Medicare Compliance & Reimbursement

But do publicly traded companies give a clear picture of the industry?  If lawmakers are looking for an excuse not to help out home health agencies this year, they may find it in a new government report on the home care industry. The Centers for Medicare & Medicaid Services' newly updated analysis of the home care market stresses that Medicare under the prospective payment system is agencies' payer of choice. "Smaller HHAs have shifted patient mix to favor Medicare patients as Medicare payments under the PPS offer the highest margins," CMS says in its report, "Health Care Industry Market Update: Home Health." The report cites the General Accounting Office's conclusion that HHAs have increased profit margins under PPS "because of fewer visits per episode of treatment, and a higher proportion of users categorized into higher payment groups." The number of agencies exiting the program has also stabilized, CMS notes. That's after about 3,000 HHA closures under the interim payment system. Analysts expect the home care industry to grow 5 to 10 percent per year, the report says. Looking at the picture of the industry CMS paints, observers could conclude that such a healthy industry doesn't need any help from the government. But analysts did tell CMS that a copayment, such as the one in currently pending Medicare legislation, could discourage growth of home care services. And the home care market has some other significant limitations. Foremost among these limitations is the nursing and other worker shortage. The industry's "dependence on labor is pressured by the current shortage of skilled caregivers," the report says. With its market updates for each provider type, CMS' Office of Research, Development and Information aims to "provide objective summary information" culled from Wall Street investment firms "that can be quickly used by CMS, HHS, Congress, and their staffs that oversee these programs," the report says. But those parties should keep in mind that the home care market has very few publicly traded companies compared to other markets, industry experts point out. Editor's Note: The report is at www.cms.gov/reports/hcimu/. Lesson Learned: While CMS' assessment of home health agencies' finances is far from bleak, it's perilous to draw conclusions about the entire industry based on the handful of companies that must report their earnings.