Health Leaders Speak Out About MedPAC's Proposed Lower Payments for 2010

Home care and hospice care providers also were concerned about figures developed by the MedPAC staff. The MedPAC data "artificially inflates" the profit margins of the industry, said Val Halamandaris, president of the National Association for Home Care and Hospice in Washington, DC.

Halamandaris said the figures distorted the true financial picture of home health providers. "Home health is and has always been a 'cottage industry,' made up of small to medium sized providers," he said. "In fact, about 23% of free-standing providers lose money in providing Medicare services, and about 30% of them make less than 5% on their Medicare services."

He was critical in part of MedPAC disregarding facility based home health providers' margins in its calculations. In particular, he said roughly 20% of Medicare participating home health agencies are facility based; in some states, especially rural areas, hospital based home health agencies make up a majority of the providers. Those providers have higher costs, resulting in an average Medicare profit margin of -7.82 percent, Halamandaris said.