Medicaid cuts contained in the One Big Beautiful Bill Act (OBBA) are not the only element of the bill that may be of concern to the home-based care community. The bill could lead to a higher percentage of hospice payment sequestration and add increase burdens on providers that offer hospice services.

The U.S. Centers for Medicare & Medicaid Services (CMS) currently sequesters hospice payments by 2%. However, the new law could result in a 4% increase.

The key issue is the federal deficit. The legislation is expected to add more than $3 trillion to the deficit, according to the Congressional Budget Office. When federal spending limits are exceeded, the government by law must go into sequestration. This means automatic, across-the-board spending cuts hovering around 4%, according to Katy Barnett, director of home care and hospice operations and policy at LeadingAge. This would bring the sequestration of hospice payments to 6%.

The only way to prevent this would be for Congress to pass a waiver of requirements from the Statutory Pay-As-You-Go Act of 2010, according to Barnett.

“The bill increases the deficit, and because it increases the deficit, it requires the government to go on sequestration. If it’s not waived by the end of September, it would add a 4% sequestration on top of the 2% that’s already in place for all Medicare providers,” Barnett told Hospice News. “If it is not waived by a separate piece of legislation that requires 60 votes in the Senate, then all providers will have a 6% cut to their base payments next Fiscal Year.”

Providers may face other hurdles created by the law. One pertains to new work requirements for Medicaid. The new law requires that certain Medicaid beneficiaries work or volunteer a minimum of 80 hours per month in order to maintain coverage.

Many low-wage hospice and home health employees — such as aides — work part time, do not receive employee health benefits, and some are Medicaid enrollees. A substantial proportion of those workers may be subject to the work requirements. To certify that they are in compliance with those requirements, they will have to submit documentation of their work hours. The specific documents and methodologies for doing so will vary from state to state, Barnett said.

This could create additional workload for these workers’ employers.

“Making sure that those folks are eligible to stay on is going to fall, in some parts, to the HR staff of the hospice to make sure that they have all their documentation and help them fill it out,” Barnett said. “It’s not really clear what that’s going to look like, and it’s going to be state by state. That’s definitely something that hospices need to be aware of. They need to know which one of their which members of their staff are on Medicaid and might need support in filing that documentation to make sure that they can maintain their health insurance if the hospice isn’t able to provide it,”

The bill also contained cuts to Medicaid totalling close to $1 trillion over the next 10 years. This likely means that millions of enrollees will lose their benefits, according to the Kaiser Family Foundation. It also means that many health care providers, beyond hospice, will face massive revenue loss. This may shut some of them down — including hospitals — particularly in rural areas.

As many as 300 rural hospitals may need to close as a result of the Medicaid reductions, according to a letter sent by Democratic members of Congress to President Trump and congressional leaders. 

This will likely have a ripple effect on hospices, who will lose referral partners in rural areas in which health care alternatives are scarce, Barnett indicated.

“I wouldn’t be surprised if rural hospices decide to divest from that, and additionally, reduce their staff and reduce access to the services that they provide,” Barnett said. “Referrals for those rural hospices that work with a partnering agency or hospital are probably going to see a decrease. They also may see that the referrals start coming from other hospitals that are further out from where the individual lives in their community, but because they can’t access inpatient services in their community anymore.”