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The supply of Medicare-certified home health agencies increased to 12,234 in 2024, a 1.5% rise from the 12,057 agencies recorded in 2023, according to the Medicare Payment Advisory Commission (MedPAC) July 2026 Data Book. This growth was not uniform; expansion was concentrated heavily in California, particularly within Los Angeles County, even as the national supply of agencies fell by approximately 1% when excluding California data.
While for-profit agencies continue to report high margins, the shift toward Medicare Advantage enrollment is fundamentally altering the financial landscape for providers.
Geographic Concentration and Regulatory Concerns
The data highlights a stark divergence between California and the rest of the United States. While the national trend for home health agency supply has been in decline, California has served as a primary driver of growth. This concentration is notable given that Los Angeles County has been previously identified by the California state auditor as a significant area for hospice fraud, waste, and abuse.
While the total number of fee-for-service beneficiaries using home health services fell by 2.1% in 2024, MedPAC analysis indicates that utilization remained relatively stable when adjusted for the decline in overall fee-for-service enrollment. Much of this shift is attributed to the increasing number of beneficiaries choosing Medicare Advantage plans, which often provide lower reimbursement rates to home health providers compared to traditional fee-for-service Medicare.
Financial Margins and Payment Pressures
Despite the competitive pressures introduced by Medicare Advantage, the financial performance of freestanding home health agencies remains robust. MedPAC reported an aggregate Medicare fee-for-service margin of 21.2% for these agencies in 2024. This figure aligns with historical trends observed since the implementation of the prospective payment system (PPS) in 2000, which has seen average margins of 17.2% over more than two decades.
The data reveals a clear disparity between profit structures:
- For-profit agencies: Recorded a 23.1% fee-for-service Medicare margin in 2024.
- Nonprofit agencies: Reported a 12.2% margin for the same period.
These persistent, high margins have led MedPAC to recommend adjustments to the Medicare home health base payment rate in previous reports. However, representatives from the industry, such as Hillary Loeffler, vice president of policy and regulatory affairs at the National Alliance for Care at Home, have cautioned that aggressive rate cuts could create instability. According to industry perspectives, excessive financial pressure may inadvertently reduce access to necessary care for vulnerable patient populations.
Utilization Patterns and Referral Sources
The 2024 data also clarifies the patient journey into home health services. The average number of in-person visits per user remained steady at 24.6, a figure that has held consistent across 2022, 2023, and 2024. Furthermore, the majority of home health admissions—75%—were initiated from the community, rather than following a hospital discharge or institutional post-acute care stay.
The decline in fee-for-service hospitalizations, which historically served as a primary source for home health referrals, continues to influence the industry. As more beneficiaries migrate to Medicare Advantage and hospital utilization patterns evolve, agencies are increasingly relying on community-based referrals.
As the industry continues to adapt to shifts in Medicare Advantage penetration and regulatory oversight, further analysis from MedPAC will be essential to understanding the long-term impacts on patient care and program integrity.