Medicare Officially Begins Hospice Rate Cut Attempt

(update: The link to the nhpco press release has been fixed. Sorry.)

I have focused quite a bit in the past on the proposed hospice rate cuts, and have probably done a poor job of explaining the different fronts on which this battle is taking place. One of those fronts has heated up quite a bit.

The Centers for Medicare and Medicaid Services has now officially proposed a rule change that will change the wage index that is used to figure hospice payment rates. This change, if it takes effect, will be phased in over a three year period and will reduce the daily rate that hospice can bill Medicare. The wage index is different for different portions of the country, so the exact effect for each hospice will vary. For my hospice, our rates will be reduced by exactly 5%. The fun part about this is that CMS can make the rule change without going to congress for approval. Thus, the fact that they have proposed the rule change is a big deal. I have no idea how many hoops the rule change has to go through before it takes effect, but, as far as I understand, none of those hoops will involve anyone outside of CMS in the decision.

NHPCO has written a very good press release about this, and has also been working to get congress to inform Secretary Leavitt that they oppose this rule change. You should read the press release. It does a good job of covering the reasons why this proposed rule change isn't a good idea.

The most important fact is that the rule change will reduce payment rates by 5% while a study done by MedPAC states that hospice profit margins average less than 3.5%. It would seem that the average elementary school child could understand that this math doesn't end up positive. Does Secretary Leavitt want hospices to reduce the type or amount of care they are providing to dying people? Do the math and draw your own conclusion.

My Hospice Cap Conclusion

I have been accused of many things in the comments section of my prior posts that mention the Medicare Hospice Cap issue. Most seem to be from people who are effected by the cap problem and think that I just can't understand the issue since I am not. Many were nice, many were not. To be honest, I have had trouble from day one knowing exactly what I think and feel about this issue. I'll try to sort that out for both you and I in this post.

I base my judgment on the following facts.

• My hospice does not have a cap problem.
  
• My hospice does not come anywhere close to having a cap problem.
  
• I have trouble picturing a way that my hospice would have a serious cap problem.
  
• I do understand how a hospice could have minor cap problems.
  
  • (Let me explain. The biggest thing that keeps my hospice from having cap problems is that we care for quite a few cancer patients who, on average, are not on hospice very long. This allows our dementia patients who, on average, live longer to have "room under the cap". If we stopped getting cancer patients, my hospice would probably be much closer to cap problems than we are now. Thus, I understand how, if your referral sources are exclusively working with the types of hospice patients that tend to live longer, you could find yourself in cap problems.
    
• I know there are hospices out there who have earned their cap problem, and I do not feel sorry for them in the least. Those hospices who admit people who have no business being on hospice, keep them on service for an extended period of time, and then whine about their cap problems get no sympathy from me. The thought of them going out of business makes me somewhat happy.
  
• I know there are hospices out there who have stumbled into cap problems, and I do feel sorry for them.
  
  • There is someone in my state that I look to as an example of what a hospice director should be. I believe this person to be honest with pure intentions, but this person's hospice has cap issues. Processing that is hard for me, and has helped me understand that good hospices can be caught up in the cap.
    
• There is no way to know for sure what percentage of the hospices with cap issues are problem hospices and what percentage are hospices with a problem.
  
• Most importantly, no matter what the people pushing for a fix to the cap seem to believe, there is no way to separate the cap issue from the other issues within the hospice industry.
  

With those things in mind, here are the conclusion I have come to. Am I right? I'm not sure. Will some think I'm wrong? No doubt. Will some think I am the devil himself? Probably. This is an emotionally charged issue to say the least.

My Conclusion:

I do not want congress to focus on changing the hospice cap. Instead, I want Medicare to focus more on enforcement of the cap.

My reasoning:

The government, especially Medicare, is well aware that there is abuse and corruption in the hospice industry, and they will be forced to address it at some point. As best I can tell, they have three opportunities on the horizon to address these problems.

