Updated Mar 26, 2018 - Health

The big business of home health

A home health aide helps a patient at her house.

A home health aide helps a patient. Photo: Bonnie Jo Mount / The Washington Post via Getty Images

The Medicare Payment Advisory Commission, an influential body that studies health policy, is once again recommending Congress slash Medicare payments to companies that provide home health services.

The bottom line: MedPAC has criticized the home health industry for several years, arguing taxpayers are overpaying while companies are reaping large profits. This may seem like arcane payment policy, but it is growing in importance as more people are treated at home as a way to keep costs in check.

The numbers: 15.5%, the average profit margin home health companies made on Medicare payments, according to MedPAC's most recent report. The group recommended cutting home health Medicare payments by 5% in 2019, similar to its suggestions from prior years.

"The historical overpayments Medicare has made need to be addressed," MedPAC wrote.

Yes, but: The home health industry argues that margin is misleading and doesn't account for marketing, technology, bad debt and other costs.

  • The National Association for Home Care & Hospice said margins are closer to 2% based on its own analysis of Medicare cost data. The lobbying group did not provide a copy of the analysis.

Between the lines: It's doubtful Congress will push for the straight 5% cut. The more realistic threat for home health companies is whether the federal government will resurface a new payment system that would make cuts. That proposal was defeated last year after intense industry lobbying.

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