Labor Cost Study Finds Increased Challenges Meeting Home Health Staffing Needs Amid Record Demand, High Costs

A study of Partnership member agencies underscores need for Congress to stop Medicare payment cuts that would add further financial pressures to home health sector

Washington, DC – The Partnership for Quality Home Healthcare (the Partnership) recently released the results of an independent study that found the Medicare home health sector faces increased demand, a dwindling talent pool, and financial challenges due to inflation and pressures from the pandemic. The results show that Medicare’s Home Health Prospective Payment System (HHPPS) proposed payment adjustments for CY2023 will result in financial harm to providers and undercut patient care and quality at a time when in-home care is an essential option for patients. Further, home health is increasingly preferred by patients, families, and caregivers and the cost of care is increasing faster than Medicare’s payments due to staffing shortages and surging costs for resources.

The Partnership’s study – conducted independently by Dobson | DaVanzo & Associates (DDA) to investigate changes in the home health labor costs of member agencies – found that home health agencies will likely need to increase wages for clinical staff more quickly than in the past in order to be competitive at a time when agencies find it difficult to maintain operations due to an insufficient supply of clinicians and high home health staff turnover from employer competition.

Other key findings of the study include:

• Home health agencies had an average of only 59% of positions filled in first-quarter 2022 due to clinicians exiting the profession due to retirement, burn-out, vaccine mandates, and COVID-19 risks.
• More home health agencies are having to turn away referrals due to an inability to hire clinicians, with 71% of survey participants saying this was a factor affecting the number of services that could be provided.
• As wage increases continued into the third year of the COVID-19 public health emergency, home health agencies were expected to continue experiencing both staffing pressures and volatility throughout 2022, calling for innovative recruiting and retention strategies.

According to the DDA survey executive summary, “Reduced home health care capacity may disproportionately impact Medicare beneficiaries. CMS is a major payer in the health care sector, but beneficiaries may experience reduced access as Medicare payments lag environmental changes. Without a nimble response to a volatile labor situation, continued CMS reliance on methodologies that are appropriate only in a stable labor climate could result in barriers to access to home health care for Medicare beneficiaries.”

The results of this survey underscore Congress’ need to pass the Preserving Access to Home Health Act of 2022 (S.4605/H.R. 8581). This bipartisan legislation would stop the proposed permanent 7.69% Medicare cut to home health from being implemented in 2023 and it would block an additional $2 billion “clawback” for services already provided during the first two years of the COVID-19 pandemic from taking effect.

“As costs and wages continue to rise, home health agencies are finding it extremely difficult to continue providing care with CMS not accounting for this evidence in its proposed payment adjustments,” said Joanne Cunningham, CEO of the Partnership. “I urge CMS and lawmakers to carefully consider our home health labor study to ensure that payment policies accurately reflect the reality of the labor climate and do not result in barriers to access to home healthcare for beneficiaries.”

The full survey report was included in the Partnership’s comments to CMS in response to the Proposed HHPPS Rule for CY2023. To read the comment letter, click here.

To read the full Home Health Labor Cost Survey, click here.

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