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Profit Margin Summary

For Immediate Release: March 7, 2011 – Updated March 22, 2011

Reimbursement Cuts will Negatively Affect Hospice Care – Particularly in Rural America

NHPCO releases data showing devastating impact of cuts

(Alexandria, Va) – An independent study focusing on  the projected  margins of the hospice community found that, as a result of two recent cuts to Medicare reimbursement, the first regulatory and the second statutory, the overall median Medicare profit margin for the hospice community could decrease from 4 percent  in 2008 to minus 11 percent (-11%) by 2019.  Further, analysis concludes that 66 percent of hospice programs could have negative margins by the same date.

Hospices caring for Americans in rural areas would be the most severely affected, with median profit margin decreases ranging from 0 percent in 2008 to minus 16 percent (-16%) by 2019.

The National Hospice and Palliative Care Organization today released the results of the study commissioned as part of its ongoing work to protect patient access to hospice in America.

“This analysis confirms our worst fears,” said J. Donald Schumacher, president and CEO of NHPCO.  “With the entire hospice community – rural and urban, large and small, community-based and multi-state – being hit by the same devastating slope downward, there is no way for patient access to not be negatively impacted.”

The Centers for Medicare and Medicaid Services initiated a seven-year phase out of the Budget Neutrality Adjustment Factor beginning in 2009 (FY2010). The BNAF is a key element in the Medicare hospice wage index calculation. The phase out of the BNAF will ultimately result in a permanent reduction in hospice reimbursement rates of approximately 4.2 percent.  

The 2010 Patient Protection and Affordable Care Act (ACA) imposed an additional change to the Medicare hospice rate formula that will further cut hospice payments by approximately 11.8 percent over the next ten years through the introduction of a “productivity adjustment” that is applied to the annual payment updates for hospice.   Hospices care almost exclusively for Medicare and Medicaid beneficiaries.

NHPCO’s advocacy and lobbying affiliate, the NHPCO Hospice Action Network is currently pursuing legislation that will soften the cuts to hospice programs.  Additional advocacy efforts also include promoting accountability and transparency within hospice, while ensuring access to high quality end of life care for future generations of Americans.  

The hospice community’s largest and most representative annual lobby day is April 6, with hundreds of Hospice Advocates expected to be on the Hill asking for relief from the cuts.  The effort will be supported by thousands of Hospice Advocates who will participate through a virtual lobby day event that week.  The nation’s hospices employ approximately 200,000 medical professionals, administrators, social workers and clergy nationwide.  

“NHPCO and the Hospice Action Network have been engaged in a long-term, multi-phased strategy to soften the cuts to hospice reimbursement since the first cuts were announced in 2008,”said Jonathan Keyserling, executive director of the NHPCO Hospice Action Network.  “Congress should expect to hear a unified hospice voice on Capitol Hill next month, asking for relief on behalf of the 1.5 million patients, and their families, who depend on high-quality, compassionate end-of-life care each year.”

The trend analysis was performed by The Moran Company using 2008 Medicare Healthcare Cost Report Information System (HCRIS) and the 2008 Medicare Hospice Claims Standard Analytic File (SAF) (100%), in addition to information provided by NHPCO that projects annual estimated changes in hospice reimbursement rates outlined in the ACA and the proposed rule.  A summary of the report is available on the NHPCO website, and the full report is available by request

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Contact:
Jon Radulovic

Vice President of Communications
703-837-3139
jradulovic@nhpco.org

Angie Truesdale
Director of Public Policy
703-647-5163
atruesdale@nhpco.org

NHPCO Members:  More comprehensive information on the analysis will be featured in the April edition of NewsLine.  To take action on this issue by sharing the report with your Members of Congress, please visit the Hospice Action Network Legislative Action Center.

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