BALTIMORE, MD (Home Care Wire) The Medicare hospice benefit’s significant growth has caught the eye of policy-makers, and now providers and beneficiaries will pay the price for attracting such notice.

The Centers for Medicare & Medicaid Services wants to eliminate hospices’ budget neutrality adjustment factor (BNAF), according to a proposed rule in the May 1 Federal Register. That change will cut 4 to 5 percent from Medicare hospice spending over three years, notes the National Association for Home Care & Hospice.

CMS proposes phasing out the BNAF by 25 percent in 2009, 75 percent in 2010 and completely in 2011, according to the proposed rule. That would translate to a 1.5 percent decrease to wage index in 2009, 3 percent in 2010 and another 1.5 percent in 2011, CMS explains.

The current BNAF is “clearly obsolete,” CMS maintains in the rule. It’s based on outdated data that is artificially high, the feds say. CMS and a provider group agreed on the BNAF when CMS revised wage index methodology in 1997.

“Continuation of this excess payment can no longer be justified,” the agency argues in the rule. Hospices have had plenty of time to adjust to the new wage index and no longer need this adjustment, CMS says.

The impact: The wage index reductions will result in a 1.1 percent decrease to Medicare hospice spending in 2009, CMS estimates. If an inflation update of 3 percent occurs, hospices will see a 1.9 percent increase overall in payment rates.