This article is part of the HHCN+ membership
On January 15, the Medicare Payment Advisory Committee (MedPAC) met to vote on various items, including recommendations regarding home health Medicare base payment rates. In its annual tradition, the organization voted to recommend a reduction in Medicare's base payment rate for home health services.
The recommended cuts for 2027 would reduce home health Medicare spending by $750 million to $2 billion over one year and $10 billion to $25 billion over five years, according to records from MedPAC's Jan. 15 meeting.
During the meeting, MedPAC members questioned the logic behind the deep cuts in home health benefits and suggested the organization may change its approach to home health recommendations.
Additionally, the organization outlined how access to care is determined, but this calculation does not fully represent the home care ecosystem.
Digging into the specific details shared at the MedPAC conference is essential to understanding the organization's thought process and what the industry can expect from it in the future.
In this week's HHCN+ update, we share analysis and key takeaways from the MedPAC poll, including:
– MedPAC public meeting details
– Historical background of MedPAC home health recommendations
– How can the industry expect MedPAC’s methodology to evolve?
MedPAC's Latest Views on Home Health Care
For years, home health industry officials have seen MedPAC propose lowering Medicare home health payment rates, typically in the 5% to 7% range. While these cuts are typically conveyed with the message that they do not reduce access to care or reduce providers' willingness to serve beneficiaries, MedPAC says the cuts could increase cost pressures on providers.
This year, MedPAC recommended a 7% reduction based on the determination that access to home health care services is good and profit margins remain healthy.
The organization measures access to home health care by talking with two or more home health agencies about how many beneficiaries live in their ZIP code, and found that 97% of beneficiaries do so. They also reported an increase in the amount of paid Medicare per person.
Hilary Loeffler, vice president of policy and regulation at the National Alliance for Care at Home, told me these measurements don't paint a complete picture of access.
“They tend to focus solely on the mere presence of home health agencies that claim to serve a ZIP code, without any analysis of whether they are actually admitting patients to their services,” she says. “We have administrative data that we can look at. We see how many people are being discharged from a hospital where the hospital says they're discharging patients for home health care. And when we go and look, patients aren't getting access to home health care. We don't see about half of hospital-to-home health referrals actually getting services from home health agencies. So we think just the presence of an agency in that location, regardless of whether it's accepting patients or not, is an inadequate indicator.” ”
MedPAC uses this and other measurements based on historical precedent.
“It seems like they've always done things that way, and there hasn't been much incentive to look at things from a different perspective,” Loeffler said.
Loeffler said MedPAC commissioners briefly noted before the vote that the organization is working to take a closer look at access to care in other ways. This initiative could completely change the organization's approach to home health care in the future, but after years of reducing home health payments, it seems highly unlikely that we will change course anytime soon. One of the questions asked during the MedPAC meeting was reasons for hope.
The future of MedPAC recommendations
One of the MedPAC members brought up a point that Loeffler would bring up later in our conversation. It was that skilled nursing facilities (SNFs) had higher profit margins than home health care providers. Nevertheless, MedPAC recommended that SNFs receive more modestly lower payments than home health care.
“There was no justification for that at all, and that continues to be frustrating for us because we should be doing more to support patients at home because that’s where they want to be and that’s where we have the ability to serve them,” Loeffler told me. “But you can't do that if you're constantly trying to lower payment rates to home health agencies and you don't even have that same legitimacy when you look at other areas of the Medicare system.”
MedPAC member Dr. Thomas Diller, vice president and chief medical officer of the AdventHealth Population Health Services Organization (PHSO) and president of the AdventHealth Provider Network (AHPN), made a similar point.
“I'm new to this process and I'm just raising a few questions,” Diller said, according to a recording of the meeting published on MedPAC's site. “We recognize that we are only considering fee-for-service Medicare and its impact. But we just voted for a 4% reduction in SNFs with a 25% margin. Those margins are 21% and we are voting for a 7% reduction. So I'm not sure if we're following the logic of how we came up with them.”
From my perspective, these types of questions are absolutely essential to prompting MedPAC to change course and protect home health care payments in the future. It is by no means certain that such questions will result in substantive change.
The group seems interested in reevaluating its approach, but I asked Loeffler if we can expect this change anytime soon in the next year or two, or if it's more of a “someday, hopefully, maybe” situation.
Unfortunately for the industry, Loeffler agreed with the latter characterization. Therefore, while the home health care industry should not expect major changes from MedPAC, there is further reason to hope that there may be changes to the organization's methodology and, by extension, its recommendations.
