Long Term Care

MedPAC Looks to Reform Medicare Hospice Payment System

The Medicare Payment Advisory Commission (MedPAC) has reaffirmed its earlier recommendation to reform the Medicare hospice payment system.

As of now, Medicare makes a flat daily payment for most hospice care. However, MedPAC finds that this payment system does not align well with the provision of care at the end-of-life. MedPAC research has found that more services are provided at the beginning and end of a hospice episode, forming a u-shaped pattern. It was concluded by MedPAC that this payment model makes longer hospice stays generally more profitable for the hospice than short stays.

Originally suggested in March 2009, the commission recommended a per diem payment rate that varies over the course of an episode to more accurately match the hospices’ provision of care at the end-of-life. Payments would be increased at the beginning of the episode, and be reduced per day as the length of the episode increases. An additional end-of-episode payment was also recommended to reflect a hospice’s higher level of effort at end-of-life. MedPAC recommends these changes to be made by 2013.

A prior analysis of visit data came solely from one large for-profit chain provider hospice. New data has come in from Medicare claims data, initially required from July 2008 and documented through December 2008, and additional data from 17 non-profit hospices from October 2005-September 2008, according to MedPAC reports. It was derived from this data that short stay patients receive a greater share of visits from nurses/home health aides, than long stay patients.

After the number of visits per week by length of stay and diagnosis were analyzed, it was found that there is little variation in visits per week across diagnoses after taking length of stay into account. However, cancer patients were shown to receive a slightly higher share of visits from nurses than patients with other diagnoses. Also, outside of visit frequency, visit hours per week do not vary much by diagnosis once length of stay is taken into account. This confirms that length of stay is a more significant predictor of visit frequency than diagnosis, according to MedPAC.

Similar numbers of visits per week were recorded for rural and urban hospices and for different sized hospices, as per the Medicare claims data analysis. More aide visits were recorded per week for free-standing, home health-based and for-profit hospices, according to the same data. The difference between hospice visit frequency for facility residents compared to patients in the home, taking into account length of stay, was illustrated to show that hospice visits are more frequent for residents of a nursing home or assisted living facility, than for in-home patients.

MedPAC has suggested three strategies for its research agenda on payment system reform:

• Additional analysis of Medicare claims data to look further at the implication of visit patterns for the structure of a revised payment system. Patterns could be analyzed for patients with stays of more than 180 days when data for a longer time period is available.
• Potentially using the data from the 17 hospices to explore any differences in travel time by location of care, and the implications of that.
• Looking at data on prescription drugs and home medical equipment use for a limited number of hospices, and how they affect costs. CMS could expand data reporting to include such ancillary services.

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