Friday, April 11, 2008

Medicare Hospice Cuts:
Is Hospice Worth Protecting?

Since more than 83% of hospice care in the United States is funded by the Medicare Hospice Benefit, any cuts to the Medicare budget draws the attention of the hospice & palliative care community. Hospice Guy over at Hospice Blog has done a good job of keeping this issue in the news. Here is how Hospice Guy sums up information from NHPCO:

The detail I missed in the president's budget proposal is that he is proposing the end of the Hospice Wage Index. Instead of having a wage index just for hospices, we would start using the hospital wage index. Now, I'm no rocket scientist, but I'm figuring that a wage index is a wage index. In the long run, that is probably true, but in the short run, it is nowhere near true. The problem here is that there are differences between the two indexes. In my world, we get paid about 5% more using the hospice wage index than we would with the hospital wage index. That means, that if they make this change effective next year, we will not only not get a pay raise (see prior budget post) we will take around a 5% pay cut. That could really hurt.
Basically the Medicare Hospice Benefit payment structure will be frozen for FY 2009-11 and then for the next 3 years be reduced by 0.65%/year. This will provide an estimated $5.1B in savings over 5 years (roughly $1B/year). In addition to the freeze and cut, the hospice wage index will also be phased out over 3 years (what 3 years, I am not sure). This will amount to $2.3B in savings over 5 years.

So the total proposed cuts amount to $7.4B in savings over 5 years or nearly $1.5B/year less total payments to hospice programs. The estimated cost of the Medicare Hospice Benefit is around $10B/year as of 2006 growing about $1B/year (est. 9-10% growth). (Source: NAHC 2007 report)

This $1.5B/year is why you will hear about a 15% cut. Here is a rough side by side comparison of how I understand the numbers. 'Current' being the Medicare Hospice Benefit payments/expenditures and 'With Cuts' demonstrating the total payments with the $1.5B/year cuts proposed. (If anyone knows these numbers more accurately, please email me.)

Hospice agencies have increased in number of providers, and some have broken the Cap that Medicare put in place to prevent taking patients 'too early' in a terminal course. This is quite another issue for another post, but the increase in hospice agencies passing the Cap, and the growth of providers have made CMS suspicious enough to warrant closer inspection. And with Bush trying to find places to make cuts in the Medicare Budget, it may be some gloomy days ahead for hospice organizations.

Unless some action is taken by hospice organizations and grass roots efforts to push back the cuts, I imagine many hospice agencies who are not making a 15% profit are going to find it hard to stay in business. Some of the bigger hospices may be able to weather the cuts, but regardless of for-profit/not-for profit status, these cuts will change our medical landscape.
(Note: many hospices have to subsidize services with community donations and therefore are not making a profit)

And all this on the heels of the study that showed hospice care saves an average of $2,309 for every Medicare recipient receiving hospice services. With 1.3M people receiving hospice in 2006, and 83% of those people under the Medicare Hospice Benefit, hospice care saved Medicare almost $2.5B last year. That's right $2.5B. And they are suggesting 15% cuts in funding annually over the next 5 years. Looks like Medicare actually might be paying more in the end.

So what can you do? Write your elected representatives via NHPCO's handy CapWiz system and tell them what you think about the proposed cuts to hospice. Or contact your local media since this has not been there much. Or get a letter writing campaign started at your hospital or hospice. Our field touches many people so getting the word out should not be hard. If anyone wants to write a sample letter to your elected representatives, please add it in the comments. And if you do write your representatives, put a comment here so the other 700+ readers see they are not alone.

PS This post was unusually and surprisingly difficult to research. And not because I generally lack excitement over policy/budgetary issues. Most of the information on this important PUBLIC policy issue was locked behind membership walls at NHPCO, nor the NHPCO's sister lobbying organization, AFCEOL, which had some outdated links to membership blocked parts of the NHPCO website. Nothing was located on the front page of the AAHPM. Absent too was any information from the HFA. Nowhere to be found on Pallimed until now (I can point fingers at myself too.) The NAHC website had the most open access information. And looking up the OMB or White House sites was absolutely fruitless in finding any information about CMS payment. And I do not consider myself a search engine Luddite. So kudos to Hospice Guy at Hospice Blog and NAHC for being accessible on this issue. And to the rest of us, let's step this up a bit.

4/12/08 23:27 NOTE: Some items clarified from original post after an alert reader emailed me. ($ added to monetary figures, note about many hospice agencies not making profits, minor grammar changes for clarification)

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