Medicare Advisers May Seek 7% Pay Cut for Home Health Agencies
December 16, 2024 1:30 pm |
bgov.com- Pay-cut draft recommendation reflects strong industry profit
- Medicare panel may also urge no hospice pay update for 2026
A congressional advisory panel is considering a recommendation that Congress cut Medicare payments to home health agencies by 7% in 2026.
The proposed draft recommendation, revealed Friday at the Medicare Payment Advisory Commission’s December meeting, reflects the industry’s continued strong profit. In 2023, home health agencies averaged a 20.2% profit margin on Medicare fee-for-service beneficiaries, said Evan Christman, a commission senior analyst.
That’s higher than the industry’s long-term average margin of 17.1% since 2001, he added.
For 2025, the commission expects agency margins to decline to 19% as costs increase faster than payments, but “these margins indicate that Medicare fee-for-service continues to pay well in excess of costs,” Christman said.
A 7% cut in the Medicare pay rate for 2026 would result in “no adverse effect on access to care,” Christman said. “We expect continued willingness and ability of the providers to treat” traditional Medicare beneficiaries.
The recommendation comes amid a dispute between the National Association for Home Care & Hospice and the Centers for Medicare & Medicaid Services over the methodology used by the CMS to determine payment rates for home health agencies.
In a lawsuit filed in July 2023, the association tried to stop Medicare from using a payment methodology known as the Patient-Driven Groupings Model, or PDGM, which has caused reimbursements to be cut for thousands of home health agencies since it was implemented in 2020.
The PDGM calculations targeted in the lawsuit set Medicare payments based on patients’ clinical characteristics, like the type and severity of ailment, rather than the volume of care provided.
The US District Court for the District of Columbia ruled in a memorandum opinion on April 26 that the association failed to exhaust all administrative remedies to resolve the dispute because it “skipped the agency’s process for seeking expedited judicial review.”
Because of that, the court granted the federal government’s motion for summary judgment. The association has said it will renew the lawsuit in the future.
MedPAC provides Congress with analysis and policy advice on the Medicare program. Its recommendations are nonbinding, but Congress relies on the panel’s expertise when making funding decisions.
Each year, the commission advises lawmakers on payment updates for a variety of care providers that treat Medicare beneficiaries.
The commission’s draft recommendations for annual payment updates will be formally voted on in January. Final recommendations for 2026 will be included in the commission’s March 2025 report to Congress on Medicare payment policy.
Hospice, Dialysis Providers
The commission is mulling a recommendation that Congress provide no 2026 payment update for hospice providers due to similar strong industry profit.
The hospice industry had an aggregate profit margin of 9.8% on traditional Medicare beneficiaries in 2022, the last year with available data, said Kim Neuman, a commission principal policy analyst. The commission expects the 2025 profit margin to be 8%, Neuman said.
In 2022, freestanding providers had a 12.4% profit margin, and for-profit providers had a 16.1% profit margin, Neuman said. But nonprofit hospice providers had only a 0.3% profit margin, while free-standing nonprofits showed a 5.1% profit margin on Medicare beneficiaries.
“Based on our positive payment adequacy indicators and the projected margins,” Congress should eliminate the 2026 payment update, Neuman said.
For dialysis providers, the commission is pondering a recommendation to update the Medicare payment rate by the amount determined under current law, which is an estimated 1.7%, commission staff said.
Medicare Advisers May Seek 7% Pay Cut for Home Health Agencies
bgov.com
December 16, 2024 1:30 pm
- Pay-cut draft recommendation reflects strong industry profit
- Medicare panel may also urge no hospice pay update for 2026
A congressional advisory panel is considering a recommendation that Congress cut Medicare payments to home health agencies by 7% in 2026.
The proposed draft recommendation, revealed Friday at the Medicare Payment Advisory Commission’s December meeting, reflects the industry’s continued strong profit. In 2023, home health agencies averaged a 20.2% profit margin on Medicare fee-for-service beneficiaries, said Evan Christman, a commission senior analyst.
That’s higher than the industry’s long-term average margin of 17.1% since 2001, he added.
For 2025, the commission expects agency margins to decline to 19% as costs increase faster than payments, but “these margins indicate that Medicare fee-for-service continues to pay well in excess of costs,” Christman said.
A 7% cut in the Medicare pay rate for 2026 would result in “no adverse effect on access to care,” Christman said. “We expect continued willingness and ability of the providers to treat” traditional Medicare beneficiaries.
The recommendation comes amid a dispute between the National Association for Home Care & Hospice and the Centers for Medicare & Medicaid Services over the methodology used by the CMS to determine payment rates for home health agencies.
In a lawsuit filed in July 2023, the association tried to stop Medicare from using a payment methodology known as the Patient-Driven Groupings Model, or PDGM, which has caused reimbursements to be cut for thousands of home health agencies since it was implemented in 2020.
The PDGM calculations targeted in the lawsuit set Medicare payments based on patients’ clinical characteristics, like the type and severity of ailment, rather than the volume of care provided.
The US District Court for the District of Columbia ruled in a memorandum opinion on April 26 that the association failed to exhaust all administrative remedies to resolve the dispute because it “skipped the agency’s process for seeking expedited judicial review.”
Because of that, the court granted the federal government’s motion for summary judgment. The association has said it will renew the lawsuit in the future.
MedPAC provides Congress with analysis and policy advice on the Medicare program. Its recommendations are nonbinding, but Congress relies on the panel’s expertise when making funding decisions.
Each year, the commission advises lawmakers on payment updates for a variety of care providers that treat Medicare beneficiaries.
The commission’s draft recommendations for annual payment updates will be formally voted on in January. Final recommendations for 2026 will be included in the commission’s March 2025 report to Congress on Medicare payment policy.
Hospice, Dialysis Providers
The commission is mulling a recommendation that Congress provide no 2026 payment update for hospice providers due to similar strong industry profit.
The hospice industry had an aggregate profit margin of 9.8% on traditional Medicare beneficiaries in 2022, the last year with available data, said Kim Neuman, a commission principal policy analyst. The commission expects the 2025 profit margin to be 8%, Neuman said.
In 2022, freestanding providers had a 12.4% profit margin, and for-profit providers had a 16.1% profit margin, Neuman said. But nonprofit hospice providers had only a 0.3% profit margin, while free-standing nonprofits showed a 5.1% profit margin on Medicare beneficiaries.
“Based on our positive payment adequacy indicators and the projected margins,” Congress should eliminate the 2026 payment update, Neuman said.
For dialysis providers, the commission is pondering a recommendation to update the Medicare payment rate by the amount determined under current law, which is an estimated 1.7%, commission staff said.