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Hawaii Home Health Medicare Margins on Steep Decline
Date:6/13/2013

find it difficult to keep their doors open.  This may result in increased rehospitalizations."

Under the Affordable Care Act (ACA), the Centers for Medicare & Medicaid Services (CMS) is directed to rebase home health payments between 2014 and 2017 by a percentage determined appropriate by the Secretary.  This percentage is to be implemented in equal increments during each year from 2014 through 2017.

Analyses developed with the support of Dobson DaVanzo and Associates and Avalere Health indicate that the current trajectory of Medicare home health reimbursement is on track to produce negative margins by 2017 in 10 states, including Hawaii, even if home health payments are not subjected to further legislative and regulatory reductions.  Under this 'best case' scenario, using the Medicare Payment Advisory Commission (MedPAC) methodology for calculating margins (which has been found to exclude many costs that home health agencies routinely bear), Hawaii's Medicare home health margin will fall to -11.7 percent by 2017.  

This decline is due to the impact of an estimated total of $72.5 billion in Medicare home health payment cuts – equivalent to a 22 percent reduction – made since 2009 through legislative and regulatory changes.  

The analyses illustrate the impact of cuts projected under multiple rebasing scenarios for the state of Hawaii, including: -0.5 percent rebasing, -1.2 percent rebasing and -3.5 percent rebasing annually from 2014 to 2017: 

  • Even without rebasing, Hawaii's Medicare home health payments will be 11.7% below cost.
  • If payments are rebased at 0.5 percent per year, Hawaii's Medicare home health payments will be 15.1% below cost.  [national average 2.7 p
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SOURCE Healthcare Association of Hawaii
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