Home Health & Hospice Week

Profit margin figures seal agencies’ fate with commission.

Despite the significant hit that home health agencies have taken from the pandemic, an advisory body to Congress wants Medicare to slash home health payment rates by 5 percent next year.

The Medicare Payment Advisory Committee is using pre-pandemic, 2019 figures to justify its proposed recommen­dation for the reduction (see box, p. 355, according to its Dec. 4 virtual meeting. Chief among those statistics is home health agencies’ 15.8 percent profit margin on Medicare.

MedPAC also predicts that HHAs' 2021 Medicare profit margin will be 14 percent.

“Medicare has overpaid for home health since the PPS was established,” MedPAC staffer Evan Christman told commis­sioners in the meeting. “The fact that home health can be a high-value service does not justify the excessive overpayments.”

He added, “Medicare margins have averaged better than 16 percent in the 2001 to 2018 period. These overpayments do not benefit the beneficiary or the taxpayer,” Christman insisted.

Costs for items such as personal protective equipment (PPE), COVID-19 testing, and telehealth have increased for HHAs this year, Christman acknowledged. But “we did not assume that all COVID-related costs in 2020 carried over into 2021, reflecting that factors like surge pricing of personal protective equipment will be mitigated in the future,” he explained.

Commissioners had good things to say about the value of the home care benefit. Home health can keep patients out of higher-cost, higher-risk facilities, noted commissioner Susan Thompson, interim CEO of UnityPoint Health and a nurse.

“Hospital at Home has been literally a life saver in our system as we have used this program to decant patients who have low-intensity chronic illness with exacerbation of symptoms, moving them to the home with monitoring equipment to make beds for patients that are in our emergency room,” Thompson related in the meeting. “Folks like to be at home, and the fact that an organization will invest in monitoring equipment to keep a patient at home as opposed to being in a hospital bed where we have limited visiting, I anticipate we’re going to have a demand for this kind of a service going forward.”

Home Care Demand To Increase

The same goes for long-term care, she noted. “We are not going to see folks running to get into nursing home facilities,” Thompson added. “The demand for home care to help us keep people in their home and live high quality of life, I predict, is going to go up.”

Prediction: “I’m just very bullish on home care,” Thompson concluded. “It’s going to be such an important component in our continuum … not only for the beneficiary and living a great quality of life in our Medicare years, but also to the overall cost of care to the Medicare program.”

Commissioners were also quick to laud home care workers. “I really appreciate the efforts of home health workers, and it’s hard to imagine how difficult that must be in some of these settings to keep doing the work they’re doing,” commissioner Jonathan Jaffery, professor with the University of Wisconsin School of Medicine and Public Health, said in the meeting.

Aides deserve special notice, said commissioner Lawrence Casalino, physician and professor with the Weill Cornell Department of Healthcare Policy and Research in New York. “Our home health workers … are in many ways risking their lives every day to get to work and going into people’s homes, and they are not paid very well,” Casalino said. “You don’t really hear too much about them, and they tend to be, of course, from racial and ethnic minorities.”

Despite that praise, home health payment rates still need to come down, commissioners agreed. “This is a high-value care, and I have always worried when we make recommen­dations to cut fees here,” Thompson said. “But I cannot argue with the kind of Medicare margins that we see here,” she said. “I do support these recommendations.”

Likewise, “I’m really torn here,” said commissioner David Grabowski, a professor at Harvard Medical School. “On the one hand, I think home health is the future. There’s a real opportunity here to … grow this area,” he said. “On the other hand, it’s really hard to argue with the huge margins that home health agencies have been associated with and going forward, I’m very supportive of the recommendation,” he concluded.

Every other commissioner also expressed their support for the 5 percent cut, which is lower than the 7 percent cut the commission recommended last year. Commissioners will officially vote on the measure next month, and the finalized recommendation will go into a March report to Congress.