Home health care companies’ profits up in 2010

By Kelly Kennedy—–

WASHINGTON – Home health care companies made an average 19.4% profit in 2010, a report released Thursday shows, prompting the independent board that oversees Medicare to again ask Congress to lower reimbursement rates for these companies.

  • A Medicare report found that the government saved money by expanding the use of generic medications for recipients.

A Medicare report found that the government saved money by expanding the use of generic medications for recipients.

Created by Congress in 1997, the Medicare Payment Advisory Commission (MedPAC) reports each March about trends in overall Medicare spending and how to save money. Their latest findings include:

•The government saved money by increasing the use of generic drugs for Medicare recipients. Beneficiaries who pay some share of their drug costs are more likely to use generics than lower-income patients who don’t have to pay, the study showed.

Medicare Part D spending for prescription medications rose from $42.5 billion in 2006 to $59 billion in 2011.

Medicare Advantage enrollment grew to 12.1 million beneficiaries in 2011. That counters predictions by opponents of the 2010 health care law who said Medicare Advantage payments would drop.

Some MedPAC recommendations have been addressed by the health care law. For example, hospitals have begun moving away from the traditional fee-for-service programs. They will also be penalized with a fee for high readmission rates.

The home health care industry is fighting a proposed law that would require them to pay employees minimum wage and overtime. They argue that seniors will have to pay more money and will have to have several caregivers, rather than one who can stay all the time, because the companies won’t have the money they need to pay those benefits. But Mark Miller, MedPAC’s executive director, said the board expects the industry to see a 19.8% profit margin in 2013 from Medicare.

“Why would they come in if there weren’t some kind of economic opportunity?” Miller said. “We’re getting 200 a year entering the business. Even in rural areas, our average profitability is pretty high.”

MedPAC has made numerous recommendations in recent years for saving money, often by reducing fraud, but Congress has not acted. Miller said the board would keep proposing changes as long as they make sense, regardless of Congress’ inaction.

Congress needs to repeal the system that determines payments for physicians, the report said. MedPAC called for the change “about a decade ago,” Miller said, when it would have caused small savings. Freezing payments for the doctors with the current system would cost between $300 billion and $400 billion over 10 years. MedPAC’s plan to reduce payments for three years, and then freeze payments, would cost $200 billion.

The 2010 health care law created a new panel, the Independent Payment Advisory Board, which has the power to change policy automatically unless Congress acts. That eliminates the current system in which MedPAC recommends changes that Congress often ignores. This year, the Republican-led House is pushing proposals that would strip the new board of much of its power.

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