Home Health & Hospice Week

Medicare cuts will take their toll on providers, data show.

The health care industry may not be as recession-proof as some experts claim.

Home health and durable medical equipment spending will slow from recent years, the Centers for Medicare & Medicaid Services re-veals in its most recent National Health Expenditure data projections.

HHAs have seen a pretty healthy run lately. Annual overall spending, which includes out-of-pocket and commercial insurance payments, grew between 10 and nearly 13 percent every year from 2004 to 2007, CMS says in its new spending estimates. Medicare spending increased even more, from 13.9 percent to 17.6 percent, depending on the year, during that time period.

But HHAs should tighten their belts for some leaner years ahead, the new data suggests. CMS expects overall spending to grow in the lower 7 percent to 9 percent range every year for the next decade. Medicare spending will increase even more slowly, in the 5 to 7.9 percent range per year.

Just ahead: CMS expects overall spending on home health to total $69.7 billion this year, up 8.1 percent from 2008. Medicare spending during that time should reach $27.4 billion, up 6.5 percent from last year. Overall spending should increase 7.1 percent and Medicare spending 5.2 percent from 2009 to 2010, CMS predicts.

Know What To Expect

CMS's spending growth estimates for DME are lower, but more in line with recent years. Overall DME spending grew between about 1 and 4 percent per year from 2004 to 2007. Medicare spending fluctuated a bit more during that period, from a low of a 0.7 percent increase to a high of 6.9 percent.

In the next 10 years, CMS expects overall DME spending also to fluctuate from a tiny 0.1 increase to up to 5.7 percent more, depending on the year. Medicare spending will increase more robustly at between 6.6 percent to 8.9 percent, depending on the year.

CMS projects overall DME spending to reach $25.2 billion in 2009, which remains flat from last year. Medicare spending should increase to $8.0 billion, or 7.2 percent, during that time period. Overall spending should increase 2.5 percent and Medicare spending 8.9 percent from 2009 to 2010, CMS predicts.

In comparison: Spending on all health care will grow 5.4 percent in 2009 and 4.6 percent in 2010, CMS predicts. 

Note: CMS's spending projections are at www.cms.hhs.gov/NationalHealthExpendData -- click on the "Projected" link in the left column.