Home Health & Hospice Week

“If at first you don’t succeed, try, try again” seems to be MedPAC’s motto when it comes to hospice payment recommendations.

Note: The hospice Medicare profit margin includes data from hospital-based providers, unlike the home health margin.

In 2021, more than 1.7 million Medicare beneficiaries used hospice services provided by more than 5,300 hospices, MedPAC reports. The number of providers increased 6 percent from the previous year.

Medicare spent $23.1 billion on hospice services in 2021, MedPAC adds. That’s up from $22.4 billion in 2020.

And both average length of stay and median length of stay decreased. ALOS came in at 92.1 days.

If Congress had reduced the per-patient aggregate cap by 20 percent in 2020, 33.5 percent of hospices would have exceeded the cap for that year, MedPAC calculates. That’s compared to 18.6 percent without the cap cut.

“This is a unique sector in that we can adjust the payments that Medicare makes to hospices based on the behavior with respect to length of stay,” noted MedPAC Executive Director James Mathews in the meeting. “And so here we are taking savings out of the sector in a manner that is targeted towards the hospices that have … the most extreme lengths of stay, at the right-hand tail of the distribution, where they might not be completely adhering with the Medicare requirements with respect to admitting patients into hospice, keeping them longer than they should be, that kind of thing,” Mathews suggested.

Targeted Cuts Appeal To Wide Array Of Commissioners

Commissioners expressed widespread support for the recommendation.

“This is an elegant way to achieve two things at once. In other words, we’re basically taking money out and we can do a target,” noted MedPAC Chair Michael Chernew, professor in the Department of Health Care Policy at Harvard Medical School. In 2020, Medicare pay would have been cut by 3.3 percent if the cap were in place, MedPAC estimates.

The cap cut “gives us … this ability to balance where we think the overall sector should be, but do it in a way that … targets a portion of the sector of long stays, that we think are probably overpaid,” Chernew said.

“I’m supportive,” said Commissioner Jaewon Ryu, president and CEO for Pennsylvania-based integrated health care system Geisinger. “I especially like the targeting component with the reduction in the aggregate cap,” Ryu highlighted.

“Here there is a way to develop a policy recommendation that is maybe not razor-sharp, but at least is … directed at a set of patterns … that are concerning and that may not be really in keeping with the best interests of the program and the beneficiary,” praised Commissioner Robert A. Cherry, Chief Medical and Quality Officer at UCLA Health in Los Angeles. “That is not an opportunity that we oftentimes have. So it’s not targeting any type of hospice, per se, but a practice. And if there are certain types of hospices that engage in those practices, of course they may be disproportionally affected,” Cherry noted.

“It strikes a logical balance in summarizing the various dynamics in the space,” lauded Commissioner Kenny Kan, chief actuary of Horizon Blue Cross Blue Shield (BCBS) of New Jersey.

However, Kan did raise the only possible problem any commissioner expressed about the proposed rec. “For this cohort of very frail beneficiaries, in the last month of life especially, where hospice total cost could be like half that of a hospital stay, are we — by reducing the cap by 20 percent — are we … sending a different signal in terms of incenting towards the usage of more efficient care?” he asked.

While MedPAC won’t issue an official recommendation until it finalizes it in February and issues an official report to Congress in March, lawmakers are already using the cap cut idea in year-end budget negotiations underway currently (see story, p. 350).

Industry representatives including the National Hospice and Palliative Care Organization, National Association for Home Care & Hospice, and LeadingAge have asked the Centers for Medicare & Medicaid Services to focus on program integrity efforts such as location-specific enrollment moratoria and more frequent surveys to combat problems, rather than rate cuts — targeted or not (see HHHW, Vol. XXXI, No. 43).

Don’t miss: Do you have thoughts on MedPAC’s proceedings? You now can give the advisory board your two cents without traveling to D.C. “To the public, please send us your thoughts to meetingcomments@medpac.gov or reach out in any other way,” Chernew said when closing the meeting on Dec. 8. “We really are looking forward to hearing from you.”