The Centers for Medicare and Medicaid Services has turned its attention to changing the Medicare hospice wage index.
Among other planned changes, CMS announced Tuesday that it will eliminate an adjustment that has slightly increased payments for the past 11 years.
Industry groups attacked the proposal, saying it comes in the face of increased demand and rising operating expenses for hospice organizations.
CMS said the budget neutrality adjustment factor, applied to the labor portion of the hospice payment only, has become outdated, particularly because it's based on wage index values that are 24 years old and because hospice payments have increased substantially.
CMS estimated hospice expenses at $9.2 billion in 2006, compared with about $2.2 billion in 1998 - a growth rate it estimates at almost 20 percent per year - and expenses now are growing at about $1 billion per year.
The Medicare Payment Advisory Commission, or MedPAC, projects that hospice expenses will continue to grow at a rate of 9 percent through 2015, outpacing the growth of payments to other healthcare sectors.
It also highlighted growth in the number of hospices, from 1,602 in 1994 to nearly 3,000 today.
"We believe that this growth in Medicare spending for hospice indicates that the original rationale of the BNAF - to cushion the impact of using the new wage index - is no longer justified," CMS wrote in its proposed rule.
CMS is proposing phasing out 25 percent of the wage index adjustment in fiscal year 2009, which begins October 1, by 75 percent in fiscal year 2010 and eliminating it in fiscal year 2011. It projects savings over five years at $2.29 billion.
The agency is also seeking to change the way it accounts for wage data reported by multi-campus hospitals, which has an effect on the hospice wage index. Combined with an estimated hospice market basket increase of 3 percent in fiscal 2009, changes in the rule would result in an average net update of 1.9 percent.
Reaction from professional hospice organizations was swift, with officials saying the CMS plan was only seeking ways to save money for the government.
"Regardless of how the administration chooses to characterize or couch this action in technical terms, it is a rate cut," said J. Donald Schumacher, president and CEO of the National Hospice and Pallative Care Organization. "Through the proposed rule, the administration is circumventing Congress to save money in a manner that may ultimately jeopardize the services provided by hospices."
The organization said hospices are particularly hard-hit by rising costs, particularly for gas, supplies and pharmaceuticals.
"Given that 80 percent of care is delivered in the home, hospice professionals must drive to reach those they serve and are subjected to inflationary pressures with every visit to the gas pump," Schumacher said.
The NHPCO estimates that 1.3 million Americans received care from hospice providers last year. The organization and an affiliate recently supported bipartisan letters from 87 congressmen to Health and Human Services Secretary Mike Leavitt in opposition to the proposed rule.
CMS will accept comments on the proposed rule through June 27. A final rule is expected by August 1.