A new phrase was ushered into everyone's vocabulary in 2013: “sequestration.”
While the term itself is now familiar, many are still unsure exactly what it means and if — or how — it will affect them personally.
While most tax increases were avoided for the short-term at the onset of the year to steer clear of the so-called fiscal cliff, these forced across-the-board spending cuts, which went into effect April 1, will now affect many, including hospice providers.
Sequestration cuts will reduce the reimbursements the health care industry receives from Medicare by 2 percent. That may at first glance appear small, but, for example, that equates to nearly $500,000 annually for a hospice providing care for 500 patients each day — and may remain in effect for a number of years.
In the first year of sequestration, it is estimated by the Congressional Budget Office, program spending will be cut by $3 billion. And there may be more changes on the way.
Because nonprofits in the heath care industry provide care for everyone, regardless of an individual's ability to pay, the need for charitable care, or care not covered by Medicare and insurance, will increase. Fulfilling this need means that the community support these nonprofits rely on year after year will be more important than ever.
There is hope within the hospice industry that Congress will consider the fact that recent studies have found that hospice actually saves money. In 2007, a study conducted by Duke University researchers found that hospice care reduced Medicare spending by an average of $2,300 per person compared with normal care, which typically includes expensive hospitalizations.
More recently, research out of Mt. Sinai Medical Center shows that the hospice benefit can result in more than $5,000 in savings when patients are in hospice care between eight and 14 days prior to death. The study reports that, in addition to saving money for Medicare, hospice enrollment was associated with significant reductions in hospital and intensive care admissions, hospital lengths of stay and 30-day readmissions, and it reveals that savings appear to grow as the period of hospice enrollment lengthens.
According to the report, "If 1,000 additional beneficiaries enrolled in hospice 15 to 30 days prior to death, Medicare could save more than $6.4 million." Amy S. Keller, the study's lead author, also stated, "Considerable evidence supports that hospice significantly enhances quality of care for patients and their families near the end of life."
Providing critical programs and specialized services could be challenged in the months and years ahead when the impact of sequestration begins to be felt.
Steven M. Knaub is president and CEO of Hospice & Community Care. Founded as Hospice Care of Lancaster County, it serves seven counties in Central Pennsylvania and is one of the state's largest nonprofit hospice providers.