NHPCO: Proposed 2.8% Hospice Payment Hike Insufficient 

The 2.8% base payment rate increase recently proposed by the U.S. Centers for Medicare & Medicaid Services (CMS) is insufficient to support hospice patients’ care needs, a major industry group said.

CMS earlier this month released its 2024 hospice proposed rule, which included the 2.8% increase — an estimated total of $720 million. If finalized as written, the rule would also raise the aggregate payment cap to $33,396.55, up from $32,486.92 this year.

The National Hospice & Palliative Care Organization (NHPCO) recently took the pulse of its provider members as it pertains to the proposed rule. A large contingent indicated that the percentage is too low to offset inflation, wage pressures and other headwinds.

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“The 2.8% proposed rate increase for hospices is not enough to support the care hospices provide. Hospices are dealing with inflation rates that are at least twice that high, compounded by historical and ongoing workforce challenges,” NHPCO said in a statement. “In 2024, pre-determined sequestration cuts will further reduce hospice reimbursement to a de facto increase of about 1%.”

Geographic wage adjustments could further erode the dollar amounts hospices receive despite the increase, according to Melinda Gruber, president of Caring Circle and south region vice president of Medical Group and Continued Care.

“The 2.8% rate increase will be wage adjusted for our hospice program, so we won’t receive the full 2.8%,” Gruber said in a statement emailed to Hospice News. “Meanwhile inflation and labor market demands have escalated our expenses. RN wages have increased since 2021 between 19% and 26%. Medical supply costs have increased 18% and some pharmacy expenses have increased as much as 73% depending on the drug.”

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Sequestration is another concern.

After a moratorium during the pandemic, full Medicare sequestration resumed on July 1, 2022. Hospice and other health care providers are once again seeing their Medicare payments slashed by 2% across the board.

Gruber reported that the sequestration cut into her organization’s revenue by $200,000 last year and by $50,000 in Q1 2023.

Providers voiced similar concerns last year when they received a 3.8% increase. Some contended that the rate put them at a disadvantage in competing in the labor market with health systems and other entities.

Industry observers anticipate that the “lower than expected” rate hike could adversely impact providers’ finances, according to Brian Tanquilut, equity analyst for the investment banking firm Jefferies Financial Group.

“Given inflationary pressures seen by most [health care] providers and comments from sector bellwether [VITAS parent company Chemed (NYSE: CHE)], we believe investors were expecting a higher rate increase vs. CMS’s proposal,” Tanquilut indicated in a research note. “While CMS could still adjust this rate to reflect more recent trends once they finalize the rule, the rate proposal would be an incremental negative for hospice providers.”

In addition to a 2.8% hike in the per diem base rate, the proposal includes new requirements and requests for information around who can certify patients, program integrity, health equity initiatives, quality measurement and telehealth.

NHPCO voiced support for several of these proposals, including a requirement for certifying physicians to be enrolled in Medicare.

“The proposed rule would require physicians to be enrolled in Medicare to certify and recertify patients for hospice care,” the organization indicated. “ If designed and implemented properly, NHPCO believes this measure may help identify physicians who are engaging (or potentially engaging in fraudulent or abusive behavior, presenting a risk of harm to Medicare beneficiaries or are otherwise unqualified to certify or recertify beneficiaries for hospice.”

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