Morgan Gonzales
2026-01-22 21:24:00
This article is a part of your HHCN+ Membership
On Jan. 15, the Medicare Payment Advisory Commission (MedPAC) met to vote on a variety of items, including its recommendation for the home health Medicare base payment rate. In what has become something of an annual tradition, the organization voted to recommend a cut to the Medicare base payment rate for home health care services.
The recommended cut for 2027 would decrease home health Medicare spending by between $750 million and $2 billion in one year, and between $10 billion and $25 billion over five years, according to a transcript of MedPAC’s Jan. 15 meeting.
During the meeting, a MedPAC member asked a question regarding the logic behind a severe cut to the home health payment, suggesting that the organization has the potential to change its approach to home health recommendations.
Additionally, the organization outlined the ways in which it determines access to care, calculations that fail to fully represent home health ecosystems.
Diving into the specific details shared in MedPAC’s meeting is essential to understanding the organization’s thought process and what the industry can expect to see from it in the future.
In this week’s HHCN+ Update, I’ll share analysis and key takeaways of MedPAC’s vote, including:
– Details from MedPAC’s public meeting
– The historical context of MedPAC’s home health recommendations
– How the industry can expect MedPAC’s methodology to evolve
MedPAC’s most recent opinion of home health
Home health industry insiders have seen MedPAC propose cuts to the Medicare home health payment rate for years, typically in the range of 5% to 7%. These cuts are typically delivered with the message that they will not reduce access to care or providers’ willingness to serve beneficiaries – though MedPAC has said the cuts can increase cost pressure on providers.
This year, MedPAC recommended a 7% cut based on its determination that access to home health services is strong and that margins remain healthy.
The organization measured home health access by discussing the number of beneficiaries living in a ZIP code with two or more home health agencies – which it said 97% of beneficiaries do. It also reported that fee-for-service Medicare per capita volume increased.
These measurements do not paint a full picture of access, Hillary Loeffler, vice president of policy and regulatory affairs at the National Alliance for Care at Home, told me.
“They tend to focus on just the mere presence of a home health agency that purports to serve a zip code, without any analysis as to whether they’re actually accepting patients onto service,” she said. “There is administrative data that you can take a look at. You can see how many people get discharged from a hospital where the hospital has said that they’re discharging the patient for home health, and then you go and look and the patient hasn’t been able to access home health care. About half the time we’re not seeing hospital referrals to home health actually being able to receive services from a home health agency. So just the presence of an agency in a location, without any regard to if they’re even accepting patients, we think is an inappropriate metric.”
MedPAC uses this metric and other measurements because of historical precedent.
“It seems like that’s how they’ve always done things, and they haven’t really had the impetus to look at things in a different way,” Loeffler said.
According to Loeffler, the MedPAC commissioner briefly mentioned before the vote that the organization was committed to taking a closer look at access to care in a different way. This commitment could totally rewire the organization’s approach to home health in the future, though a quick change of direction, to me, is highly unlikely after years of cutting home health payments. Though one question asked during MedPAC’s meeting is reason for hope.
The future of MedPAC’s recommendation
One member of MedPAC brought up a point that Loeffler would later bring up in my conversation with her, namely, that skilled nursing facilities (SNFs) have a higher margin than home health providers – and yet MedPAC recommended a softer payment cut for SNFs than for home health.
“There really wasn’t any justification for that, which continues to be frustrating for us, because we should be doing more to support patients at home, because that’s where they want to be and there’s the ability to serve them there,” Loeffler told me. “But it can’t be done if you’re constantly trying to cut payment rates to home health agencies and not even having the same justification for that when you’re looking at other sectors of the Medicare system.”
Dr. Thomas Diller, MedPAC member, the vice president and chief medical officer for the AdventHealth Population Health Services Organization (PHSO) and president for the AdventHealth Provider Network (AHPN), raised a similar point.
“I’m new to this process and just kind of raising an issue,” Diller said, according to a transcript of the meeting available on MedPAC’s site. “I recognize that we are only considering fee-for-service Medicare and its effects on this. But we just voted for a SNF reduction of 4% with margins at 25%, and these margins are 21% and we’re voting for a 7% reduction. So I guess I’m not sure I follow the logic of how we came up with those.”
From where I sit, this type of question will be absolutely essential to prompting MedPAC to change course and protect home health payments in the future. Whether such a question will result in any substantial change is far from a sure thing.
It seems the organization is interested in reevaluating its methods, but I asked Loeffler if we could expect this change soon, as in the coming year or two, or if change is more of a “one day, hopefully, maybe” situation.
Unfortunately for the industry, Loeffler agreed with the latter characterization. So while the home health industry shouldn’t expect any major change from MedPAC, there’s more reason to hope that there might be a change to the organization’s methodology, and therefore to its recommendations.
