House Bill Would Extend Hospice Payment Sequestration Moratorium

Reps. Brad Schneider (D-IL) and David McKinley (R-WV) have introduced the Medicare Sequester COVID Moratorium Act in the U.S. House of Representatives.  The bill would extend the temporary suspension of Medicare sequestration payment reductions for hospices for the duration of the federally declared COVID-19 public health emergency.

The U.S. Centers for Medicare & Medicaid Services (CMS) originally implemented a moratorium on sequestration pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act or CARES Act, but that provision is currently set to expire on Dec. 31. 

“At a time when health care workers are on the front lines battling the COVID-19 pandemic, Congress should be doing everything within their power to ease their burden,” McKinley said. “America’s health care providers continue to be stretched thin and face serious financial challenges as a result of the economic and public health crisis. Suspending Medicare reimbursement cuts will allow hospitals and doctors to keep their doors open and continue providing critical care to their patients.”

Under the auspices of the Budget Control Act, CMS in 2014 began reducing payments to hospice providers by 2% across the board. Under current law, a hospice provider must return payments to CMS if the total paid exceeds the Medicare payment cap allowance. CMS includes the sequestered 2% as part of the total, even though hospice providers never received those funds.

A number of hospice providers have reported that the moratorium positively impacted their bottom lines, including giants such as VITAS Healthcare, a subsidiary of Chemed Corp. (NASDAQ: CHE), and Amedisys Inc. (NASDAQ: AMED). The impact likely has been more profound for smaller organizations that tend to see smaller margins.

The pandemic has hurt hospices financially throughout 2020. Nearly 60% of respondents to a National Association for Home Care & Hospice survey earlier this year said they expected their annual revenues to take a significant hit due to the coronavirus outbreak. Among the contributing factors to revenue drops is a decline in hospice patient admissions and referrals amid the public health emergency, as well as increased paid leave and paid time off for staff and skyrocketing costs for personal protective equipment and supplies.

Hospice industry stakeholders were quick to celebrate legislation that would extend the moratorium.

“Hospices are facing significant hardship as they continue to serve patients and their families during the COVID-19 pandemic,” said Edo Banach, president and CEO of the National Hospice & Palliative Care Organization (NHPCO). “If not extended through the public health emergency, this drop in payment will have a devastating impact on hospice providers already hit hard by COVID-19,”