For home health payments in 2025, MedPAC’s commission is again recommending a 7% reduction in the base payment rate. The commissions recommendations to Congress also included no payment update for hospice providers.
MedPAC argues that Medicare fee-for-service payments are “substantially in excess of costs.” The industry has argued consistently that payment rates have not accounted for increased costs and noted Medicare payments are keeping some agencies afloat due to the insufficient payment rates from Medicaid and MA payors.
In 2022, freestanding agencies fee-for-service Medicare marginal profit —the rate at which traditional Medicare payments exceeded providers’ marginal costs — was 23%, according to MedPAC.
MedPAC’s recommendations aren’t typically applied when it’s time for CMS to make its cuts. Instead, CMS has justified cuts due to “behavioral adjustments” under PDGM. But MedPAC’s data on profit margins is consistently brought up as an argument against payment relief.
Industry leaders are working with members of Congress to get payment relief prepped for end-of-the-year legislation that typically follows November elections, notes William Dombi, president and CEO of the National Association for Home Care & Hospice. Dombi was speaking March 14 during a webinar hosted by the Polsinelli law firm.