Home Health & Hospice Week

...but transition will sacrifice some providers' wage increases.

The final rule on hospice wage index is a mixed bag for providers - and a good indicator of what's in store for home health agencies.

The Centers for Medicare & Medicaid Services proposed no phase-in of the new Core Based Statistical Areas, which will replace the Metropolitan Statistical Areas, in April. But in the final rule published in the Aug. 4 Federal Register, CMS now says it will give hospices a one-year transition to the new CBSA-based wage areas.

The transition will give agencies a blended rate starting Oct. 1 - 50 percent of what the wage index would be under the old MSA, and 50 percent of the wage index for the new CBSA. CMS received numerous comments calling for a transition, it says in the regulation.

The National Hospice and Palliative Care Organization requested a transitional period in its com-ments on the proposed rule because some hospices' wage index changes will be "drastic" in the switch to CBSAs, notes NHPCO's Jonathan Keyserling.

The down side: Unlike hospitals, hospices whose wage index figures are set to increase under the new CBSA designations won't enjoy a hold harmless provision that preserves their increase, CMS explains. Everyone will receive the 50/50 blend whether it helps or hurts their final index.

Home health agencies can expect to see the same 50/50 blend that is in the hospice rule, predicts Bob Wardwell with the Visiting Nurse Associations of America. "I see home health being given exactly the same deal," says Wardwell, a former top CMS official.

The 50/50 blend for skilled nursing facilities' wage index is an even better indicator that HHAs will end up with that transition as well, adds William Dombi, vice president for law with the National Association for Home Care & Hospice.

Phase-In Could Have Been Better

"Both hospice and home health deserve a better deal" on wage index transition, Wardwell tells Eli. "A multi-year transition without the CBSA winners having to face a reduction would have been most equitable. Our members who will see their long-awaited wage index increase diminished by the 50/50 blend are understandably very disappointed."

But most providers will see only a small reduction from their CBSA increases due to the blend, Dombi says. "In exchange, all HHAs will receive a greater degree of stability to the index values, an element that all have long desired," he notes. "The volatility of the index from one year to the next is of very serious concern to all, since those that see a rise one year can see a fall the next."

Reclassification Inequities Continue

While hospices gained some ground on the transition, they got nowhere on wage index reclassification. While hospitals can request reclassification to a higher-paying wage area, hospices - and most likely HHAs - won't be able to. CMS insists it has no authority to allow reclassification for other provider types.

"It's impossible for those VNAs, who face a huge disparity between their wage index and that of one or more reclassified hospitals, to the offer the same kind of salaries and bonuses that allow hospitals to recruit and retain staff," Wardwell fumes. "I almost choke when I hear hospitals singing the blues about Medicare payment ... at the same time as hospitals are offering big signing bonuses and $4 per hour salary differentials to lure nurses from our VNAs."

"Hospices and HHAs will continue to get a bad deal in relation to the hospitals so long as CMS refuses to consider the impact of the rural floor and reclassification authority," Dombi tells Eli. "All these providers compete for the same employment pool and any index that does not provide parity is unfair."

"Hospital reclassification is creating such large disparities that something will have to give soon," Wardwell portends. "No objective person can look at this situation and say it is fair."

A complicating factor is that hospices get paid based on the wage index where the patient they are serving lives, not on the wage index of one location like hospitals, Keyserling points out.

CMS may not have the explicit authority to allow reclassification for other provider types, Wardwell admits. But the agency "has such a broad legislative authority to establish an appropriate wage index for home health" that it could adopt an adjusted index to reflect the impact of reclassified hospitals, he maintains.

NAHC and VNAA will continue to push for wholesale wage index reform that will reduce both inequities and year-to-year volatility, Dombi and Wardwell say.

Note: The wage index final rule is at www.cms.hhs.gov/providers/hospiceps/cms1286f.pdf.