Home Health Margins and Volume Quintile
Quintile 2011 2012 2013 2014
First (Smallest) 6.6 7.1 6.1 4.0
Second 8.3 8.1 7.8 5.4
Third 10.1 10.1 8.9 7.6
Fourth 13.4 13.2 11.2 10.0
Fifth (Largest) 17.4 16.8 14.8 12.5
Sources: MedPAC Report to the Congress: Medicare Payment Policy, March 2014 and 2016 and MedPAC June 2014 and June 2015 Data Book.
Medicare Margin 2014
All Freestanding HHAs 10.8%
Majority urban 11.2%
Majority rural 8.5%
For profit 12.2%
Nonprofit 6.4%

Freestanding home health agencies had an aggregate margin of 10.8 percent in 2014. MedPAC estimates the marginal profit of HHAs to be 13.3 percent in 2014, about 20 percent higher than the overall Medicare margin.

“[MedPAC] includes hospital-based HHAs in the analysis of inpatient hospital margins because these agencies operate in the financial context of hospital operations. Margins for hospital-based agencies in 2014 were -22.4 percent. The lower margins of hospital-based agencies are chiefly because of higher costs, some of which may be due to overhead costs allocated to the HHA from their parent hospitals.

“On the basis of these policies and assumptions, [MedPAC] projects a margin of 8.8 percent in 2016. This projection assumes that the sequester reduction of 2 percent remains in effect through 2016.”

Sources: MedPAC Report to the Congress: Medicare Payment Policy, March 2014 and 2016 and MedPAC June 2014 and June 2015 Data Book.

Hospice Margins and Volume Quintile
Quintile 2010 2011 2012 2013
First (Smallest) -6.5 -4.1 -2.3 -0.3
Second 2.0 2.8 5.9 6.0
Third 4.5 7.5 9.7 9.4
Fourth 6.8 9.9 11.2 11.2
Fifth (Largest) 9.0 9.6 10.6 8.3
Source: MedPAC Report to the Congress: Medicare Payment Policy. March 2016.

In 2013, the average hospice Medicare margin was 8.6%. Freestanding hospices had higher margins (12%), while home health based hospices averaged 2.2% and hospital-based -16.7%.

Source: MedPAC Report to the Congress: Medicare Payment Policy March 2016.

Home Health Service Use
Measure 2006 2013 2014
Home Heath users (millions) 3.0 3.5 3.4
Episodes (millions) 5.5 6.7 6.6
Per Home Health user 1.8 1.9 1.9
Payments (billions) $14.0 $17.9 $17.7
Per Home Health user $4,606 $5,169 $5,156

The average episode per home health user has decreased from 2.0 in 2010 to 1.9 in 2014. Payment per home health user decreased in the same period from $5,679 to $5,156.

Source: MedPAC March 2015 and March 2016; MedPAC December 2015 meeting presentation: Assessing payment adequacy and updating payments: home health care services.

Type of Visit Visits per Episode (2014)
Skilled Nursing 9.8
Therapy 6.7
Home Health Aide 2.2
Medical Social Services 0.1
Source: MedPAC Report to the Congress: Medicare Payment Policy, March 2016.
The number of Medicare-certified hospices has increased from 3,250 in 2007 to 4,092 in 2014.

Sources: Medicare & Medicaid Research Review, 2013 Statistical Supplement and CMS/OIS/HCIS, Data from the Standard Analytical Files. Table 8.1; MedPAC June 2015. Table 11-3; MedPAC March 2016.

Diagnosis 2014 LOS (in days)
Cancer 53
Neurological conditions 148
Heart/circulatory 89
Debility or adult failure to thrive 102
COPD 121
Other 48
Main location of care 2014 LOS (in days)
Home 90
Nursing facility 110
Assisted living facility 154
Source: MedPAC Report to the Congress: Medicare Payment Policy, March 2016.