... while Medicare cuts threaten hospices' profit margins

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Medicare profit margins for hospice providers could dip into negative territory thanks to two new cuts to Medicare reimbursements, according to a new survey.

Roughly 88% of hospice programs could see negative Medicare profit margins by 2019, according to the new study, which was released Monday by the National Hospice and Palliative Care Organization (NHPCO). Those profit margins are expected to fall from a national median of 2% in 2008 to minus-14% during that time. Rural hospice programs are expected to be hardest hit, dropping to an estimated minus-19% Medicare profit margin by 2019.

The Medicare cuts described in the NHPCO study would reduce reimbursement through a seven-year phase-out of the Budget Neutrality Adjustment Factor (BNAF), which is a key element in the Medicare hospice wage index calculation. The BNAF elimination would cut reimbursements by roughly 4.2%, according to the NHPCO study. A further Medicare hospice rate adjustment contained in the Patient Protection and Affordable Care Act would reduce reimbursements by 11.8% over 10 years. A summary of the report is available at the NHPCO website.