Home Health & Hospice Week

New industry-commissioned report shows the dangers of cutting hospice support.

For once, an influential advisory board to Congress is recommending a full rate increase for hospices. But that isn’t the end of the story.

In its annual March report to Congress, the Medicare Payment Advisory Commission also recommends cutting the aggregate per patient cap by 20 percent, as well as wage adjusting it. Commissioners unanimously approved the measure back in MedPAC’s January meeting (see HHHW by AAPC, Vol. XXXII, No. 4).

The report includes a laundry list of reasons for the recommendations, ranging from hospices’ 14.2 percent Medicare profit margin in 2020 to the fact that 18.6 percent of hospices exceeded the cap in 2021. (See related box, p. 83, for more stats MedPAC listed in support of the cut rec.)

On one hand: Hospices may be tempted to dismiss the report and its recommendations, since MedPAC has suggested the same cap change four years in a row now with no effect.

On the other hand: Providers shouldn’t be lulled into complacency, experts warn. “MedPAC’s recommendations often offer insights into future legislation or regulations, and its reports to Congress have prompted shifts [in] Medicare payment policies,” cautions attorney Lisa Churvis with law firm Arnall Golden Gregory in Atlanta.

And MedPAC maintains that “the 20 percent aggregate cap reduction would be more equitable across providers than an across-the-board payment reduction, focusing payment reductions on providers with the highest margins and longest stays,” Churvis adds in online analysis. That sense of targeting could prove an attractive way for lawmakers to justify the cuts when they are looking for funding for other priorities.

In 2020, the cap reduction would have reduced hospice payments by about 3 percent, MedPAC estimates. It would cut Medicare hospice spending by up to $750 million in 2025 and up to $10 billion over five years.

Industry veterans hope legislators will take a closer look at the issue and see why a cap cut isn’t justified.

The National Hospice and Palliative Care Organi­zation “has and will continue to disagree with this approach,” NHPCO’s Judi Lund Person tells AAPC. That’s because “the length of stay issue is most often caused by the types of diseases with more difficult disease trajectory and the precision of the prognosis is more difficult,” Lund Person explains.

If Medicare lowers the cap amount, access to hospice services could get even more difficult for beneficiaries with unpredictable neuro and other diagnoses, experts agree.

MedPAC’s own data point to why lawmakers and Medicare officials shouldn’t mess with the cap, maintains consulting and accounting firm The Health Group in Morgantown, West Virginia. In 2020, “above-cap hospices had a Medicare aggregate margin of about 22.8 percent before the return of overpayments but had a margin of 7.7 percent after the return of overpayments,” the report cites. “The Medicare aggregate margin for below-cap hospices was 14.8 percent,” it highlights.

“By their own data, above-cap hospices had a margin of less than the average, yet, they continue to recommend a 20 percent reduction to the cap,” The Health Group stresses. “Such a reduction will impact many providers that never experienced a cap liability in the past.”

Bottom line: “MedPAC’s own data validates an overall reduction to the cap is not justified,” The Health Group argues.

Even 6-Month+ Hospice Stays Save Money

Meanwhile, industry reps NHPCO and the National Association for Home Care & Hospice have brand new data to show just how valuable hospice services are to the Medicare program and its beneficiaries.

NAHC and NHPCO commissioned independent research organization NORC at the University of Chicago to conduct “one of the most comprehensive analyses of enrollment and administrative claims data for Medicare patients covered by Medicare Advantage and Traditional Medicare,” the trade groups note in a release.

Among the findings from the study of 500,000 Medicare beneficiaries who died in 2019 with a hospice stay immediately prior to death and 457,000 decedents who had similar risk profiles but did not have a hospice stay:

• NORC estimates that Medicare spending for those who received hospice care was $3.5 billion less than it would have been had they not received hospice care.
• In the last year of life, the total costs of care to Medicare for beneficiaries who used hospice was 3.1 percent lower than for beneficiaries who did not use hospice.
• Hospice is associated with lower Medicare end-of-life expenditures when hospice lengths of stay are 11 days or longer. “In other words, earlier enrollment in hospice reduces Medicare spending even further,” NAHC and NHPCO stress in the release.
• Long stays save money too. For those who spent at least six months in hospice in the last year of their lives, spending was on average 11 percent lower than the adjusted spending of beneficiaries who did not use hospice.

“Multiple studies over many years have confirmed what hospice providers know: hospice care improves the end-of-life journey for patients and families. This new NORC study shows that in addition to improving care, hospice saves tax dollars,” NHPCO COO and Interim CEO Ben Marcantonio says in the release. “With questions about the future of the Medicare Trust Fund, policymakers and healthcare leaders are working to make changes that increase value and reduce costs, while putting patients at the center and delivering more care at home. That’s what hospice has done for more than 40 years,” Marcantonio emphasizes.

“One important finding of this research is that generally as hospice lengths of stay increased, so did Medicare savings,” highlights NAHC President William Dombi in the release. “Hospice stays of less than 15 days don’t give enough time for patients and families to benefit fully from the person-centered care that hospice provides. Yet, 50 percent of hospice patients receive 17 days or less of hospice care,” Dombi adds.

“This research, along with Americans’ growing demand for hospice care, shows that any effort to save money by reducing hospice expenses will backfire,” Marcantonio warns. “In fact, we should increase the investment in hospice, both to save money and to increase the quality of end-of-life care,” he urges.

“Policymakers, health systems, and healthcare payers reading this groundbreaking research should see an opportunity to support patient interests and family wellbeing, while also driving savings for Medicare by ensuring timely patient access to hospice care,” Dombi exhorts.

Note: Links to the 18-page NORC report and related materials are at www.nahc.org/hospiceworks and www.nhpco.org/ hospiceworks.