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Medicare Compliance & Reimbursement

Medicare:

Hospices May Get Higher Payments At Beginning, End Of Stays

Published on Mon Mar 06, 2006

MedPAC looks to shake up hospice pay--but don't count on a case mix adjuster.

After more than 20 years, the Medicare hospice payment system could see some big changes.

The Medicare Payment Advisory Commission is considering recommending changes to the hospice payment system in its June report to Congress. And lawmakers have proven receptive to MedPAC's suggestions lately.

One change that won't happen any time soon appears to be a case mix adjuster, MedPAC staff indicated at its recent meeting.

MedPAC contractor RAND Corp. analyzed data from one for-profit hospice chain. The results "don't make a compelling case that case mix adjusters based on patient characteristics would improve the accuracy of the payment system," according to MedPAC staffer Kathryn Linehan.

In other words, "if it ain't broke we shouldn't fix it," notes MedPAC Commissioner John Bertko.

Leaving hospice payments "unadjusted by case mix" is a wise idea, says John Mahoney, principal of the Summit Business Group in Penfield, NJ. Adding a case mix adjuster "would require a significant increase in the amount of data that hospices would be required to collect and manage," notes Mahoney, former president of the National Hospice Organization. "At the end of the day, the government and hospices may have a slightly more equitable payment system, but they would probably both pay for it in added management and compliance costs."

A case mix adjuster also could lead hospices to cherry-pick the most lucrative patients, notes the National Association for Home Care & Hospice.

MedPAC Eyes Lower Pay for Middle Days

MedPAC staff and commissioners displayed more enthusiasm for rebalancing hospice payments across the length of stay. RAND's data analysis showed the hospice chain delivered more intensive care at the beginning and end of patients' hospice stays--especially in the last three days of care when patients were dying.

"Redistributing payments from the middle days to the first and especially last days of the stay would more accurately reflect the costs incurred at these stages of the hospice stay," Linehan said in the meeting.

"It is important that MedPAC is acknowledging the higher costs at the beginning of care and again during the final days of life," cheers attorney Mary Michal with Reinhart Boerner Van Deuren in Madison, WI. That pattern is "a constant in hospice, regardless of whether a hospice is for-profit or not-for-profit."

The proposal recognizes the problem of late entry for some hospice patients, especially cancer patients, Michal notes. "It is heartening."

Although receiving higher payments for the first and last days of stays would help with short-stay patients, it could prove damaging for hospices that are taking on more non-cancer-diagnosis patients, warns consultant Beth Carpenter with Beth Carpenter and Associates in Lake Barrington, IL.

"Increasing numbers of hospice patients have non-cancer diagnoses," Carpenter points out (see related article in this issue). "This movement of the hospice population to other types of diagnoses results in longer lengths of stay and a whole lot of days in between start of care and the final days. As lengths of stay move higher, a lower rate for the intervening days could be potentially damaging to agencies that manage the care of longer stay patients."

Tinkering with the hospice payment system may compromise its biggest strength, Mahoney cautions.

"The beauty of the current system is its simplicity," Mahoney tells Eli. "I'd be reluctant to corrupt that simplicity just for some marginal tweaking."

If MedPAC does make the rebalancing recommendation in its June report, it will do so based on analysis of only one company's patient data. That data came from 24 sites serving about 6 percent of the Medicare hospice population, MedPAC staff say.

"Drawing conclusions from the report of one stand-alone for-profit chain is interesting for the sake of discussion, but not appropriate for making decisions on funding schemes," Carpenter maintains. "Profitability is influenced by census size, length of stay, diagnosis mix, intensity of services, level of care decisions, etc."

NAHC urges MedPAC to tell Congress to implement a hospice demonstration project before making any hospice payment changes. The demo would "collect data necessary to analyze current needs and practices in end-of-life care," the trade group explains. A demo's data could determine "the most appropriate changes needed to update the hospice benefit."

Regardless of what MedPAC recommends this time around, hospices should realize they will be in for more scrutiny thanks to the industry's growth, Michal cautions. "MedPAC is paying attention to such issues as the rise in Medicare spending for hospice, profit margins, utilization of the different levels of hospice care, the impact of the cap, the cost breakdowns for drugs, nursing, social services, DME, etc.," she tells Eli. "The increased utilization of hospice services will result in increased attention to the reimbursement."

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