Study Says Medicare
Cuts Will Send Hospice Industry into Profit Loss
Hospice group,
NHPCO, backed study says 88 percent could have negative margins by 2019
March 7, 2011 –
The profit margin for companies providing hospice care could decline
from the two percent it achieved in 2008 to a negative 14 percent by 2019 due to recent
cuts to Medicare reimbursements, according to the results of a survey
released today by the National Hospice and Palliative Care Organization.
The independent study was commissioned by NHPCO.
The organization
cites the two recent cuts in the Medicare pay for hospice care as being
in the regulatory and statutory areas. The study analysis also concludes
that 88 percent of hospice programs could have negative margins by the
2019 date.
Hospices caring
for Americans in rural areas would be the most severely affected, with
median profit margin decreases ranging from minus 2 percent in 2008 to
minus 19 percent by 2019.
The NHPCO said
the study is part of its ongoing work to protect patient access to
hospice in America.
"This analysis
confirms our worst fears," said J. Donald Schumacher, president and CEO
of NHPCO. "With the entire hospice community – rural and urban, large
and small, community-based and multi-state – being hit by the same
devastating slope downward, there is no way for patient access to not be
negatively impacted."
The Centers for
Medicare and Medicaid Services initiated a seven-year phase out of the
Budget Neutrality Adjustment Factor beginning in 2009 (FY2010). The BNAF
is a key element in the Medicare hospice wage index calculation. The
phase out of the BNAF will ultimately result in a permanent reduction in
hospice reimbursement rates of approximately 4.2 percent.
The 2010 Patient
Protection and Affordable Care Act (ACA) imposed an additional change to
the Medicare hospice rate formula that will further cut hospice payments
by approximately 11.8 percent over the next ten years through the
introduction of a "productivity adjustment" that is applied to the
annual payment updates for hospice. Hospices care almost exclusively
for Medicare and Medicaid beneficiaries.
NHPCO's advocacy
and lobbying affiliate, the NHPCO Hospice Action Network (www.hospiceactionnetwork.org)
is currently pursuing legislation that will soften the cuts to hospice
programs. Additional advocacy efforts also include promoting
accountability and transparency within hospice, while ensuring access to
high quality end of life care for future generations of Americans.
The hospice
community's largest and most representative annual lobby day is April 6,
with hundreds of Hospice Advocates expected to be on the Hill asking for
relief from the cuts. The effort will be supported by thousands of
Hospice Advocates who will participate through a virtual lobby day event
that week. The nation's hospices employ approximately 200,000 medical
professionals, administrators, social workers and clergy nationwide.
"NHPCO and the
Hospice Action Network have been engaged in a long-term, multi-phased
strategy to soften the cuts to hospice reimbursement since the first
cuts were announced in 2008," said Jonathan Keyserling, executive
director of the NHPCO Hospice Action Network.
"Congress should
expect to hear a unified hospice voice on Capitol Hill next month,
asking for relief on behalf of the 1.5 million patients, and their
families, who depend on high-quality, compassionate end-of-life care
each year."
The trend
analysis was performed by The Moran Company using 2008 Medicare
Healthcare Cost Report Information System (HCRIS) and the 2008 Medicare
Hospice Claims Standard Analytic File (SAF) (100%), in addition to
information provided by NHPCO that projects annual estimated changes in
hospice reimbursement rates outlined in the ACA and the proposed rule.
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