Medicare proposal to reduce hospice wage index equals rate cut
More than 80% of counties see decrease in the first year
The Centers for Medicare & Medicaid Services (CMS) doesn't call it a rate cut. However, the net result of the proposed hospice wage index elimination over the next three years is a reduction in reimbursement. More than 80% of counties will see a wage index reduction in the first year, and 67% of those counties will experience a 1% or greater decrease with 3.4% of counties experiencing a 5% or greater decrease.
"We understand the national perspective and the budget woes of CMS. We also see that all segments of health care spending are being looked at carefully," says Renee Hahn, chief financial officer, Harry Hynes Memorial Hospice in Wichita, KS. "Our concern is that CMS hasn't looked at the big picture."
Research shows that hospice saves money over other providers at the end of life,1 but instead of looking for ways to divert patients who are appropriate for hospice care from higher-cost providers to hospice, CMS is simply looking for ways to cut hospice reimbursement, Hahn says.
The proposed wage index reduction is scheduled for release as a final rule in August with implementation in October 2008. The wage index reduction is based on the elimination of the budget neutrality adjustment factor, which was created in 1995 when the wage index was updated from the 1983 wage index.
An analysis of the proposed rule and wage index reductions shows an average reduction in reimbursement of 4.6% over this year's reimbursement rates at the end of the three-year implementation, says Judi Lund Person, MPH, vice president for regulatory affairs and state relations for the National Hospice and Palliative Care Organization. "CMS says that the average decrease in the first year of implementation will be 1.1%, but some states will see a much higher reduction," she says.
Jonathan Keyserling, JD, vice president of public policy and counsel for NHPCO, says, "CMS says that this won't be a real reduction because hospice will continue to receive the market basket adjustment that is an annual increase designed to offset increases in the cost of goods and services due to inflation."
The wage index also affects allocation of the market basket adjustment, so hospices will feel the reduction in two ways, he explains. Because the market basket adjustment is supposed to reflect increases in cost due to inflation, any reduction in the adjustment due to a reduction in the wage index will not accurately reflect increased costs, he adds.
Hahn says, "If the proposed rule to reduce the wage index is approved as written, we won't have much time to prepare, so hospices need to look within their agencies to find ways to cut costs. Be sure to have candid, open conversations with all of the key people in your organization to make sure that no one panics and that the cost savings strategies still allow you to provide quality patient care."
One last tip from Hahn: "Be prepared for more scrutiny of hospice reimbursement from CMS," she says. "At one time, hospice was an alternative health care option; now we are mainstream. We are on the CMS radar now."
Reference
1. Taylor DH, Ostermann J, Van Houtven CH, et al. What length of hospice use maximizes reduction in medical expenditures near death in the U.S. Medicare program? Soc Sci & Med 2007; 65:1,466-1,478.
The Centers for Medicare & Medicaid Services (CMS) doesn't call it a rate cut. However, the net result of the proposed hospice wage index elimination over the next three years is a reduction in reimbursement.You have reached your article limit for the month. Subscribe now to access this article plus other member-only content.
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