In last month’s Hospice EndNotes, we discussed the Medicare Payment and Advisory Commission’s (MedPAC) November 2009 report on hospice visit patterns. In this article, we will review MedPAC’s December 2009 report on hospice payment adequacy. In its December meeting, MedPAC assessed hospice payment adequacy by looking at four factors: access to care, quality of care, access to capital, and payments and costs. A brief summary of the findings is provided below.

Access to Care

MedPAC determined that Medicare beneficiaries have good access to hospice care. This finding is supported, in part, by the following data:

Quality of Care

MedPAC recognized that there is no publicly available quality data covering all hospices and the limited data that is available is sponsored by associations.

Access to Capital

MedPAC reported that our credit markets are recovering and that publicly traded hospices have good financial reports and solid access to capital. However, MedPAC was unable to evaluate access to capital by nonprofit providers due to limited data.

Payments and Costs

MedPAC’s review of hospice payments and costs included the following data:

The recommendation made by MedPAC staff to the commissioners after the presentation was to “update the payment rate of increase for 2011 by the projected rate of increase in the hospital market basket index, less the commission’s adjustment of 1.3% for the productivity factor.” The 2011 hospital market basket increase is estimated to be 2.4% to 2.5%. The commissioners approved the rate adjustment recommendation in their January 2010 meeting along with a decision to include MedPAC’s March 2009 recommendations in their March 2010 report to Congress. These recommendations include:

MedPAC continues to be concerned that the hospice Medicare benefit contains an incentive for hospice providers to promote long hospice stays rather than focus on the appropriate timing of admissions, as demonstrated by a “strong correlation between the length of stay and profitability.” You should continue to audit your hospice length of stay and identify additional ways to contain costs since hospice rate increases will likely be very limited over the next several years.

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