Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


MedPAC Backs a Copay for Home Health

By Jane Norman, CQ HealthBeat Associate Editor

Members of the Medicare Payment Advisory Commission (MedPAC) recommended that Congress set a first-ever copay for home health care services, despite worries about the financial burden it might place on beneficiaries.

The commissioners also suggested changes to the home health payment system but said they should be postponed until 2013, a small reprieve for home health companies deeply concerned about earlier MedPAC discussions on trimming payment rates. But the companies would likely also suffer from any copay Congress would impose because fewer seniors might use home health care if they have to share in paying for it.

Now its up to Congress to decide whether to take on the usually powerful senior lobby and levy such a copay on Medicare recipients.

The concept of a copay was supported by nearly all the commissioners. And MedPAC Chairman Glenn Hackbarth said there's evidence that use of copays—common in other sectors of Medicare—reduces health care use. Medicare spent $19 billion on home health services in 2009.

Commissioners agreed on suggesting a $150 copayment for each 60-day home care treatment period, or episode, and that figure will be included in the text of a March report to Congress, separately from the formal recommendation. At a December meeting, members had balked at a $300 figure put forth by Hackbarth, and the $150 was described as less burdensome for seniors. It would come out to an estimated $8 a visit. Hackbarth said the $150 was "modest." It would equal 5 percent of the average episode payment.

A number of commission members also said they're concerned about a home health system that one characterized as "out of control" and about possible fraud. In certain areas—many in Texas—there are high percentages of Medicare enrollees using home health care and high rates of use. In Starr County, Texas, 35 percent of all Medicare fee-for-service beneficiaries use home health care services.

There's also a danger that home health care, intended to be temporary, can turn into long-term care, commissioners said.

Seniors with very low incomes who are also eligible for Medicaid would be exempt from the copay. Had the copay been in effect in 2008, it would have applied to a third of all home care episodes, which are a series of related visits.

Nonetheless, some commissioners said they are concerned about the overall financial burden that would be placed on seniors. Mitra Behroozi of the Service Employees International Union urged caution in particular about the $150-per-episode figure.

Among commissioners, 13 voted in favor of the copay recommendation, two abstained and one voted against it. The vote against it came from George N. Miller Jr. of First Diversity Healthcare Group in Springfield, Ohio.

The copay would apply to home health episodes that are not preceded by hospitalization or post-acute care. Episodes with very few visits would be excluded from the copay.

Karen R. Borman, a physician from Abington Memorial Hospital in Abington, Pa., said that commissioners have heard about some "fairly eye-popping" margins of profit in some sectors of Medicare, and home health care is one of them. MedPAC staff members said there was a 17.7 percent margin in 2009 for free-standing home health agencies. Access generally is adequate, and the number of agencies continues to grow, with more than 3,800 new agencies in business since 2000.

The volume of use has increased by 50 percent since 2001, and the percentage of enrollees using home health care services continues to rise, staff members said.

Borman said that she has "warm and fuzzy feelings" about the best home health care, but that sometimes MedPAC commissioners must "step back a little bit" and use a "more detached intellectual judgment" in their decision-making.

Bill Dombi, vice president for law at the National Association for Home Care and Hospice, said that earlier recommendations for copays in home health care have found little traction in Congress among either Democrats or Republicans.

"We've got ages of experience in fighting copay battles," said Dombi. "We would anticipate there is going to be a very open-minded review." He said he had difficulty imagining who might sponsor legislation to launch what he called a "sick tax" on senior citizens.

"They will receive the recommendation. I have strong doubts they will do anything with it," he said.

Dombi said that the recommendations adopted by the commissioners were better than the $300 copay talked about at the December meeting but would still be harmful to home health care recipients, who, he said, are often women older than 80 living on their own. Often they have many other illnesses, he said.

And if the copay is only applied to seniors who are admitted from the community rather than from hospitals or nursing homes, he said he wouldn't be surprised to see doctors start admitting their Medicare patients to hospitals just so they can avoid the home health care copay later.

Dombi also said that if there are concerns about high use rates in certain geographic areas, then those areas should be targeted rather than introducing copays for everyone. And, he said, while some home health care agencies may have high profits, a third are already "below water" with their Medicare margins and would sink further if the recommendations are adopted by Congress.

Scott Armstrong of Group Health Cooperative in Seattle called the $150 per episode a "very reasonable" copayment, not unlike others in Medicare.

The copayment would reduce Medicare spending by an estimated $250 million to $750 million in 2012 and by $1 billion to $5 billion over five years.

MedPAC also said that Congress should instruct the secretary of health and human services to begin a two-year change in home health rates in 2013 and eliminate the market basket update for 2012. That would reduce spending by $750 million to $2 billion in 2012.

Also, commissioners recommended that the HHS secretary and inspector general should conduct a review of counties that have "aberrant" use of home health care, and payment should be suspended if significant fraud is found.

A fourth recommendation was that the secretary should revise the home health case-mix system to rely on patient characteristics to set payment for therapy and non-therapy services and no longer use the number of therapy visits as a payment factor.

In other recommendations, MedPac said Congress should:

  • Update the Medicare outpatient dialysis payment rate by 1 percent for calendar year 2012.
  • Eliminate the update to payment rates for skilled nursing facilities services for the 2012 fiscal year.
  • Eliminate the update to payment rates for in-patient rehabilitation facility services for the 2012 fiscal year.

The American Health Care Association (AHCA) was not happy about the decision on skilled nursing facilities.

"We understand that MedPAC's limited scope forces the commission to recommend funding levels for skilled nursing care based solely on its recent assessment of the Medicare program," said former Kansas Governor Mark Parkinson, president and CEO of AHCA. "Fortunately, Congress does not suffer from such limitations. In fact, Congress can, and should, consider the entire economic picture—to include the relationship of Medicare and Medicaid in the long-term care setting – when determining federal funding levels for FY 2012, especially as their constituents' care, good-paying caregiver jobs and local economies depend on it."

Publication Details