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Home Health & Hospice Week

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Medicare Advantage VBID, Live Discharge, Star Ratings Feature In New MedPAC Report

Published on Fri Mar 24, 2023

Plus: Expect a rate increase in the neighborhood of 2.9 percent for 2024, Commission estimates.

There’s a lot to unpack in the Medicare Payment Advisory Commission’s new report to Congress addressing hospice payment rates, and some of that baggage could weigh down hospices in the future.

Take a look at these hot spots the MedPAC report hospice chapter touches on:

1. Rate increase. While MedPAC urges lawmakers to cut the aggregate per patient hospice cap by 20 percent in 2024, it also recommends that “the Congress should update the 2023 Medicare base payment rates for hospice by the amount specified in current law.” Right now, “CMS’s third-quarter 2022 projections of the market basket (3 percent) and productivity adjustment (0.1 percent) would result in an increase in hospice payment rates of 2.9 percent,” MedPAC estimates in the 471-page report.

The National Hospice and Palliative Care Organization “is pleased that the MedPAC recommendation is in line with the statutory increase for FY 2024,” NHPCO’s Judi Lund Person tells AAPC. However, don’t write that increase in ink quite yet. “The percentage increase will not be known until the FY 2024 Hospice Wage Index proposed rule is published later this spring,” Lund Person reminds.

2. VBID. Medicare Advantage plans’ administration of the hospice benefit has led to a number of headaches for providers — billing and otherwise. “In 2021, the first year of the hospice VBID, 9 MA parent organizations offered hospice in 52 plan benefit packages.” That year, “about 9,630 beneficiaries received hospice care from an MA plan through the VBID in 2021,” the report recounts. “In 2023, 15 MA organizations, comprising 119 plan benefit packages, will furnish hospice benefits under the VBID model,” MedPAC offers.

“MA plans and hospice providers reported implementation challenges, but they reported that these challenges lessened over time,” MedPAC assures. “Experience with VBID hospice continues to evolve as the number of plans participating increases in future years of the model,” it says.

3. LOS, live discharge red flags. “Above-cap hospices have substantially longer stays than below-cap hospices, even for patients with similar diagnoses. Above-cap hospices also have substantially higher rates than other hospices of discharging patients alive,” MedPAC says in support of its recommendation to reduce the hospice cap (see related story, p. x). “These length-of-stay and live-discharge patterns suggest that above-cap hospices are admitting patients who do not meet the hospice eligibility criteria, which merits further investigation by the Office of Inspector General (OIG) and CMS,” the report suggests.

“MedPAC, by recommending a 20 percent reduction in the cap, is proposing a simple, but improper approach to reducing Medicare expenditures for hospice services, rather than looking at rational approaches for addressing the underlying problem of excessive, and potentially inappropriate, lengths of stay in hospice,” criticizes consulting and accounting firm The Health Group in Morgantown, West Virginia. If adopted, “the arbitrary overall 20 percent reduction in the hospice cap will have significant and unintended consequences on hospice providers across the country,” the firm warns in its electronic newsletter.

Try this instead: “MedPAC reports that ‘there is evidence suggesting that some hospices are inappropriately using live discharges as a way to limit their cap liabilities,’” Lund Person notes. “Instead of implementing a 20 percent cap cut, CMS and OIG should monitor this type of behavior under current policy before making any changes under a policy to reduce the cap,” she urges.

In fact, MedPAC suggests in the report that “there could be merit in considering a payment penalty for hospices with unusually high rates of live discharges. For example, live-discharge rates could be included in a compliance threshold policy.”

4. Star rating dispersal. “Scores on available quality metrics were stable overall,” MedPAC assesses.

MedPAC reveals the star rating ratios in the most recent period — 1 percent of hospices received one star, 14 percent of hospices received two stars, 36 percent of hospices received three stars, 39 percent of hospices received four stars, and 10 percent received five stars.

5. SNFs and ALFs. As multiple oversight reports have done for a while, this report touches on the issue of hospices serving higher percentages of patients in skilled nursing and assisted living facilities.

“Hospices with a large share of patients in nursing facilities and assisted living facilities have higher Medicare aggregate margins than other hospices,” MedPAC offers. “For example, in 2020, the 50 percent of hospices with the highest share of patients residing in nursing facilities and assisted living facilities had an aggregate Medicare margin that was more than double the margin for providers with fewer patients residing in facilities.”

A number of factors may be the reason for the margin difference, MedPAC acknowledges. It “is driven in part by the diagnosis profile and length of stay of patients residing in facilities,” the report says. LOS in assisted living facilities averaged 165 days, in nursing facilities averaged 109 days, and at home averaged 95 days.

“In addition, treating hospice patients in a centralized location may create efficiencies in terms of mileage costs and staff travel time, as well as facilities serving as referral sources for new patients,” the report notes. And “nursing facilities can also be a more efficient setting for hospices to provide care because of the overlap in responsibilities between the hospice and the nursing facility,” it adds.

6. Surging entrants. “In 2021, most of the growth in the number of hospice providers was concentrated in California and Texas,” MedPAC points out. “Between 2020 and 2021, California gained 167 hospices and Texas gained 56 hospices, continuing the trend in recent years of substantial market entry by hospice providers in these two states.”

They weren’t alone. There were 21 new hospices in Arizona, nine in Nevada, and seven each in Georgia, Michigan, and Virginia, MedPAC adds.

On the other hand, “some states saw the number of hospice providers decline,” MedPAC admits. But “these changes were generally modest,” the report contends. “Connecticut and Nebraska experienced the largest net decrease (three hospices each).”

7. MCCM. The idea of concurrent care — covering both curative and palliative care simultaneously — hasn’t entirely left the building in the wake of the disappointing Medicare Care Choices Model, the report indicates.

MCCM “participants were more likely to enroll in hospice before death and to do so earlier than the comparison group of decedents,” MedPAC notes. “Based on the experience of 4,574 MCCM enrollees who enrolled between January 2016 and September 2020 and died by March 2021 … the MCCM was associated with a 14 percent net reduction in Medicare expenditures for these beneficiaries due to greater hospice use and lower acute care costs at the end of life,” the report highlights.

However: A project evaluation “cautioned against broadly extrapolating from these findings because the model involved a small number of beneficiaries and hospice providers, and … noted uncertainty over the magnitude of the effect on spending,” MedPAC adds.

8. Quality data. MedPAC restated that the penalty for not reporting quality data will move up to 4 percent next year, from the current 2 percent.

Note: The hospice chapter of MedPAC’s report is at www.medpac.gov/wp-content/uploads/2023/03/Ch10_Mar23_ MedPAC_Report_To_Congress_SEC.pdf.

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