The U.S. Centers for Medicare & Medicaid Services (CMS) recently proposed a 2.7% pay increase for hospice care for Fiscal Year 2023. While reimbursement increases are always welcome to providers, some stakeholders question whether this will be enough to fend off continuing COVID-19 headwinds and skyrocketing inflation.
Also on providers’ minds is the phased-in return of sequestration that began on April 1 – a 1% withholding that will rise to the standard 2% as of June 30, representing a headwind that some hospices consider “devastating.” CMS had temporarily suspended sequestration during the pandemic.
If finalized as written, the rule would also raise the aggregate payment cap to $32,142, up a corresponding 2.7% from $31,297.61 in 2022.
With these factors in play, some stakeholders fear that the 2.7% increase may be inadequate relative to rising costs.
“In reading CMS’s proposed rule for FY23 Hospice Payment Rates, what we see is partial recognition of the value of hospice care. A 2.7% increase is clearly an improvement from FY22 rates, but not enough to keep pace with the rising costs of doing business in today’s economy,” Edo Banach, president and CEO of the National Hospice and Palliative Organization, told Hospice News in an email. “How can hospices compete for talent when their reimbursement grows slower than inflation?”
Many health care providers are beginning to see a light at the end of the tunnel when it comes to the pandemic. Even if that perception is correct, the economic symptoms of COVID will not disappear overnight.
Hospices continue to face surging costs for personal protective equipment (PPE) and COVID-19 testing kits, paid leave for staff and investments in telehealth. They have also seen declines in institutional referrals and hospice length of stay, further eroding their margins.
Providers are also contending with rising wages in an intensely competitive labor market, as well as the price inflation affecting the nation at large.
As of January, the consumer price index was up 7.9% from a year earlier, according to the U.S Department of Labor, reaching a 40-year high.
“The biggest concern by far that we’re hearing about is labor costs, and obviously the difficulty of finding staff in the numbers that are needed,” Theresa Forster, vice president for hospice policy and programs at National Association for Home Care & Hospice (NAHC), told Hospice News. “Certainly, as drug prices go up, they do have an impact, but I think definitely it’s labor costs by far that have folks are most concerned.”
Also worrisome is the price of gasoline, which surged upwards following the Russian invasion of Ukraine. Retail gas prices rose 19.3% a gallon as of March, the American Automobile Association reported.
These increases pose difficulty for hospices considering that most clinical staff routinely drive to conduct patient visits.
These are matters that hospice organizations will bear in mind as they prepare their comments on the proposed rule. The comment period expires on May 31.
“As NHPCO prepares to formally respond to the proposed rule, we’re asking a lot of questions about the assumptions baked into the rule, and the impact it will have: Why are the calculations based on cost reports from 2019 – before the pandemic or the inflationary spike?” Banach said.
However, providers may feel relieved that the proposed rule does not contain substantial regulatory changes. CMS provided updates on ongoing projects, such as phased-in changes to the agency’s methods for applying the wage index to payment rates.
CMS is changing the data sources it uses to adjust hospice payment amounts to account for differences in wage rates among markets. The implementation strategy is designed to minimize disruption as well as the monetary impact on providers.
The proposal also includes an update on the agency’s testing of the Hospice Outcomes & Patient Evaluation (HOPE) tool, which will replace the Hospice Item Set (HIS) quality reporting system when completed.
“[The proposed rule] is pretty straightforward in terms of the issues that it deals with. CMS has decided not to pursue a great number of new policy initiatives, and the ones that they have put forward are ones that we think are very, very good policy,” Forster said. “That would include the proposal to limit the losses based on the wage index value changes.”
Hospices should take note that the agency is moving forward on a development of a Technical Expert Panel (TEP) that will design a new Special Focus Program (SFP) for regulatory enforcement. The SFP will have the power to impose enforcement remedies against hospices with a track record of poor performance on regulatory or accreditation surveys.
Hospices flagged by the SFP would be surveyed every six months rather than the current three-year cycle.
The program would have the authority to impose fines, suspend reimbursement, appoint temporary management to bring the hospice into compliance, or revoke a provider’s Medicare certification.
Congress directed CMS to establish the SFP through the Consolidated Appropriations Act of 2021. Legislators included the SFP language in response to July 2019 reports on hospice quality from the Office of the Inspector General (OIG) at the Department of Health and Human Services (HHS).
“When they do come up with a plan for how that SFP will look, that will be subject to public rulemaking,” Forster said. “That would be for the Fiscal Year 2024 payment year, so we’ll have an opportunity to take a look at what they’ve come up with and provide additional input.”
Companies featured in this article:
National Association for Home Care and Hospice, National Hospice and Palliative Care Organization