During its December meeting, the Medicare Payment Advisory Commission (MedPAC) issued draft recommendations advising Congress to reduce Medicare payments to home health agencies by 7% starting in 2026. The recommendations are part of MedPAC’s annual evaluation of payment adequacy across provider settings, which includes assessments of beneficiaries’ access to care, quality, capital availability, and cost-payment…
During its December meeting, the Medicare Payment Advisory Commission (MedPAC) issued draft recommendations advising Congress to reduce Medicare payments to home health agencies by 7% starting in 2026.
The recommendations are part of MedPAC’s annual evaluation of payment adequacy across provider settings, which includes assessments of beneficiaries’ access to care, quality, capital availability, and cost-payment relationships.
While access to home health services remains strong, a decline in the percentage of hospital inpatients discharged to home health care was noted, dropping from 20.1% in 2020 to 18.2% in 2023.
The home health sector served over 2.7 million patients in 2023 through more than 12,000 agencies.
Industry leaders, including Dr. Steve Landers, expressed concern with the recommendations as unsustainable and based on flawed financial analyses, expressing concerns about access to care under further cuts. Dr. Landers stated,
“As an aging nation the most patient-centered, compassionate, and cost-effective strategy for Medicare is to have robust and thriving options for care in the home and community setting, and care that meets the individualized and holistic needs of people with serious illness later in life. Freezing and cutting investments in hospice and dramatically cutting home health are exactly the opposite approaches from what is needed. Medicare hospice spending has not kept up with labor inflation in the past five years and the typical length of stay and proportion of beneficiaries accessing hospice has stagnated. With respect to home health, the recommendation for drastic cuts is based on a flawed analysis of agency margins that fails to account for all payers and the true financial health of the home health system.”
In addition to home health, MedPAC staff recommended:
- A 3% payment increase for physicians and professional health services,
- Maintaining current rates for outpatient dialysis and hospice,
- A 3% reduction for skilled nursing facilities, and
- A 7% reduction for inpatient rehab facilities.
MedPAC will finalize its recommendations during a January vote, with approved proposals included in its March 2025 report to Congress.
Tab-G-HH-payment-adequacy-December-2024_SEC.pdf