1. The hospice reimbursement issues that are currently before congress. An across the board cut of hospice reimbursement has the ability to reduce the services hospice patients receive. Yes, if you cut the rates deeply, those companies that are only in hospice for the money will leave, but it will also force those who stay in the industry to reduce services to match the income. Even with that, the corruption will not be stopped. Any company that wants to bend the rules to increase profits would still be able to do so.
   
2. Later this year, Medicare will begin gathering information on exactly what hospices are doing for their patients. As much as they claim that they will not use this information for payment reasons, nobody believes them. I have said many times on this blog, the current Medicare Hospice reimbursement system does not work. It is crazy that we get paid the exact same amount for every patient no matter where they live, how sick they are, or what care we provide. I believe Medicare will change that in the next few years. I pray they will not use that fix as their way to try to fix every industry problem. We all know what happened to home health a few years ago. I think Medicare will change our payment system, but I hope the corruption within the industry will be under control so that Medicare doesn't have to "drop the hammer" like they did on home health. A lot of home health agencies went out of business when they changed the payment system and many of them were good agencies that got caught in the crossfire. It is in the best interest of hospices and their patients that the reimbursement system be set up to encourage and reward best practices instead of being set up to punish bad practices.
   
3. The Hospice Cap. Given the facts above, I believe that corrupt agencies are probably the ones who will be hit hardest by the cap. I also believe that is what the cap was created to do. There are going to be honest hospices who have cap issues, but I have trouble understanding how an honest hospice has a serious cap problem. Yes, they will have to pay back money. Yes, they are going to have to try to make sure they don't cross the cap line in the future, but, in the end, they will endure the pain and come out the other side alive and well. I believe that the hospices that owe amounts so large that they can't ever pay it all back are generally the ones that earned their problems. Some may have done this with good intentions of helping people (which is what they all claim), but the fact is that they admitted a lot of people who lived significantly longer than six months on hospice. They crossed the cap line at a dead sprint and kept going. The cap is a regulation put in place to keep hospice admissions reigned in around the six months to live mark, and it is doing its job. Enforcement of the cap will mean that patients are not admitted as early in their disease process as they have been in recent years, but it will not reduce the services they receive once they are admitted to hospice.
   

With those options in mind, I believe the best thing that could happen for the hospice industry as a whole is for the Medicare Hospice Cap to be enforced more not less. The best hope for those who will need hospice in the future is that the cap will be enforced and the bad actors will be put out of business. That will allow Medicare to focus on coming up with an appropriate payment system instead of a payment system intended to be punitive. Yes, this will cause some real issues for some hospices, but it will cause minimal issues for hospice patients. There is going to be pain in the hospice industry. I believe there should be some pain within the hospice industry, because there is, no doubt, corruption within the industry. Out of the three options listed above, enforcing the Cap is the best way to focus the pain towards corruption and away from patient care. Yes, some hospices will be injured in the crossfire, but I think the majority of those who should be allowed to survive will.

Pallimed’s Take on the Hospice Budget Cuts

As you know, I have been trying to raise some awareness about the hospice reimbursement cuts in the proposed federal budget. Christian at Pallimed has jumped on the bus with a post that is much more informative than anything I have written. Make sure and read his post to gain a solid understanding of what the issues are and then do something about it by contacting your congressman. Another good idea that Christian made is that you put in the comments of his post what you have done so that we can begin to see what effect the hospice blogosphere may be having.

(It doesn't hurt that Christian says a lot of nice things about me in his post. He is clearly a good judge of character, which must translate into a good judge of when it is time to start acting to keep these cuts from sneaking through congress.)

NHPCO Legislative Campaign

I've written a bit recently about the Medicare hospice payment changes proposed in the president's budget, and now NHPCO has a tool to help you let our legislators know about your feelings on this issue.

If you are like me, the effort you must go through to write your Senators or Representative a letter about any subject isn't worth the minuscule impact that the letter will have. Seriously, do you really think your senator is going to read your letter and change their mind based on what you say? Maybe I'm jaded, but I don't really think my elected officials really care what I think.

