MedPAC’s Miss on Reality of Home Health Financial Reality Results in Suggested Cut in 2025 Proposed Rule

The March 2024 MedPAC report recommending a 7% payment reduction for home health agencies in 2025 has sparked significant concern within the industry. Why is this recommendation being met with such resistance, and what does the financial reality of home health agencies look like in contrast to these federal suggestions?

Are the MedPAC recommendations truly reflective of the financial state of home health agencies, and what are the broader implications for these essential services?

The latest episode of What the Home Health dives deep into the discrepancies between MedPAC’s report and the actual financial conditions faced by home health agencies. Hosted by Matthew Mulski, the discussion features Kalon Mitchell, an expert in healthcare IT and consulting. Kalon Mitchell leverages his extensive background in healthcare technology and business intelligence to shed light on these critical issues.

The two discuss…

Financial Discrepancies:

– Kalon Mitchell explains how cost report data divides into Medicare, Medicare Advantage, and Medicaid, highlighting that 52% of patients are Medicare Advantage but only contribute 36% of revenue.

– The discussion reveals why Medicare Advantage payments are significantly lower than traditional Medicare and the resulting impact on home health agencies.

MedPAC’s Assessment:

– MedPAC’s focus on Home Health Medicare margins alone is misleading. Kalon’s findings suggest that when considering all payer margins, home health agencies, on average, face negative profit margins, unlike hospitals.

When considering all payer margins, home health agencies, on average, face negative profit margins, unlike hospitals.

Implications and Recommendations:

– Understanding the risks of MedPAC’s recommendations, the need for CMS and MedPAC to adopt an all-payer revenue approach for home health agencies is discussed.

– The importance of CMS increasing base payment rates to ensure the viability of home health agencies is emphasized.

Kalon Mitchell, the owner of Kalon BI Consulting, has a long history in Healthcare IT. He developed the first commercially available DRG grouper in 1985 and founded MedTranDirect in 1986, which created some of the first electronic billing software in the country. After selling his company to WellSky in 2018, Kalon has continued to work on developing business intelligence tools and researching regulatory issues in post-acute care.