Home Health & Hospice Week

Are you ready for a case mix system? The hospice industry is undergoing major changes, and Medicare had better keep up.

So said the Medicare Payment Advisory Commission in its April 22 meeting.

The hospice market has seen an influx of not-for-profit providers and rapid growth, MedPAC re-searchers noted (see stories, "Experts: Hospice M&A To Soar" and "ID Number Changes Coming HHAs' Way"). In addition to the aging of Americans, that change indicates "the financial environment for providing hospice care is likely very favorable," a MedPAC staffer noted.

While MedPAC won't make any recommendations to Congress until next year, here are some of the reimbursement options the influential advisory body is mulling:

Case mix. Recent studies have shown hospices are having to turn away patients with expensive needs such as chemotherapy, total parenteral nutrition, lack of a caregiver, etc., researchers noted. A case mix system, where hospices are reimbursed based on patients' conditions, would give hospices an incentive to accept those patients.

When hospice payment rates first were set, expensive therapies such as chemotherapy weren't used for palliative care and thus weren't included in the rates. Thus recalibration may be in order, a staffer pointed out.

Outliers. Regardless of a case mix decision, the payment system also should contain outlier payments to compensate for extremely expensive patients.

Site of service. MedPAC may want to recommend lower payments for patients in a nursing home, since hospices save money on transportation and other costs that way. Likewise, payments for beneficiaries dually eligible for Medicare and Medicaid deserve examination in the nursing home setting. That's because hospices pay nursing homes for the room and board in that case.

Rural adjustment. Rural hospices have lower patient volume and farther distances to travel, both cutting into their bottom lines. To compensate for that, a rural adjustment, such as the temporary one in place for home health agencies, may be in order.

Day differentials. Because the first and last day of a hospice stay are so expensive, lawmakers may want to consider offering increased payment for those days. That would help defray the costs of extremely short-stay patients.

Prognosis. Commissioners discussed extending the six-month prognosis to 12 months, but observers say a cost-conscious Congress would be unlikely to expand the benefit so drastically -- especially in light of booming hospice market trends.

In addition to payment changes, MedPAC is likely to once again propose quality measures for the hospice industry. The commission will take up the hospice proposals when it reconvenes in September.