MedPAC Draft Recommendations for Home Health and Hospice Reimbursement
Monday, January 14, 2013

Section: Public Policy and Advocacy

The January 10-11, 2013 Medicare Payment Advisory Commission (MedPAC) meeting, was an opportunity for staff to present draft recommendations and address specific questions that have been raised by Commissioners during this cycle of policy consideration. After some fine-tuning and more formal voting, recommendations will be included in the March 2013 MedPAC Report to Congress. All recommendations are for payment changes to be considered by Congress and the Centers for Medicare and Medicaid Services (CMS) in 2014.

Home Health

Staff reported that there were 6.9 million episodes in 2011 with 3.4 million beneficiaries utilizing home health and total expenditures for home health were $18.4 billion. In 2011, over 700 providers entered the sector because of the low capital requirements. MedPAC staff stated that the margins for home health providers in 2011 were 14.8 percent and were projected to be 11.8 percent in 2013 due to some regulatory changes such as market basket and case mix cuts.

The staff report found that agencies that provided more therapy had higher margins in 2010 and as such, the payment for therapy services was revised in 2012. Medicare margins were lower in states with high utilization and the majority of rural add-on payments are received by high-use counties.

Agencies with high numbers of Medicare/Medicaid patients and high shares of community-admitted episodes had lower margins than other agencies. Community-admitted users account for about half of all home health users and 64 percent of episodes in 2010. Community-admitted users also had fewer chronic conditions and more functional assistance needs.


Maintain the recommendations from March 2011 and 2012:

  • The Congress should direct the Secretary to begin a two-year rebasing of home health rates in 2013 and eliminate the market basket increase for 2014. 

To access the home health presentation, please click here. [Katy inserts online.]

Commission staff reported that there were less than 1.2 million Medicare beneficiaries using the hospice benefit with spending totaling $13.8 billion. The percentage of decedent beneficiaries using the hospice benefit increased to 45 percent up from 23 percent in 2000. The number of hospices has increased, driven specifically by growth in for-profit hospices.

The average length of stay was 86 days in 2011 and remained steady through that year. The length of stay was also found to vary by beneficiary and provider characteristics including diagnosis, patient location, ownership and type of hospice.

In 2010, aggregate Medicare margins for hospice providers were 7.5 percent. Freestanding agencies had higher margins that provider-based agencies, for-profit providers had higher profits than nonprofits and urban providers had slightly higher margins than rural providers did. Margins were higher for providers with longer stay patients and more patients in nursing and assisted living facilities.

MedPAC staff project that margins in 2013 will be 6.3 percent, which takes into account regulatory changes including market basket adjustments, the phase out of the wage index budget neutrality adjustment, the implementation of face-to-face visit requirements and new quality reporting requirements. .


  • The Secretary should eliminate the update to the payment rate for hospice for fiscal year 2014.

In addition, the recommendations from 2009 will also be re-stated related to the "U" shaped curve and the focused medical review of hospices with many long-stay patients.

To access the hospice presentation, please click here. [Katy inserts online]


The Chairman was careful to acknowledge that recommendations did not include the potential impact of sequestration. Under sequestration all Medicare providers could receive a 2 percent reduction in payment.  By way of illustration, the Chairman noted that if sequestration was to go into effect the recommendation from the Commission would be to keep the hospice payment at the same level as 2013 with no 2 percent reduction.
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