In the News: Federal Government Happenings

Attention has been focused on the Medicare funds being reimbursed to home health and hospice providers. As a result there has been renewed scrutiny on these providers’ reimbursement structure.

Wage Index Proposal

The Centers for Medicare & Medicaid Services (CMS) has proposed to update and revise the Medicare hospice wage index (WI) for fiscal year (FY) 2009 with a plan that phases out an adjustment to the hospice wage index that has been in place over a decade. This proposal is based upon projected Medicare dollar savings in the billions. This will still allow an increase in reimbursement rates, but the increase would be much lower than usual than the anticipated amount.

Historically, it was believed that the change in wage index made in 1997, was a more accurate and valid method for calculating the wage index adjustment. This was termed the budget neutrality adjustment factor [BNAF] and has continued to affect hospice reimbursement via the calculation of the wage index adjustment. With this factor’s elimination, it is stated that the updated wage index would more accurately reflect current wages.

One factor that CMS states supports this finding is the rate of increase in the number of Medicare-certified hospices - increasing at the rate of 86% since 1994, with a 26 % between 2001 and 2005. This rate if sustained would in fact project a growth rate that outpaces the growth rate of other health care provider types including hospitals, skilled nursing facilities, physician services and home health care.

Three Year Phase Out

The phase out is projected to span 2009-2011. In year one, Fiscal Year 2009, a25 % reduction would be put into place. In year two, Fiscal Year 2010, an additional 50% reduction (for a total of 75%) would be put into place. In year three, Fiscal Year 2011, a complete elimination of the BNAF wage adjustment would take place.

CMS further states that this elimination would then base the hospice wage index on the unadjusted hospital wage index, which is updated annually. This would result in a more accurate wage index, that is more in alignment and consistent with the home health wage index. Since hospice and home health providers are home-based benefits, it is believed these provider types compete in the same labor markets

Hospices are not the sole provider type affected by these proposed revisions. In addition this rule also proposes a change in how multi-campus hospitals report their wage data. A final rule is anticipated for publication in August 2008.For more details and to link to the proposed rule and accompanying documents, go to http://www.cms.hhs.gov/center/hospice.asp.

Office of the Inspector General [OIG] Medicare Hospice Benefit Reports

A series of reports has been released by the OIG focused on the Medicare Hospice Benefit.  These include reports focused on Hospice Beneficiaries' Use of Respite Care released in 2005 and Medicarew Hospice Care: A Comparison of Beneficiaries in Nursing Facilites and Beneficiaries in Other Settings. These reports were the foundation of data used in the more recent oversight and reports released including Medicare Hospices: Certification and Centers for Medicare & Medicaid Services Oversight, which focused on hospice survey timeliness and results. This report was very critical of how CMS maintained oversight and monitored levels of compliance of hospice programs with standards. As a result more attention has been focused on increasing onsite surveys as well as off site medical reviews of care and services.

In 2008, a new OIG study undertaken through the medical record review process is focused on several critical elements of hospice care. These include:

• Assessment[s] completed and documented for every patient
• Plan of care reflects assessment findings
• Services billed at appropriate care level
• Beneficiaries received services billed
• All services documented and include location, frequency and care level
• Reimbursement corresponds with care and services provided.

This study being conducted throughout 2008 has a planned release date in Fiscal Year 2008. It is important that the hospice provider increase its internal utilization and record review process in order to critically evaluate the service and billing elements, as well as its documentation process. More information on the Office of the Inspector General’s Hospice focused oversight is available at www.oig.hhs.gov.