Home health providers warn of unsustainable Medicaid/Medicare rates and federal payment risks

Jill Olsen, executive director of VNAs of Vermont, told the House Health Care Committee on Jan. 15, 2025, that home health and hospice agencies are under “real financial pressure” from reduced Medicare payments, high Medicaid payer mixes and workforce shortages.

Olsen said home health agencies take roughly 16% of hospital discharges and that long‑term care discharges to skilled nursing facilities are approximately 17.4%. She reported that some agencies have Medicaid payer mixes near 30% and that, on average, Medicaid reimbursement was about 67% of Medicare — a level she said is well below the cost of providing services.

“We cannot afford to provide any more services at below cost,” Olsen said. She warned the committee of “this risk of this large clawback of overpayments” by Medicare, referring to federal authority to recoup supposed overpayments back to Jan. 1, 2020, and said that risk leaves small agencies especially fragile.

Olsen described last year’s closure of Franklin County Home Health as an example: another agency absorbed the service area, but the closure demonstrated how high Medicaid exposure and rising labor and traveler costs can make operations unsustainable. She said Choices for Care and other state long‑term‑care programs require sustained funding if Vermont is to rely on home and community‑based services to reduce institutional care.

Why it matters: Home health and hospice provide alternatives to inpatient and nursing‑facility care and affect hospital discharge capacity. Olsen argued that without payment changes, agencies may continue to close or restrict services, which could push patients into costlier settings or create discharge backlogs.

Olsen urged lawmakers to pursue rate adjustments, Medicaid payment support and clearer federal negotiation strategies to ensure community providers can meet reform goals that shift care into homes and communities.