Thursday, January 14, 2010

Hospice Objects to MedPAC Margin Projections and Reductions

(Alexandria, VA)—The National Hospice and Palliative Care Organization today urged the Medicare Payment Advisory Commission to adjust the community’s 2010 projected profit margins from 4.6 to 2.6 percent in order to more accurately reflect hospice’s unique, mandatory program costs of volunteer and bereavement services.

The Medicare (and Medicaid) hospice benefit includes all care related to the terminal illness, as well as requires programs to provide up to 13 months of bereavement services to the families and loved ones of the beneficiary after he or she dies. In addition, the Medicare hospice benefit requires that trained volunteers provide at least 5 percent of the patient care hours. These services are mandatory as detailed in the hospice conditions of participation, and this is unique to the hospice benefit.

“While other providers also may establish volunteer programs, and perhaps the cost of those programs are considered non-reimbursable costs on the Medicare cost report, we know of no other provider that is federally required to establish and maintain a volunteer program and to track and document the cost savings achieved,“ said NHPCO Vice President of Public Policy Jonathon Keyserling. “The costs of both volunteer and bereavement services must be included in the margin computation.Any other approach would ignore the financial reality of hospice programs bearing these mandatory costs.”

MedPAC staff projected hospice margins of 4.6 percent for 2010. NHPCO contends this figure overstates the actual margin being experienced by most hospice programs.

“The MedPAC staff previously noted that they estimated bereavement costs to be about 1.5 percent. Another cost for every hospice program is the cost of administering and tracking volunteer services, but these also are not considered in margin calculations. We estimate that the cost of volunteer services would be 0.5 percent. Therefore, the “true” margins of hospice programs, providing the range of required services under Medicare, would then be 4.6 percent minus 1.5 percent minus 0.5 percent yielding a ‘real’ margin of 2.6 percent,” Keyserling said.

The 2008 MedPAC projection for hospice margins was 3.4 percent. NHPCO argues that a 4.6 percent projection for 2010 indicates, mistakenly, that hospice margins are growing.

“The discrepancy in the numbers is an indication of a change in the calculation methodology, by excluding the costs of delivering statutorily mandated services, rather than pointing to the fact that hospice margins are actually shrinking. For MedPAC to recommend countering an erroneous growth in hospice margins by reducing the annual inflationary adjustment is absurd and potentially devastating to the hospice community,” Keyserling concluded.

NHPCO is committed to working with the MedPAC staff and Commissioners to address and resolve issues, both perceived and real, within the hospice community.

“We look forward to working with MedPAC staff and Commissioners to fully explore the available data before payment reform is implemented,” said NHPCO President and CEO J. Donald Schumacher. “NHPCO is also committed to a full discussion of the costs of care and a detailed analysis of the data elements that will be necessary for comprehensive data collection.”


Media Contact:
Michele Matthews
Manager, Public Policy Communications
Direct: 703-837-3135

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