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:
- 40% of Medicare decedents used hospice in 2008, compared to 23% in 2000.
- The number of new hospice providers continues to grow by approximately 6% per year, with the strongest growth being in the for-profit sector.
- The average length of stay for hospice patients has increased from 82 days in 2006 to 83 days in 2008.
- There is no evidence that the hospice cap impedes access to hospice care.
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 average cost per patient day in 2007 was $134, which ranged from $121 per patient day for for-profit providers to $148 per patient day for non-profit providers.
- Hospices with longer lengths of stay have lower costs per patient day.
- The average margin for hospice providers has ranged from 4.5% to 6.5% since 2001, and the average margin in 2007 was 5.9%.
- The projected hospice margin in 2010 is 4.6%.
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:
- Congress should direct the secretary of the Department of Health and Human Services (Secretary) to change the Medicare payment system for hospices to:
◦Have relatively higher payments per day at the beginning of the episode and relatively lower payments per day as the length of the episode increases;
◦Include a relatively higher payment for the costs associated with patient death at the end of the episode; and
◦Implement the payment system changes in 2013 with a brief transitional period.
- Congress should also direct the Secretary to:
◦Require that a hospice physician or advanced practice nurse visit the patient to determine continued eligibility prior to the 180th-day recertification and each subsequent recertification, and attest that such visits took place; and
◦Require that all patient stays in excess of 180 days be medically reviewed for those hospices that have stays exceeding 180 days and where such stays make up 40% or more of their total cases.
- The Secretary should also direct the Office of Inspector General to investigate:
◦The prevalence of financial relationships between hospices and long-term care facilities such as nursing facilities and assisted living facilities that may reflect a conflict of interest and influence admissions to hospice;
◦Differences in patterns of nursing home referrals to hospices;
◦The appropriateness of enrollment practices for hospices with unusual utilization patterns (for example, high frequencies of very long stays, very short stays or enrollment of patients discharged from other hospices); and
◦The appropriateness of hospice marketing materials and other admissions practices and potential correlations between length of stay and deficiencies in marketing or admission practices.
- The Secretary should also collect additional data on hospice care and improve the quality of all data collected to facilitate the management of the hospice benefit. Additional data could be collected from claims as a condition of payment and from hospice cost reports.
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.