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MedPAC Calls for 7% Medicare Home Health Rate Cut Next Year

MedPAC Calls for 7% Medicare Home Health Rate Cut Next Year


The Medicare Payment Advisory Commission (MedPAC) unanimously voted on Thursday, January 11, 2024, to recommend a 7% reduction in Medicare home health payment rates for Calendar Year (CY) 2025. Initially released in December 2023, these draft recommendations from MedPAC provide guidance to Congress on Medicare payment matters. The recommendations mark MedPAC's sixth consecutive year proposing Medicare home health rate cuts.

Should Congress accept these recommendations, a significant spending cut is anticipated, leading to a decrease in home health spending estimated between $750 million to $2 billion in one year and $5 billion to $10 billion over five years.

During its presentation, MedPAC disclosed key home health utilization and spending data for 2022:

  • Total home health agencies: Over 11,300
  • Users: 2.8 million (8% of fee-for-service beneficiaries)
  • Services: 8.6 million 30-day periods
  • Payment for services: $16.1 billion

Notably, MedPAC upholds its position that fee-for-service Medicare home health agencies had a 22.2% profit margin in 2022, with a 7.9% profit margin across all payers that year. The projection for this year is an 18% profit margin.

Expressing concern about the proposed cut, National Association for Home Care & Hospice (NAHC) President William A. Dombi stated, "That recommendation is based on an antiquated methodology of assessing whether the rates are sufficient to provide beneficiaries with access to care." He emphasized that the current rates are already insufficient, and a cut of this magnitude would jeopardize the primary Medicare benefit, leading to increased costs in more intensive care. NAHC, in collaboration with HCAF and home health care advocates, urges Congress to recognize the pressing need for increased support for home health care rather than reducing it.

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