MedPAC Recommends 20% Cut to Hospice Aggregate Cap

WASHINGTON, D.C. (December 16, 2021)—Late last week, the Medicare Payment Advisory Commission (MedPAC), an advisory body to the U.S. Congress, verbally approved the following recommendations, with a formal vote will be taken at a January meeting. The National Association for Home Care & Hospice (NAHC) has provided a summary of those recommendations:

1. For fiscal year (FY) 2023, the Congress should eliminate the update to the 2022 Medicare base payment rates for hospice and wage adjust and reduce the hospice aggregate cap by 20%; and
2. The Secretary of Health and Human Services should require that hospices report telehealth services on Medicare claims.

On an annual basis, MedPAC reviews draft policy recommendations for inclusion in its annual Report to Congress: Medicare Payment Policy issued each March. The commissioners met to discuss a wide array of preliminary recommendations that included discussion of hospice payment and related issues.

The first recommendation is a repeat of recommendations from the previous two reports; MedPAC staff indicated that based on existing analysis they do not believe these changes would negatively impact access to hospice care or willingness or ability of hospice providers to care for beneficiaries.

The second recommendation regarding telehealth services was motivated by the expanded use of telecommunications-based visits during the public health emergency (PHE) and the need to know the extent to which telehealth visits are being conducted and access to care during the PHE.

NAHC has strongly urged the Centers for Medicare & Medicaid Services (CMS) to begin collection of data related to telecommunications-based visits to ensure more complete knowledge of services that are being provided as part of the hospice benefit.

In arriving at these recommendations MedPAC examined a great deal of data regarding the Medicare hospice program that provides insights into existing hospice payment adequacy as viewed through four separate lenses:

1. Beneficiaries’ access to care, including the supply of providers; use, length of stay, and visits; and marginal profit.
2. Quality of care, including findings of the CAHPS Hospice Survey and visits at the end of life – while quality data were not available due to the PHE, there was a slight improvement in the share of patients receiving at least one visit from a nurse or other clinician in last three days of life in 2019. MedPAC also indicated that while in-person visits declined during 2020 that does not necessarily reflect a reduction in quality but more likely was due to the PHE.
3. Hospices’ access to capital, including provider entry and financial reports and mergers and acquisition activity—continued growth in the number of for-profit providers (7% increase) and continued favorable perspectives on the sector by investors indicates positive access to capital.
4. Medicare payments and hospices’ costs, including overall Medicare margins in 2019 and the projected overall Medicare hospice margin in 2022 – the 2019 Medicare hospice margin was 13.4%, and four of five provider quintiles average margins of over 10%. Non-profit hospices and provider-based hospices generally experience lower margins.

Following are some key data provided during the meeting:

• Medicare hospice outlays grew to $22.4 billion in 2020;
• In 2020, over 5,000 providers served over 1.7 million beneficiaries;
• The number of hospice providers grew by 4.5% during 2020, largely driven by the growth in for-profit hospice providers;
• Hospice deaths in 2020 increased by 18%;
• The number of decedents using hospice increased by 9%;
• The share of decedents using hospice declined to 47.8% in 2020 (from 51.6% in 2019;
• Total number of hospice users increased by 6.6% between 2019 and 2020;
• The number of hospice days increased by 4.9% in 2020;
• During 2020 more hospice patients were cared for at home, in assisted living facilities, and in hospitals, while fewer were cared for in nursing facilities and hospice facilities;
• Average length of stay increased from 92.5 days in 2019 to 97.0 days in 2020, while the median length of stay remained stable at 18 days;
• Average in-person visits per week decreased from 4.3 visits in 2019 to 3.5 in 2020, with aide visits experiencing the largest decline, although nursing visits also declined (likely offset to some extent by use of telehealth visits);
• Marginal profit in 2019 was 17%; and
• During 2019, 19% of hospices exceeded the aggregate cap (margin prior to recoupment was 22.5% and 10% afterward).

While time for general discussion was limited, commissioners expressed a great deal of interest in this sector, including the status of the Medicare Advantage VBID Hospice Component Model (a CMS demonstration model under which hospice is being covered as part of the MA benefit package), concerns about access to care in rural areas, concerns about the impact of the workforce shortage on hospice care, request for further exploration of live discharges in hospice care, and the degree to which the hospice population has changed and reflects a higher proportion of patients with cognitive disease.

A copy of the slides used during the staff presentation is available here. A copy of the full transcript of the meeting is posted here.