies and discuss plans for recommendation regarding payment updates for 2014. These recommendations will be included in MedPAC’s March 2013 Report to Congress.

During the meeting, the Commissioners reviewed findings presented by the MedPAC staff, including data on access to care (supply of providers and service utilization), quality of care, providers’ access to capital, and Medicare payments and costs. Once again, MedPAC staff reported that the supply of home health providers is adequate (99 percent of beneficiaries live in areas served by home health); that although flat in 2010-2011, the number of episodes of care had increased by 65 percent between 2002-2010; access to capital is adequate; and quality is slightly improved. In 2011, home health expenditures totaled $18.4 billion with 6.9 million episodes for 3.4 million Medicare beneficiaries. The number of home health agencies exceeded 12,000 in 2011.

The average home health profit margin in 2011 was 14.8 percent, and is expected to be 11.8 percent in 2013. The Commission staff expressed the opinion that home health has been consistently overpaid since 2001. They reported that relatively efficient agencies outperform other agencies in cost and quality. Relatively efficient agencies are also predominantly agencies that have lower costs, lower share of community admissions and are more likely located in the West, Pacific, and New England.

During the December meeting Commissioners requested additional information on several topics. In response to these requests staff reported:

  • Agencies that provided more therapy episodes had higher margins in 2012;
  • Those that were in the top quartile of agencies with high shares of Medicare/Medicaid patients had lower margins than other agencies;
  • High dual eligible agencies were disproportionately from Texas and other high utilization regions;
  • High rates of home health use are concentrated in a few states (35-39 episodes per 100 beneficiaries versus national average of 17-18) ;
  • Medicare margins averaged 11.4 percent in states with high utilization (Florida, Louisiana, Mississippi, Oklahoma, and Texas), versus 15.3 percent in all other states;
  • The majority of rural add-on payments are received by high-use counties;
  • Services similar to those provided in the home under the Part B fee schedule are typically paid less than home health (e.g. Part B home visit $87 versus home health average payment of $187);
  • Community-admitted users account for about half of all home health users and 64 percent of episodes in 2010, had fewer chronic conditions, and needed more functional assistance than post-acute users.

On a final note it was pointed out that home health has several potential roles in Affordable Care Act (ACA) provisions. Different approaches to testing bundled payment for post acute care should include home health. Also home health has a role in community-based Care Transitions initiatives, Independence at Home projects, and ACOs and Medical Homes. It was suggested by one commissioner that home health be incorporated in other benefits, rather than stand alone.

Since the recommendations for home health payment update for 2014 does not differ from those for 2013, a vote was not required. MedPAC will restate the multiyear recommendation that was made in the 2013 Report to Congress. The Chairman’s proposal to Congress is to maintain the recommendations from 2011 and 2012:

  • The Congress should direct the Secretary to begin a two-year rebasing of home health rates in (2013) and eliminate the market basket increase in (2012)

This recommendation is expected to result in a decrease in spending of $750 million to $2 billion and $5 to $10 billion over 5 years. It is predicted that there will be some contraction from the current high level of supply, but that access should continue to be adequate. 

From the NAHC Report Article