CMS rule doesn't address factors such as salary
CMS rule doesn't address factors such as salary
Competition for nurses not reflected
Hospice managers and staff members have become accustomed to looking for ways to streamline services and lower costs, but the proposed three-year reductions in the wage index planned by the Centers for Medicare & Medicaid Services (CMS) will add an extra challenge for managers.
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Will wage index reduction cause cut in charity care? One of the risks to hospice patients presented by the reduction of the wage index by the Centers for Medicare & Medicaid Services (CMS) is that if CMS focuses only hospice reimbursement without looking globally, hospices will have to cut services, points out Renee Hahn, chief financial officer, Harry Hynes Memorial Hospice in Wichita, KS. "The Medicare Conditions of Participation describe the minimum services that a hospice must provide. If you choose to expand or enhance your program with a bereavement service, an enhanced volunteer program, or charitable care, you must find a way to fund it yourself," she says. Continued cuts by Medicare might divert more community funds raised by the hospice into underwriting Medicare patient care and take it away from charitable care or community services such as bereavement counseling, Hahn adds. "We might also start to see hospices pull their service area closer in to their home office, which would leave rural areas without coverage," she says. For the upcoming first year of the proposed wage index reduction, The Hospice of the Florida Suncoast is looking at a 3% reduction, reports Anne Hochsprung, vice president of finance for the Clearwater, FL, hospice. "This represents a $2 million decrease in income for our agency," she says. At the same time, her hospice provides $11 million each year in uncompensated care for the community, Hochsprung points out. "Before we look at cuts in our community care, we are looking for other ways to maximize our revenue stream by renegotiating contract rates, applying for grants for community services, and looking for ways to cut costs in other areas," she says. "We already run a slim ship, with our net income only at 2%." |
The reduction in the wage index does not take into account many factors that contribute to the cost of providing hospice care, so managers will have to look at even more areas in which to save money, says Renee Hahn, chief financial officer, Harry Hynes Memorial Hospice in Wichita, KS.
"Because we go to the patients in most cases, agencies are paying employees for nonproductive 'windshield time' and paying gasoline costs as we reimburse employee travel expenses," she says. With gasoline costs rising, this expense is a significant one for agencies and for employees as they pay the difference between mileage reimbursement and actual costs, Hahn says.
The nursing shortage also is not factored into the decision, says Hahn. "It is getting harder to find experienced hospice and home health nurses, and you have to be able to pay them wages that are competitive with local hospitals and other health care providers," she says.
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What is the budget neutrality adjustment factor? The proposal by the Centers for Medicare & Medicaid Services (CMS) to reduce the hospice wage index over the next three years is based on a reduction of an adjustment added into the hospice wage index in 1995. The National Hospice and Palliative Care Organization developed the following history and explanation of the budget neutrality adjustment factor and its effect on the industry:
Source: Excerpted with permission from National Hospice and Palliative Care Organization web site: www.nhpco.org/i4a/pages/index.cfm?pageid=5575. June 2008. |
Problem in rural areas
The irony of CMS' calculation of the wage index is that rural counties receive a lower reimbursement than urban counties, points out Hahn. While the cost of living in a rural area may be less than in an urban area, the cost of providing hospice care is not significantly different, she says. "We are trying to hire the same employees that the local hospital is hiring, so our salaries and benefits have to be competitive," Hahn says.
In Pinellas County, FL, they've seen their wage index drop some amount every year for the past several years, says Anne Hochsprung, vice president of finance for The Hospice of the Florida Suncoast in Clearwater, FL. "As we've watched the wage index drop, we've also watched salaries in this area go up, which is a double-whammy for our budget," Hochsprung says. "We always have open positions on our staff, but we do use flextime or pool nurses to fill the gaps."
Hahn's hospice serves half of Kansas, a total of 22,000 square miles. "How do you make ends meet with rising travel costs, rising staff costs, rising supply costs, and a reduction in reimbursement?" she asks. The other problem is that although her hospice also receives reimbursement from the state Medicaid program and private insurers, these payers tend to mirror payment strategies of CMS, she says.
For this reason, Hahn encourages all hospices to review their contracts with other payers. "Make sure you know if reimbursement from other payers is tied to the Medicare rate of reimbursement," she suggests.
Hospice managers and staff members have become accustomed to looking for ways to streamline services and lower costs, but the proposed three-year reductions in the wage index planned by the Centers for Medicare & Medicaid Services (CMS) will add an extra challenge for managers.Subscribe Now for Access
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