by Kristin Rowan, Editor

 MedPAC makes recommendations to Congress and HHS on issues affecting the Medicare program. The March report for 2025 includes recommendations for hospice, home health, and SNFs, in addition to in-patient and out-patient hospital services.

Using the exact terminology from the 2024 report, MedPAC recommends that Congress eliminate the update to the 2025 Medicare base payment rates for hospice. MedPAC pointed to a number of statistics to support the evaluation:

• The number of hospice providers increased in 2023
• Some of the growth in hospice providers occurred in states where CMS has concerns over program integrity
• The percentage of patients using hospice increased by .8 percent nationwide, as did the days of care and visits per week
• Medicare payments exceeded marginal costs by 14 percent

• The population of the U.S. is aging as more and more Baby Boomers qualify for Medicare; there is an increased need for hospice agencies to accommodate the volume of patients
• Whether there are more hospices in states where program integrity is questioned does not impact the need for hospice care; program integrity reform changes this, not reimbursement rates
• The rise in use, length of stay, and days of care explain the increase in the number of hospice; need, not profitability drives this growth
• The average markup in 2022 was 72 percent above marginal cost

Marginal cost is the cost of adding one more unit of production. In simple terms, that would be the overall costs of adding one hour of care for a hospice patient. This would include scheduling, hourly wage, and other operational costs. MedPAC believes that if an agency adds one hour of care and make 14 percent more than their costs, that is sufficient.

• The number of HHAs participating in Medicare increased by 3.4 percent.
• Most of the growth in HHAs was in LA County. Outside LA County, the number of HHAs decreased by 2.8 percent.
• The number of 30-day episodes per beneficiary decreased by 1.8 percent, but is still higher than in prepandemic years
• MedPAC was unable to compute the marginal profit for 2023
• Quality of care (percent discharged to community) increased by 1.3 percent
• The all-payer margin in HHAs was 8.2 percent, attracting investors
• The projected Medicare payment margin for 2025 is 19 percent

• LA County has more HHAs, but the rest of the country has fewer. We believe if you ask The National Alliance for Care at Home, Bill Dombi, or any number of prior HHA owners, low reimbursement rates forced them out of business

• Pandemic numbers skewed the need for care at home because everyone was at home; if you only look at prepandemic numbers compared with 2023 numbers, the need for home health is increasing
• HHAs keep patients out of the hospital, which accounts for more Medicare payments and higher costs
• Again, the average margin across the U.S. is 72 percent, but MedPAC somehow believes 8 percent will attract investors and buyers; volume is attracting buyers, not margins
• The projected 2025 margin is 19 percent and MedPAC recommends lowering it to 14 percent, matching hospice, and is 58 percent lower margins than the average industry

Surprisingly, there is an overlap in thinking between providers and MedPAC. In the February 2025 comment on the CMS notice of proposed rulemaking for 2026, MedPAC addressed the coding intensity and increased Medicare Advantage payments. 

Last summer, Editor Emeritus Tim Rowan reported on the inflated health conditions filed by payers. Medicare Advantage payers also routinely deny care that traditional Medicare plans would cover. MA payers are collecting on both the front and back ends of the “Bank of CMS.” According to the Center for Economic Policy Research, upcoding by MA plans costs CMS 106 percent of traditional Medicare costs. Quality bonus payments add an additional 2 percent. Operating surplus from enrolling healthier beneficiaries adds another 11 percent. Payments to MA plans are 19 percent higher. MedPAC agrees and urges CMS to further investigate coding intensity from MA payers.

Although we agree with MedPAC’s assessment of MA coding intensity, that is where the similarity ends. Let’s take that recommendation one step further and require that MA plans pay hospice and home health providers a higher percentage of their risk-assessment adjustment and let the payers make their profits elsewhere.

Given the recent upheaval in D.C. and the fear that Medicare, Medicare Advantage, Medicaid, Social Security, and other benefits would be done away with completely, we are relieved to see the House Budget Bill passing without the drastic reductions to care at home.

Following the passing of the House Budget Bill,  The National Alliance for Care at Home issued a response statement. We’ve published the full response here for you.

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Kristin Rowan has been working at The Rowan Report since 2008. She is the owner and Editor-in-chief of The Rowan Report, the industry’s most trusted source for care at home news. She also has a master’s degree in business administration and marketing and runs Girard Marketing Group, a multi-faceted boutique marketing firm specializing in content creation, social media management, and event marketing.  Connect with Kristin directly kristin@girardmarketinggroup.com or www.girardmarketinggroup.com

©2025 by The Rowan Report, Peoria, AZ. All rights reserved. This article originally appeared in The Rowan Report. One copy may be printed for personal use: further reproduction by permission only. editor@therowanreport.com