The Medicare Payment Advisory Commission (MedPAC) published this report on Thursday, March 12, 2026

General Outtakes Regarding Medicare Growth and Spending

Following are my outtakes regarding the March 2026 MedPAC Report to Congress (re: Medicare spending, value, quality, etc., focused on home health and hospice):

Overall, national healthcare spending grew by 7% in both 2023 and 2024.

Medicare spending has grown even faster:

• By 9% in 2023, and
• 8% in 2024, and
• Accounts for 21% of national healthcare spending (3.8% of GDP)

Healthcare spending has grown from 13% of GDP in 2000, to 18% in 2024.

Key Points germane to Medicare spending in home health and hospice:

Medicare Home Health – Chapter 8

• In 2024, traditional fee-for-service (FFS) Medicare:
  • Spent $16.0 billion in home health
  • On 2.7 million FFS Medicare beneficiaries (avg cost of $5,925.93 per beneficiary)
  • There were over 12,000 HHAs certified to participate in Medicare
  • The avg # of FULL 30-day periods was 3.1 per beneficiary
  • The avg # of visits per FULL 30-day periods was 8.3
  • Identified Profit Margins:
    • The all-payer margin for free-standing HHAs in 2024 was 5.0%, and
    • The Medicare margins for free-standing HHAs in 2024 averaged 21.2%

• MedPAC projects that Medicare Margins will average 19% for 2026
  • As they state that payments far exceed costs for Medicare home health,
  • And have for more than 20 years

MedPAC’s recommendation

The Commission recommends that, for 2027, the Congress reduce the 2026 Medicare base payment rate for home health agencies by 7 percent.

For Your Consideration

• MedPAC has recommended cuts to home health spending of at least 5% for the last 9 years (10 years if we include the 2026 draft comments [7% cuts for the last 3 years, 4 w/draft 2026 comments])
• Compare this to what MedPAC historically recommends (as a trend) for the other Medicare segments:
  • Inpatient PPS Hospitals – Small increases (~+1-2%)
  • Physician Fee Schedule – Small increases (+1-2%)
  • Skilled Nursing Facilities – Small increases or freezes
  • Inpatient Rehab Facilities – Small increases (~+1-2%)
  • Hospice – Small increases
  • Dialysis Facilities – Small updates or rebasing adjustments
• Since 1999, Home Health is the only Medicare provider type that has gone through a formal rebasing (2014 – 2017, per the ACA), but it has also gone through several informal rebasing actions when major changes were made to the payment methodology since the inception of both the IPS and PPS.
• In fact, whereas the other Medicare provider types routinely receive positive payment update recommendations from the MedPAC, this has been a rare occurrence for Home Health.  Since 2000, MedPAC has recommended ~ 15 payment reductions to Home Health, and no other segment comes even close (i.e., Hospitals ~3-4x, SNFs ~4-5x, Physicians ~5-6x, Hospice ~1-2x, and Inpt. Rehab ~1-2x)

• Q: If home health is so grossly overpaid, why are so many HHAs struggling financially?

Medicare Hospice – Chapter 10

• In 2024, traditional fee-for-service (FFS) Medicare:
  • Spent $28.3 billion
  • On more than 1.8 million Hospice FFS Medicare beneficiaries (avg cost of ~$15,722.22 per beneficiary)
  • There were approx. 6,700 providers certified to participate in Medicare
• The avg length of stay (LOS) for decedents was 99.6 days, and the median LOS was 19 days in 2024
  • It would have been interesting to know what the LOS were for
    • All hospice beneficiaries using the service for the year, and
    • for non-decedents as of 12/31/24
• In-person hospice visits by agency staff averaged 3.9 visits per week at just under one hour per visit
• The aggregate Hospice FFS Medicare Margins were 8.0% for 2023 (down from 9.8% in 2022)
• MedPAC projects the 2026 Hospice FFS Medicare margin to be 9 percent

MedPAC’s recommendation

For fiscal year 2027, the Congress should eliminate the update to the 2026 Medicare base payment rates for hospice.

Summary

These comments by MedPAC are very much inline with past Reports to Congress.

See my Blog for past posts regarding MedPAC’s prior Reports to Congress.

Home Health Hub members may view comments and discussions on this and other issues germane to their memberships.

Industry-average Medicare margins provide a valuable benchmark for evaluating agency performance. Organizations that fall below these levels may face greater challenges as payment policies continue to evolve. If you would like assistance evaluating your agency’s current position and identifying opportunities to improve margins, we invite you to contact us to discuss the options available.