When MedPAC makes payment rate recommendations to Congress next spring, it will again call for a 7% cut in the base payment rate for home health care services. The agency that advises Congress on Medicare issues was supportive of the recommendation during a Dec. 13 meeting. Final votes on the recommendations will be in early 2025.
MedPAC also intends to call for CMS to eliminate the 2025 payment rate update for hospice providers when it sets the 2026 fiscal year rates. CMS provided a 2.9% payment rate update for hospice providers for the 2025 fiscal year that began Oct. 1.
For home health providers, MedPAC staff analysis suggests that overall payment margins for fee-for-service (FFS) Medicare fell in 2023 to 20.2%, down from 22.2% the previous year and nearly 25% in 2021. It’s still far higher than MedPAC feels warranted.
Industry advocates have argued that traditional Medicare rates help to make up for Medicare Advantage and Medicaid payments that can often not meet the cost of providing care.
Fortunately for providers, Congress has yet to take MedPACs advice on steep payment cuts. But the conversation alone around high margins can also make it difficult when the industry is lobbying for payment relief or broader payment reforms.