Home Health & Hospice Week

Will industry’s comments about ‘devastating’ update fall on deaf ears?

With mere weeks left before Medicare’s hospice final rule comes out, hospices are waiting on pins and needles to see whether their problems with the proposed rule will be solved — especially when it comes to the rate increase for fiscal year 2025.

Recap: In the proposed rule released on March 28, the Centers for Medicare & Medicaid Services floated a 2.6 percent payment rate increase for FY 2025, which begins on Oct. 1 (see HHHW by AAPC, Vol. XXXIII, No. 12). And that was actually more than the rate freeze that the Medicare Payment Advisory Commission had recommended to Congress in its annual report earlier in the month.

The vast majority of the 110 comment letters CMS received on the rule put the rate update front and center, emphasizing the increase’s inadequacy and the dire consequences if CMS makes it final.

“This update fails to reflect the significant inflationary pressures that [Ohio’s Hospice Inc.] and other hospices are currently facing,” stressed the affiliation of nonprofit hospices headquartered in Dayton in its letter.

The 2.6 percent rate bump “does not adequately reflect significantly increased operational costs and is fiscally unsustainable for hospice providers,” insists Jennifer Elder with the Texas Association for Home Care & Hospice in the trade group’s comment letter.

The proposed “increase is far too low to account for the actual conditions facing hospice care providers and patients in 2025,” argues John Gochnour, COO of The Pennant Group, in the publicly traded chain’s comment letter. “Lower rate reimbursements, in the face of increased demand for hospice care as our population ages, will reduce access to care,” Gochnour warns CMS.

“The proposed rule … threatens to strain margins to nearly devastating levels,” Gochnour adds. “CMS is proposing a rule that will have disastrous consequences to an industry providing critical services to our most vulnerable populations.”

The rule’s “inevitable consequences” will be “potentially driving providers out of business, thereby leaving patients without competent care providers, disrupting much needed care, and likely resulting in the patient seeking care in a much higher cost setting such as hospitals or skilled nursing facilities,” Gochnour maintains.

Bottom line: The rule is “unsympathetic and potentially ruinous to hospice agencies across the country, and, therefore, it must be amended to eliminate the proposed nominal reimbursement,” Gochnour urges.

“This update is severely inadequate and does not reflect the high costs hospices face,” agrees Brian Vamstad with Minnesota-based Essentia Health. “The minimal proposed payment rate update feeds the probability that hospice providers will need to refuse referrals and may even close,” Vamstead warns in the health system’s letter.

Labor Shortage, Costs Cripple Hospices

Many hospices and their representatives provided a long list of reasons that agencies’ costs have skyrocketed, but one area loomed over the rest — labor.

The proposed increase “is not enough to compensate for the increase in wages and the lack of people wanting to work,” says one provider in Idaho in their comment letter. “The [wage] increase and the competition for nurses, CNAs and SWs is crazy in the rural areas we serve,” they continue. “This is affecting our ability to hire the staff to make sure no one is turned away from hospice care when needed,” they report.

“The rule provides for an inflation rate that is well below what the average pay increase is for the hospice clinical staff,” highlights Sutter Care at Home, part of Sutter Health system in California. “Sutter Care at Home is providing our clinicians with an increase this year well in excess of the recommendation and anticipates that the increase provided in 2025 will again far exceed the amount CMS is recommending. This pay increase is critical in order to continue to attract and retain clinicians in what is a very expensive and competitive marketplace,” Sutter tells CMS.

“Hospice and other post-acute providers such as home health continue to struggle to attract and retain clinical providers as the average salary for a hospital RN, for example, well exceeds that for a hospice RN,” Sutter explains in its comment letter. “Too often hospice providers hear from their clinicians that their heart is in hospice care but the salary difference between that for a hospice provider and that of a hospital provider is too significant for them to stay in hospice,” the provider laments.

Medicare has seen what happens when it underfunds a provider sector. “The home health program for Sutter Care at Home regularly turns away referrals due to a lack of clinical staffing,” the provider relates. “It is conceivable that in the coming months Sutter Care at Home will have to turn down hospice referrals if we continue to see additional referrals,” it fears.

Workforce shortages were already plaguing healthcare providers before the COVID-19 pandemic, points out the National Association for Home Care & Hospice in its comment letter. And they “have remained severe in its wake,” NAHC adds. “Hospices are hard-pressed to compete with wages and benefits that hospitals and some nursing facilities are able to offer the same personnel. These workforce shortages have been accompanied by high levels of turnover, escalating recruiting costs, and reduced productivity as newly hired staff become acclimated to hospice policies and practice, creating additional financial challenges for hospice providers,” the trade group explains.

“The significant workforce challenges and other cost inputs being experienced by hospices warrant a higher rate increase that reflects the true costs hospices are facing and the value the program provides to patients, families, and taxpayers,” exhorts Patrick Conole with The Home Care Association of New York State in its comment letter. “We are deeply concerned that the projected payment update for hospice (as well as home health) provider members will be inadequate to address the accelerating financial demands that hospices have been facing over the last three years,” Conole says.

Texas providers are getting pummeled by “unrelenting staffing shortages; a continued escalation of employee hourly wages and salaries; [and] increased levels of training and education requirements for agency employees,” TAHC’s Elder communicates.

Other factors impacting hospices’ finances include:

• Sequestration. “More than a year ago, sequestration returned to Medicare which means that hospice payments are reduced by 2 percent from the previous two fiscal years for which relief from this reduction was available,” points out Nick Westfall, CEO of VITAS Healthcare in the chain’s comment letter. “Based on the proposed update of 2.6 percent, this essentially eliminates more than two-thirds of the proposed increase,” Westfall protests.
• Costlier patients. Trellis Supportive Care in Winston- Salem, N.C. has seen an “increase in medical complexity of our patient population,” report the agency’s Jennifer Bauguss and Keiasha Robinson in its comment letter. In many other healthcare settings, higher acuity brings higher reimbursement, but that’s not the case for hospice.
• Increased medical review costs. “With increased oversight and scrutiny on hospice providers, many have had to add new administrative positions to monitor and track third party audits, as well as other oversight activities,” TAHC’s Elder notes.
• More time-intensive surveys. Recent hospice survey revisions “are leading to longer survey time frames, which increases administrative costs related to the survey process,” NAHC spotlights.
• Other soaring costs. Prices for supplies, drugs, personal protective equipment (PPE), rent, gasoline, office supplies, software, and more have all increased, Elder tells Medicare officials. Readiness against cyberattacks is another increased cost in the wake of the Change Healthcare and Ascension ransomware incidents.
• HOPE. Aside from all those cost increases, the 2.6 percent update “will likely not cover the cost to operationalize the new HOPE assessment tool, which entails vendor development and validation expenses as well as staff training,” point out Krista Bishop, Jenn Ofelt, and Cathy Simmons, with UnityPoint Health and its hospice and home health divisions, in the health system’s comment letter.