With that in mind, NHPCO has made it much easier to send a letter to the people you helped elect. Go to their Cap Wizard, click on " Help Protect the Hospice Reimbursement Rate", write your letter, put in your zip code, and magically your letter will be delivered to the right person. It is quick and easy, and as best I can tell, you don't have to be a member to use the tool.

While I don't believe that one letter makes a difference to our elected officials, I do believe that when they get enough mail on a subject they start to listen. So, pass this info on to everyone in your office. If every hospice worker in your area used the Cap Wizard, I'm almost positive your elected officials would get the message. The reality is that if this budget passes without the hospice portion being changed, the reduction in reimbursement will force hospices to change the way they operate. I believe hospice is awesome! We're not perfect, but cutting our rates by 15% is only going to hurt.

The Hospice Sky is Falling!

I can't believe I haven't written anything in a month! To make it even worse, it has probably been the busiest month in the industry since I started writing this a few years ago. While it seemed everything hit hyperdrive within the industry it also hit hyperdrive in my life. Wow.

It is almost midnight as I write this, so I'm not even going to attempt to give any type of detail to the things that have been going on. Thanks to all of you who have sent e-mails recently asking my opinion on subjects or making sure that I hadn't missed any of the big news. I've been keeping up with the news, but haven't been able to keep up with the writing.

The quick run-down of things that are happening in the hospice world:

• As I blogged recently, President Bush's budget calls for what will amount to a 15% reduction in hospice rates. I would love to know how many hospices turn a 15% profit. My guess would be that less than 5% of hospices in the nation turn that kind of profit, which means that almost every hospice in the nation would have to tighten their belts if not cut services. (If you have read this blog long enough, you'll know that I'm not a big fan of government spending, but a 15% rate cut will be very hard to swallow.)
• A congressman and senator from Oklahoma have introduced legislation to keep Medicare from collecting the hospice cap money. Currently some hospices owe Medicare quite a bit of money because they exceeded the "hospice cap" law. If they have to pay it back, it will put some of them out of business. How many? Nobody seems to know. Why do they owe money while the majority of hospices don't have any cap trouble at all? Good question. How in the world did these Oklahoma Congressmen become so convinced that Medicare shouldn't take their money back? I'd guess that hospices that owe money probably decided it was cheaper to get congress to bail them out than it would have been to pay the money back, but that's just a guess. (I'd love to write more about this one. Some other day I hope.)
• A lawsuit has been filed in Oklahoma dealing with the hospice cap issue. (I guess they thought it would be cheaper to hire a lobbyist and a lawyer than to pay the money back.) I really don't know much more than that. Both the congressional movement and the lawsuit can, I'm sure, be traced back to the National Alliance for Hospice Access.
• It is becoming more evident by the day that Medicare will release new hospice regulations ("Conditions of Participation") this summer. We won't know until then exactly what these new regulations are.
• Last but not least, two months from today hospices will be required to submit bills with much more information than we have ever submitted before. While some of the details have been ironed out, there are still some questions that have not been answered. The biggest question is how in the world Medicare expects us to track how many times the hospital nurse visited a hospice patient when the patient is in the hospital. Hospitals do not track each time an employee walks in and out of a room, but somehow Medicare expects hospices to magically be able to track and report that number. Hospices have tried to explain this to Medicare, but they don't really seem to care that we are expected to report something that we can't really know.

All of these subjects deserve their own post. Actually, may of them deserve many many posts. I write when I can. That brings me to yet another plea for others to join me in writing this blog. I am not the smartest guy in the hospice world. My opinions come from my perspective, but I know there are other valid opinions and perspectives. If you would like to write on any kind of regular basis (weekly or monthly), e-mail me and we'll talk more. Your identity will be kept anonymous just as mine has for all these years. There is a lot going on in the hospice world, why not help get the word out?