CMS Issues Proposed Hospice Reimbursement Changes for FY 2019 & Other Hospice News

By Liz Carey

(May 4, 2018)—The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule (CMS-1692-P) that would update the Medicare hospice wage index, payment rates, and cap amount for fiscal year (FY) 2019. As proposed, hospices would see an estimated 1.8 percent ($340 million) increase in Medicare payments for FY 2018.

Highlights of the proposal include physician assistants serving as attending physicians, effective January 1, 2019.

The National Hospice and Palliative Care Organization (NHPCO) noted no major surprises in its May 3, 2018, Updater and recent regulatory alert. Hospice payment rates are updated annually.

Hospice payment design is intended to encompass not only the cost of visits but also other costs a hospice incurs for palliation and management of the terminal condition and related conditions, such as on-call services, care planning, drugs, medical equipment, supplies, patient transportation between sites of care that are specified in the plan of care and short-term hospice inpatient care. The daily per diem also covers the services of volunteers and ongoing bereavement support for families.

In its March 2018 report to Congress, the Medicare Payment Advisory Commission (MedPAC) noted hospice utilization growing substantially, as well as growth in the number of for-profit hospice providers. Medicare hospice expenditures have risen from $2.8 billion in FY 2000 to approximately $17.5 billion in FY 2017.

Humana recently revealed that through a consortium group it would embark on a $1.4 billion deal to acquire 40 percent of hospice provider Curo Health Services with the goal of “managing the continuum of home health, palliative care and hospice in an integrated fashion.” The Curo transaction, which is anticipated to close during the summer of 2018, is pending, but combined with another pending plan to pull in Kindred At Home, the combo when merged could develop the largest hospice operator in the U.S. 

Hospice is reimbursed at a daily rate based on which one of four levels of care is provided: routine homecare, continuous homecare, inpatient respite care and general inpatient care. For providers, hospice costs per day vary substantially depending on the type of provider. Freestanding hospices had lower costs per day than provider-based hospices (for example, home health-based hospices and hospital-based hospices). For-profit, above-cap and rural hospices also had lower average costs per day than their respective counterparts, according to MedPAC.

Hospice profitability is closely related to length of stay. In today’s payment system, providers with the fewest long-stay patients have higher payments, while those with the most long-stay patients have lower payments than they would have had under the previous payment structure. Hospice margins vary by provider characteristics, such as type of hospice (freestanding or provider based), type of ownership (for profit or nonprofit), patient volume, and urban or rural location. In 2015, freestanding hospices had higher margins (13.8 percent) than home health-based or hospital-based hospices, according to MedPAC.

A 2016 article in the Journal of Health Politics, Policy and Law stated that the fiscal viability of hospices relies on monitoring patient mix, limiting the use of inpatient services, limiting the frequency and duration of home visits, using lower-cost personnel, and relying on family caregivers to provide hands-on care. Selective enrollment of persons with longer lengths of stay and those with less need for services, due to strong family supports or few difficult-to-manage symptoms, enables providers to minimize their expenses and maximize their margins.

“While most patients and families continue to give hospices high marks for the services they provide, there is substantial variation across hospices in indicators of hospice performance, ranging from the lack of professional staff visiting the dying patient and family in the last days of life to the rate of live hospice discharges…there is an opportunity to reshape hospice as a service focused on the patient and not on reimbursement,” the journal authors wrote.

The NHPCO launched a new campaign to reinforce the value of the Medicare hospice benefit among policy and health care decision-makers to foster a policy environment that will support patient access to high-quality comprehensive hospice and palliative care.

Hospice is considered to be Medicare’s first coordinated care model. In late April 2018, the NHPCO, which is considered the oldest and largest nonprofit membership organization representing hospice and palliative care programs and professionals in the U.S., joined other homecare champions on Capitol Hill to further the care mission—the NHPCO part of the Hospice Action Network’s Annual Advocacy Intensive.

Helpful hospice links:

• An explananation of the hospice wage index and cap determinations can be found on the Federal Register, here. Comments on the proposed rule are due to CMS no later than June 26, 2018.
• The CMS release of the proposed rule is here.
• April 27, 2018 Enhancements to Processing of Hospice Routine Home Care Payments is here.
• March 27, 2018 Hospice Quality Reporting Webinar details are here.
• MedPAC March 2018 Report is here.