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MedPAC thinks hospice payments are too high

10 Dec 2019 8:34 AM | AIMHI Admin (Administrator)

ModernHealthcare Source Article | Comments Courtesy of Matt Zavadsky

  • This pending recommendation from MedPAC is notable for EMS agencies on several fronts…

  • It’s the second time this month that MedPAC is recommending no rate increases for providers.  For ambulatory surgery centers it was based on lack of cost reporting, and in both ASCs and hospice providers, MedPAC is citing financial standing of the providers and the provider’s access to capital.  This finding may also be true for some EMS agencies.
  • Many innovative EMS agencies have partnerships with hospice agencies to reduce ED use and revocations.  Note that MedPAC is interested in further analysis of the ‘revocation’ issue.  Also note the ALOS for hospice enrollments.

MedPAC thinks hospice payments are too high

December 06, 2019





The Medicare Payment Advisory Commission is expected to vote against a pay increase for hospice in January.


Medicare hospice payments are probably too high, MedPAC's staff said at a meeting on Friday. Their research found that access to care is trending upward, while quality seems to have improved slightly. Hospices also have steady access to capital and robust Medicare margins—12.6% overall—so there's little reason to worry that beneficiaries' access to care would be hurt by financial problems anytime soon.


"The hospice rates may be higher than needed to ensure appropriate access to care," said Karen Neuman, a principal policy analyst for MedPAC.


The commission will likely recommend to Congress that they shouldn't increase the conversion factor, or base payment amount, for hospices. Most MedPAC members also favor reducing the hospice aggregate cap by 20% and instituting a wage adjustment for 2021.


Their proposed recommendation was met with opposition from hospice providers.


"(The National Hospice and Palliative Care Organization) does not support today's MedPAC recommendation to modify the hospice aggregate cap," said Edo Banach, president and CEO of NHPCO. "NHPCO shares MedPAC's goals, but this approach appears overly broad and likely to lead to a decrease in hospice access for patients and families. In the short term, we urge MedPAC to use a targeted approach that will have a higher likelihood of rewarding high quality, punishing low quality, and increasing access."


Lowering the aggregate cap and wage adjustment would help level the playing field for hospice providers, generate cost savings and target the most profitable hospices with payment cuts.


These changes wouldn't affect most providers because the hospices with the highest margins are mainly free-standing and for-profit providers. Those providers are disproportionately costly because their average lengths of stay are much higher.


"Hospice margins increase with the length of stay," said Neuman.


Not-for-profit hospices have an average length of stay of 68 days, while for-profit hospices have an average length of stay of 110 days. Likewise, free-standing hospices have an average length of stay of 92 days compared to just 70 and 57 days for home health- and hospital-based hospices, respectively.


"For the same diagnosis, there tends to be a longer length of stay for the for-profits," said Dr. Jaewon Ryu, president and CEO of Geisinger. "They also tend to enroll folks who (are more likely) to have a longer length of stay."


For-profit hospices have different patient mixes than other hospices, but it's not clear whether that's driven by the types of referrals they receive—or solicit—or if they're choosing to admit patients that are more likely to stay longer, he said.


Some commission members also wanted to know more about high live-discharge rates among hospices that have exceeded the annual cap on hospice payments—hospices that go over the cap must repay Medicare for the overages.


Most live discharges result from patients opting out of hospice or because they're no longer terminally ill, according to MedPAC's research. But there are questions about what's driving patients to leave hospice care.


"Is the beneficiary choosing not to enroll? Is the beneficiary being encouraged to leave hospice?" said Neuman.


Some larger hospice organizations track how close they are to the aggregate cap and their average length of stay, said James Mathews, executive director of MedPAC. They even adjust their business practices to make sure they don't exceed the limits.


"They are able to change their referral sources . . . if they start to see they're having cap issues," said Mathews. "They might seek referrals from hospitals who are more likely to have shorter lengths of stay."


Several MedPAC members lamented that Medicare's hospice benefit hadn't changed much since it was created for cancer patients in the early 1980's, even though the needs of Medicare beneficiaries and medical practice have transformed.


It's time to rethink the design of the benefit in light of the "changing demography of end-stage disease, and an aging and increasingly disease-burdened society," said Dr. Jonathan Perlin, president of clinical services and chief medical officer of HCA Healthcare.

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