Citing inflation and other headwinds, hospice providers and industry organizations are urging the U.S. Centers for Medicare & Medicaid Services (CMS) to reconsider the proposed 2.8% base rate increase for 2024.
This is the first of a series of Hospice News articles that will cover the industry’s response to the proposed rule. CMS published the proposal in March, which also contained a slough of data, requests for information and measures to enhance program integrity and health equity.
Providers say that the proposed increase is simply not enough to offset the financial obstacles they must overcome to sustain their services. In public comments on the proposal, the National Hospice and Palliative Care Organization (NHPCO) called for a one-time retroactive increase of 3.7% in addition to the proposed 2.8% — a total 6.5% increase.
The senior care advocacy group LeadingAge voiced similar concerns and called on CMS to institute a similar retroactive 3.8% hike.
“NHPCO heard from hospice providers throughout the country with concerns about the 2.8% hospice payment update, which is failing to keep pace with the rising costs hospice providers have experienced in recent years,” NHPCO COO and interim CEO Ben Marcantonio wrote in a letter to CMS. “The Consumer Price Index for All Urban Consumers (CPI-U) increased 4.9% year-over-year in April 2023. Hospice providers have also reported significant wage increases required to address competition for health care workers.”
The proposed 2.8% raise includes a market-basket percentage increase of 3% and a 0.2 percentage point productivity adjustment. If made final, it would represent an estimated $720 million boost to hospice payments compared to Fiscal Year 2023, according to CMS.
If the agency were to proceed as the industry organizations recommend, the retroactive pay raise would combine the the FY 2021 and FY 2022 market baskets. NHPCO stated that this one-time retrospective adjustment will ensure that Medicare payments more accurately reflect the cost of providing hospice care.
The proposal as written creates financial risk for hospice providers, NHPCO and LeadingAge contend.
This partly stems from the per diem payment structure, with which hospices must cover the total cost of care. NHPCO also pointed to rising costs associated with recruitment and retention and increased supply and fuel costs.
In addition to the labor costs and inflation, LeadingAge cited costs associated with the end of the COVID-19 public health emergency, according to a letter to CMS from Katy Barnett, the organization’s director for home care and hospice operations and policy.
“With the Public Health Emergency (PHE) coming to an end this month, hospice providers took on renewed burdens while still working to support patients, families, and staff impacted by COVID-19. The resources and flexibilities from the government over the past three years have been immensely helpful,” Barnett wrote. “However, the ongoing expenses for personal protective equipment (PPE), which will still be required to meet guidance from the Centers for Disease Control and Prevention as part of infection control processes, as well as increased costs for gas, and other increased expenses will remain in hospices’ budgets.”