AAHomecare: MedPAC's Home Health 'Freeze is Unwarranted, Unjust and Unsound'

ALEXANDRIA, Va. — The American Association for Homecare (AAHomecare) questioned the recommendation in the Medicare Payment Advisory Commission's (MedPAC) "March 2006 Report to Congress" to freeze Medicare payment rates in 2007 for the nation's 7,300 home health agencies last week. The proposed cut, if enacted by Congress, would come on top of the negative market basket updates for home health agencies in each of the last five years.

"For MedPAC to suggest anything that continues to undercut the financial underpinnings of the home health benefit is simply beyond the pale at a time when the first wave of the baby boomers will begin retiring in the next 18 months and will be depending on Medicare," said Sue Mairena, COO of AAHomecare. "Simply put, the freeze is unwarranted, unjust and unsound."

AAHomecare believes that the MedPAC home health freeze recommendation is based on two critically flawed assumptions:

  • Distorted margin data — MedPAC continues to base its annual update recommendation on only part of the home care sector by excluding all hospital-based home health agencies. Yet, hospital-based agencies represent a full 25 percent of the total sector, according to data from the Centers for Medicare and Medicaid Services (CMS). Similarly, MedPAC gives disproportionate weight to large home health agencies (HHAs) with higher profit margins through utilization of a "weighted" methodology rather than a method that gives equal weight to all providers. There is no statistically sound reason for either of these actions on the part of MedPAC.
  • Overstated sector growth — One of the principal underpinnings of MedPAC's recommendation for a freeze in the payment rate is the recent growth in the number of Medicare home health agencies nationwide. In fact, between 2003 and 2004, the total number of HHAs grew by a net total of about 335, representing growth of less than 5 percent nationally. But virtually all of the growth came from two states — Florida and Texas — that together accounted for 395 new agencies. Twenty-eight states saw a decline in the number of HHAs, seven states had no change, and the remaining 15 states had fractional increases.

Continuing, Mairena said, "Federal policymakers should be looking for ways to support this program. The home health benefit is clinically effective, patient-preferred and cost-effective, as evidenced by recent data from the Medicare program itself."

The great majority of Medicare beneficiaries choose to receive care at home when possible. AAHomecare rejects the MedPAC recommendation to further cut payments to home health agencies that provide this care and will continue to work with the Congress to prevent future cuts to this critical Medicare benefit.

Source: AAHomecare

This article originally appeared in the March 2006 issue of HME Business.

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