Medicare Compliance & Reimbursement

Soon, the Medicare Payment Advisory Commission (MedPAC) won’t be able to use home health agencies’ profit margins as a club to beat them over the head with. But unfortunately, that’s because their payments are being cut to the bone.

Between 2001 and 2013, Medicare margins for freestanding agencies averaged 17 percent. In 2013, the average fell to 12.7 percent, and 10.8 percent in 2014, according to MedPAC’s Dec. 11, 2015 meeting.

“The effects of sequestration and rate rebasing are starting to show,” says the National Association for Home Care & Hospice.

MedPAC projects an 8.8 percent margin in 2016, noted staffer Evan Christman in the meeting. But NAHC contends the rate will be even lower.

“When using MedPAC’s own numbers, the 2016 margin for freestanding HHAs would be 5.23 percent, dropping to under 2 percent in 2017 because of the added case mix creep adjustments and the annual productivity adjustment,” NAHC contends.

Based on profit margin and other data, MedPAC commissioners gave their preliminary approval to recommend a 0 percent inflation update to Medicare HHA rates in 2017. MedPAC will issue its final recommendations in its annual March report to Congress.

MedPAC also wants the Centers for Medicare & Medicaid Services (CMS) to undertake a second round of rebasing cuts in 2018, and to eliminate therapy visits from its case mix calculations for PPS.

NAHC supports the latter suggestion, it says.