My favorite hospice nurse blogger, Dethmama, asked me a question the other day - will the cuts in Medicare hospice reimbursement affect a hospice running under a "managed care umbrella"? How will the "mom and pop" hospices fare? She had obviously been reading the Hospice Blog.
While this isn't your normal topic of conversation over a couple of drinks, I do have over 20 years of experience in the health insurance industry and currently work for one of the largest in the nation. I have seen, firsthand, what happens when Medicare (the government - insert "Theme from Jaws" here) has found a target to save some bucks.
So Medicare has announced that, in a nutshell, they are not going to increase reimbursement rates to hospices for the next three years and thereafter, look to apply a 0.65% reduction in reimbursement. Medicare plans to save 2.2 billion dollars over the next 5 years with this plan.
Where does that leave a "managed care" hospice? Let me first try and explain what a Managed Care Hospice is...
Most of us with insurance fall into some type of "managed care" arrangement. We have a primary care physician and we pick specialists and emergency rooms from the insurance company's list of providers. This is due to the insurance company having a contracted relationship with these providers and it saves all of us money. A "managed care" hospice will also have these contractual relationships with pharmacies, medical equipment companies and any other providers that it does not employ directly. "Mom and Pop" hospices also have contracts with many of the same providers. However, they do not have the same discounts or control. A hospice under the "managed care umbrella" will use these providers to service thousands of their patients and all the other membership under the "managed care arm", so providers are very anxious to do business with them. In many cases, the managed care hospice can insist on service guarantees and annual increase limits to be included in their contracts.
In the short term, this will help a Managed Care Hospice compete in the marketplace and doom the "Mom and Pop" hospices that are already operating at close to a break-even level. Here comes the "but"... Hospices get 70-80% of their budget from Medicare. When the bulk of your revenue stream is going to be stagnant for the next three years, but all your costs are rising, a contract with Walgreen's isn't going to help you. The options are:
- Raise your rates for the private pay and insurance companies.
- Load up your nurses with more patients.
- Decrease services (chaplains, nutritionists, etc.).
- No more indigent/poor care.
- Close your hospice and overwhelm the others.
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