hospice in federal budget revisited

Wednesday, February 27, 2008

Hospice in the Federal Budget – revisited

I wrote a quick post earlier this month about the budget proposal that President Bush sent to congress. On first look, it was a little worse for the hospice industry than last year’s proposal, but not a big deal. Well, your lowly hospice blogger missed something big in that post. Before telling you what I missed, I’d like to say that this is the precise reason that I encourage you to become a member of the National Hospice and Palliative Care Association. That little portion of the submitted budget that I overlooked is much more than a little issue, and I would have never known about my oversight if it weren’t for the alert that NHPCO sent out to all of its members. More than that, when they sent out the alert they had excel spreadsheets already worked out so I would know just how much pain this budget could cause me. I’m sure I could have figured it out on my own, but there is little doubt that it would have taken me a few hours of research. Judging by the number of posts I have written for this blog lately, I’m pretty sure that I don’t have a few hours to do that homework. The knowledge and time saved on this one issue has paid for my dues this year. (Not to mention all of the other things they do for me throughout the year!)

No, I don’t work for NHPCO, and I do not benefit in any way if you are a member.

Moving on.

The detail I missed in the president’s budget proposal is that he is proposing the end of the Hospice Wage Index. Instead of having a wage index just for hospices, we would start using the hospital wage index. Now, I’m no rocket scientist, but I’m figuring that a wage index is a wage index. In the long run, that is probably true, but in the short run, it is nowhere near true. The problem here is that there are differences between the two indexes. In my world, we get paid about 5% more using the hospice wage index than we would with the hospital wage index. That means, that if they make this change effective next year, we will not only not get a pay raise (see prior budget post) we will take around a 5% pay cut. That could really hurt.

It is a bit unclear to me but I believe that the president has proposed to phase this in over three years, which would make it easier to swallow. As I have said before, I’m all for appropriate payment rates, and if the hospital index works as well as or better than the hospice index, then I’m game. The problem is that I’m rather sure that there are a lot of hospices that are not prepared for a 5% pay cut. There are a lot of hospices that are working hard to break even, so taking 5% away may be a critical problem. Clearly, some of that is their problem and goes back to past discussions on this blog about the need for better business practices throughout the hospice industry.

The bottom line: I don’t care who you are, if you lose 5% of your revenue, you are, at a minimum, going to have to tighten your belt. It would be nice to have three years to phase this in, but either way, every hospice in the nation needs to know that this is coming. You have now been warned.