Does Medicare pay home health agencies enough?
 
The answer is yes, data compiled by the Medicare Payment Advisory Commission staff suggest.
 
For one thing, there are well over 12,000 agencies and the number has increased 73% since 2002, staff member Evan Christman told commission members during a Dec. 6 discussion of home health reimbursement adequacy. The latest summary echoes prior MedPAC recommendations on Medicare payments to agencies.
 
Other points noted or indicated in Christman’s presentation:
  • The net number of Medicare-certified agencies rose by more than 500 in 2011, with most of the growth concentrated in “relatively few areas” where the ratio of agencies to beneficiaries already was above average.
  • The volume of home health admissions has stabilized. The 6.9 million episodes in 2011 compares with 4.1 million in 2002, but was only a fraction above the 6.8 million episodes in 2010.
  • Freestanding agencies had an average profit margin of 14.8% on their Medicare patients in 2011, but for the 25% of agencies that were most profitable, the margin was 22.88%. However, the 25% of agencies at the low end averaged a 0.3% loss on their Medicare patients.
  • When it comes to cost and quality, the many very small agencies among the new entrants are outperformed by larger, “relatively efficient” agencies. The per-visit costs of larger agencies were 15% lower and their Medicare margins were 28% higher. They also had 2% more episodes.