Home Health & Hospice Week

Medicare wage index reduction strips more than $2 billion from hospice spending. Hospices that had been hoping for the best got the worst in Medicare's final rule on hospice wage index released July 31. In the rule, the Centers for Medicare & Medicaid Services finalizes a hospice payment cut based on a wage index change it proposed in April (see Eli's HCW, Vol. XVII, No. 17, p. 130). CMS also has issued the reduced payment rates that will take effect Oct. 1 (see box, this page, for rates). Background: CMS wants to phase out the budget neutrality adjustment factor (BNAF) that had helped hospices transition to a new wage index system a decade ago. Eliminating the BNAF would mean a 1.1 percent reduction to hospice payment rates in 2009, a 2.2 percent cut in 2010 and a final 1.1 percent cut in 2011. The BNAF is outdated and unneeded by hospices, whose numbers have grown a staggering 70 percent since 1997, CMS argues in a release about the rule. "Phasing-out this special adjustment will save Medicare $2.18 billion over five years," CMS maintains. Good news: The final rule isn't all bad news. At least the inflation update for hospices, which mitigates the cuts, is larger than expected. In the proposed rule, CMS estimated a 3 percent inflation update reduced by the 1.1 percent cut for a total 1.9 percent increase. In the final rule, the inflation update is actually 3.6 percent so hospices' total increase is 2.5 percent. The higher inflation update was "welcome news," notes the Connecticut Association for Home Care & Hospice in its member newsletter. Reduced Reimbursement Could Force Industry Consolidation Although the industry hoped for a reprieve from the proposed cut, most providers aren't surprised that CMS went ahead with the reduction. "No one should have been blindsided by the decision," expects Paul Ledford with trade group Florida Hospices and Palliative Care. Budget pain: Due to political pressure, "CMS is trying to cut anywhere and everywhere regardless of the effectiveness to the benefit," says Jeff Lycan with the Ohio Hospice & Palliative Care Organization. "That way they can report they have done something." The cuts come at a particularly bad time for hospices, Ledford points out. They are squeezed by high gas prices, rising staff salaries, high health insurance costs and more. The BNAF cuts are going to cost Florida hospices about $500 million, Ledford estimates. "There's no way that these programs can make up that level of funding by charitable contributions," he tells Eli. Get Ready For Closures The result: The payment slashes will force hospices to scale back or shut down altogether, forecasts the National Hospice & Palliative Care Org-anization. The move "jeopardizes hospice care," [...]