The U.S. House of Representatives approved legislation that, if enacted, may reduce cuts to hospice Medicare payments in 2022. Dubbed the “Protecting Medicare and American Farmers from Sequester Cuts Act,” the bill would extend a temporary halt of Medicare sequestration implemented during the COVID-19 public health emergency. The moratorium would have been sunsetted by Dec. 31, but will move to March 31, 2022 if the Senate also passes the bill.
Introduced by Reps. Steven Horsford (Dem.-Nev.) and Kim Schrier, M.D., (Dem.-Wash.), the proposed legislation would impose a 1% sequestration starting in April, returning to 2% starting in July.
Additionally, the bill would prevent cuts through Pay-As-You-Go (PAYGO) of up to 4% to Medicare payments from taking effect in 2022. Through PAYGO, payment cuts are either increased or decreased based on the federal spending and revenue budget deficit during the course of a 5- to 10-year period. In such events, the White House Office of Management and Budget (OMB) would have been required to implement across-the-board cuts to some types of federal spending, including Medicare.
These financial protections will be essential to providers heading into the next year, according to William Dombi, president, National Association for Home Care & Hospice (NAHC).
“This Medicare health care extender bill includes protections that we see essential here on sequestration and PAYGO,” said Dombi during a recent NAHC webinar. “Whether the legislation on sequestration or the PAYGO becomes an opportunity, we’re doing everything we can to have this cross the finish line in 2021, and our allies in Congress will not let it go. We’ll continue this in 2022. This is where we have all been very engaged in our advocacy efforts to make this happen. Every Medicare voice is in the mix on this support of the waiver of the PAYGO requirement and the continuation of the sequestration moratorium.”
Hospice providers, advocates and stakeholders have voiced concern about these payment issues as the financial impact of the pandemic also extends into yet another year. Nearly 60% of respondents to a NAHC survey indicated that they expected their annual revenues to take a significant hit due to the coronavirus outbreak.
Originally set to expire March 1, the practice of sequestration was paused last year by Congress through the CARES Act in response to financial blows of COVID-19’s global spread. Established in 2014 by the Budget Control Act, sequestration reduced Medicare payments to hospice and other health care providers by a blanketed 2%.
Current law dictates that hospice providers must return payments to the U.S. Center for Medicare & Medicaid Services (CMS) if the total paid exceeds the Medicare payment cap allowance, even though many providers do not receive those funds.
The new legislation, if signed into law, would be a victory for the hospice community, though the changes don’t address the structural challenges providers face, according to Edo Banach, president and CEO of the National Hospice & Palliative Care Organization (NHPCO).
“The hospice community is cautiously optimistic that this is only a stop-gap measure — we will continue to work with Congress to ensure long-term relief on sequestration,” said Banach in a statement shared with Hospice News today. “The short delay of sequester cuts shows that Congress has heard our concerns that it makes no sense to put the financial squeeze on Medicare service providers in the middle of an ongoing pandemic public health emergency, a challenging economy and a health care workforce shortage.”
Hospice and other health care providers have been hit hard financially during the pandemic. The public health emergency has hospices pushing against an array of financial headwinds, including fewer admissions and shorter lengths of stay, rising paid leave for staff and soaring personal protective equipment and supply costs.
Small and nonprofit organizations particularly have felt the pandemic’s financial brunt. These hospices in general glean 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%.
The debate around sequestration cuts is expected to continue as the new March deadline approaches, according to Banach.
The National Health Expenditure Accounts (NHEA) last year projected that health care spending in the United States would reach $6.2 trillion by 2028, growing at an average annual rate of 5.4% from 2019. However, these projections did not account for COVID-19 due to the timing of the report. Additionally, Medicare is among the major payers expected to incur the fastest spending growth at 7.6% jumps per year until 2028. The Office of Actuary in CMS gauges health care spending tracked within NHEA categories as a basis for payment rates.
More is needed at a federal level to address the core issues rooted in sequestration and payment cuts for health care providers. Regulators need to take a closer look at factors driving up these costs and how hospice can bring value into the fold, according to Banach.
“Legislation passed 10 years ago in an attempt to address the rising costs of health care failed to reach [its] lofty goal, and now it threatens the well-being of vulnerable Americans who are dependent on Medicare,” said Banach. “The fact that we keep having this debate shows that annual, automatic, 2% cuts based on 10-year-old thinking have done nothing to address the core issues. It’s time for Congress to do away with the sequester and instead rethink an approach to controlling the factors that drive the cost of health care in this country.”
Companies featured in this article:
National Association for Home Care & Hospice, National Hospice & Palliative Care Organization
