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Reimbursements set to drop; health bill may be helpfulNORTH BAY — Facing up to $10 billion in cuts to Medicare reimbursement, hospice leaders had hoped the passage of the federal health bill in March would blunt the impact of such a sharp hit. Although the bill lessened the cut to $7.8 billion, hospice and palliative care will still be significantly affected, North Bay end-of-life care providers said.

Despite the decrease in Medicare funding, which most hospices are heavily reliant upon given that they traditionally serve patients over 65 years of age, some provisions of the bill will be beneficial, said Kitty Whitaker, chief operating officer of Hospice by the Bay in Larkspur. The nonprofit palliative care center served 2,600 patients in 2009 – a 14 percent increase from the previous year – and sees about 320 patients a day in San Mateo, San Francisco, Marin and Sonoma counties. About 85 percent of operating revenue comes from Medicare.

In 2010, hospice care faces a 3.5 decrease in Medicare reimbursement with incremental cuts expected over the next seven years, Hospice by the Bay CEO Sandra Lew wrote in an annual report for 2008-2009, adding that a reduction in services could arise from such cuts.

“Most hospices will have to look at their services, especially any charity and other services that won’t be reimbursed,” she said. “We’ll have to look at that.”

Judy Ryder, director of Hospice of Petaluma, Memorial Hospice and North County Hospice, agreed that the Medicare cuts will be significant, but it’s difficult to assess the full impact just yet. It, too, receives about 85 percent of revenue from Medicare and serves roughly 400 patients a day and 11,000 annually in Sonoma County.

“It’s substantial, no question about it,” she said.

Such cuts may present problems specifically for patients that receive care beyond 180 days, she said, because the cost could increase significantly.

Ms. Whitaker said Hospice by the Bay will attempt to recoup lost revenue from Medicare by increasing an already active fund-raising effort and is renting out space at its building for additional cash flow.

While the cuts in Medicare are still an issue of uneasiness for hospice care providers, both Ms. Whitaker and Ms. Ryder, and the National Hospice and Palliative Care Organization, said the Medicare Hospice Concurrent Care Demonstration Program provision of the health bill is a positive development, and it has been a priority of the organization, which advocates on behalf of hospice and palliative caregivers in Washington, for some time.

As part of the provision, 15 hospices nationwide will be selected by the Health and Human Services secretary to establish a three-year demonstration program.  An independent evaluation will then take place to determine the quality of patient care and impact on Medicare spending.

“From my standpoint, it will be interesting to compare, from a cost standpoint, those patients in this new program with patients under the traditional hospice-Medicare model,” Ms. Whitaker said. “It’s an exciting opportunity to study this because it’s never been done before.”

Ms. Ryder agreed, noting that the previous reimbursement system for hospice has been a good model in the past, and the new provision could confirm that.

“It has allowed the patient to be at the center of care. We don’t have the insurers saying you can only have a certain amount of visits. Hospice has been able to care as needed,” Ms. Ryder said.

Still, another provision of the health bill may exacerbate the Medicare cuts, Ms. Whitaker said, referring to the elimination of the Budget Neutrality Adjustment Factor, which resulted in an additional 4 percent reduction in Medicare reimbursement for hospices.

“This is a big deal for all hospices,” Ms. Whitaker said. “We live in a high labor cost area, and we really depended on this adjustment for cost of care.”