Hospice Advocates Call on Congress to Extend Sequestration Moratorium

A coalition of hospice and senior advocacy groups are urging Congress to extend the temporary suspension of Medicare payment sequestration that was implemented during the pandemic. The moratorium is currently set to expire on Dec. 31.

The National Hospice & Palliative Care Organization (NHPCO), the National Association for Home Care & Hospice (NAHC), and LeadingAge sent a joint letter to congressional leaders in both chambers requesting the extension, citing the financial hardship the pandemic has placed on providers.

“In addition to the physical, mental, and emotional toll the pandemic has taken on hospice and palliative care practitioners, it has also imposed severe financial pressure on hospices …,” the organizations wrote in the letter. “While many were hopeful that the impact of the COVID-19 pandemic would have become minimal by now, the delta and mu variants which have raged across the country, as well as the unprecedented pandemic-related workforce shortages, have left hospice and palliative care providers stretched thin and uncertain about their financial futures.”

While Congress previously extended the moratorium to Dec. 31, whether it would do so again is uncertain. The original expiration date was March 1.

Medicare sequestration was established in 2014 by the Budget Control Act. The practice reduced payments to hospice and other health care providers by 2% across the board. Under current law, hospice providers 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 hospices do not receive those funds.

Hospices have contended with declines 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. Small and nonprofit hospices have also lost revenue due to the inability to hold fundraising events or maintain thrift stores or other sources of ancillary income.

These financial pressures can be particularly devastating for small nonprofit organizations. These hospices tend to generate margins in the 3% range, according to the Medicare Payment Advisory Commission (MEDPAC). Though some of these providers operate on margins as low as 1%.

A second concern are Pay-As-You-Go rules (PAYGO), according to NAHC, NHPCO and LeadingAge. These laws say that mandatory spending and revenue bills cannot raise the federal budget deficit over a 5- or 10-year period. In such events, the White House Office of Management and Budget (OMB) must implement across-the-board cuts to some types of federal spending, including Medicare.

“We urge Congress to extend the sequester moratorium,” the letter said. “Failure to do so would result in cuts to hospice and palliative care providers and could lead to the closure of small hospices serving rural and underserved communities, reducing access to this critical benefit at a time when it has never been more needed.”