The Medicare Payment Advisory Commission (MedPAC) has advanced a recommendation that Congress cut Medicare payment rates for home health providers by 7% in 2026. First presented in December, the commission voted to advance the recommendation during its meeting Jan. 16.
Payment recommendations for all provider types are formalized in the spring before they’re delivered to Congress.
During presentations in December, MedPAC staff analysis suggested 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.
Industry advocates have argued that traditional Medicare rates help to make up for Medicare Advantage and Medicaid payments that often fail to meet the cost of providing care.
The commission is also calling for Congress to eliminate the 2025 payment rate update for hospice providers when it sets the 2026 fiscal year payment rates are set this spring. CMS provided a 2.9% payment rate update for hospice providers for the 2025 fiscal year that began Oct. 1.
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.