MedPAC Recommends Hospice Payment Freeze, Cap Cut for 2022

WASHINGTON, D.C. (January 19, 2021)—As anticipated, the Medicare Payment Advisory Commission (MedPAC), an advisory body to Congress, met last week to finalize payment and policy recommendations that will be incorporated in its annual March Report to Congress. Among the items MedPAC acted on were payment recommendations for the hospice sector in fiscal year (FY) 2022 and findings from a legislatively-mandated analysis of the impact of applying the hospital post-acute transfer policy to cases discharged to hospice.

MedPAC approved the following recommendations for FY2022:

• Congress should eliminate the update to the 2021 Medicare base payment rates for hospice, and 
• Congress should wage-adjust and reduce the hospice aggregate cap by 20%.

These recommendations are estimated to decrease spending relative to current law between $750 million and $2 billion over one year and $5 billion to $10 billion over five years. It should be noted that MedPAC’s recommendations are advisory in nature and these changes would require legislative action by the Congress in order to be enacted. 

The National Association for Home Care & Hospice (NAHC) opposed these recommendations.

As part of its hospice discussion, MedPAC conducted a brief review of the items considered when developing payment recommendations, including an overview of Medicare hospice services data for 2019 and an assessment of payment adequacy indicators (beneficiaries access to care, quality of care, hospices’ access to capital, and Medicare payments and hospices’ costs) all of which were found to be, for the most part, positive. 

The panel also briefly reviewed data related to the hospice aggregate cap and characteristics of hospice providers that tend to exceed the cap. Last year (for FY2021), MedPAC recommended that the aggregate cap be wage adjusted and reduced by 20%; this recommendation was in lieu of the commission recommending an across-the-board cut in payments for hospice providers, as it would make the cap more equitable across providers and focus payment reductions on providers with high margins and longest stays.

Section 53109 of the Bipartisan Budget Act of 2018 required that, effective Oct. 1, 2018, the Secretary of Health & Human Services (HHS) begin considering certain short-stay hospital patients that, following discharge, are admitted to hospice, as a “transfer” for purposes of hospital payment, and reduce hospital payments accordingly. The legislation also required that MedPAC evaluate the impact of the hospital to hospice transfer policy and provide a preliminary report to Congress no later than March 15, 2020, and a final report by March 15, 2021. 

As part of its discussion on hospital-related issues, MedPAC reviewed general findings from its study and indicated that, while staff found the policy to save approximately $300 million in hospital spending during FY2019 that there is no evidence of discernible changes in timely access to hospice care.

—Via NAHC