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Recent Medicare developments indicate that end-of-life health care providers can expect to face continuing change in an already dynamic sector. These latest turns are part of an ongoing trend toward redefining hospice and end-of-life care in the United States.

Paying Doctors for Counseling on End-of-Life Care. The Centers for Medicare & Medicaid Services (CMS) released a new proposed rule on July 8, 2015, that would pay doctors for counseling patients about advance planning for their end-of-life health care. The proposed rule would create two new billing codes to reimburse physicians, nurse practitioners and physician assistants for face-to-face consultations with a patient and any family or caregivers the patient may want to include, regarding options for health care at the end of life, such as under what circumstances the patient would want life-sustaining treatments. One code would cover the first 30 minutes, and the other code would cover any additional 30-minute blocks that are needed.

The move to reimburse physicians for their role in counseling patients on advance care planning comes at a time when there is a growing national dialogue about giving people more control over how and where they live their final days. It’s an inevitable conversation as the United States’ population continues to age, with an estimated 10,000 baby boomers joining Medicare every day, and as Medicare, the largest insurer of end-of-life care, continues to explore how best to manage the costly and complex needs of patients in the final year of life. There has long been a push by many health care providers and seniors to improve discussions with patients and families about advance planning for health care at the end of life. Those working in the hospice and palliative care sector know far too well the sensitivity of this topic and the difficulties that can arise when patients feel strongly about how and where they want to live their final days, but have not taken the necessary steps – such as signing a living will or health care power of attorney – to ensure their wishes are followed and respected by their doctors, care team and family.

The rule proposed by CMS would not limit the number of conversations to be reimbursed with one patient, in essence recognizing that these types of conversations vary depending on the needs of each patient and family. Currently, Medicare only covers counseling regarding advance care planning under very limited circumstances. The CMS plan is built in part upon recommendations of the American Medical Association to create billing codes for counseling sessions in which patients could discuss the range of options available to them. Patients would be able to choose whether to engage in such end-of-life counseling with their doctors. The aim of this policy change is to inform patients of their options in a meaningful way as they approach death.

The finalized provision for reimbursement of physician counseling on end-of-life care would take effect in January 2016. Details of the reimbursement, including the rate, are expected this fall when CMS finalizes the 2016 Medicare physician fee schedule.

Restructuring Hospice Reimbursement. CMS recently finalized significant changes in the structure of hospice payments, with the publication of its hospice wage index and payment rate update for fiscal year 2016. Under this final rule published July 31, 2015, CMS will continue to reimburse providers for hospice services as a bundled benefit, but beginning January 1, 2016, it will pay higher reimbursement in the first 60 days of hospice care and the last seven days of life where certain criteria are met. Under the new structure, there will be a two-tier per diem rate for routine home care, a higher rate for the first 60 days, and a reduced base payment rate for Day 61 and later. In addition, Medicare will make a Service Intensity Add-On (SIA) payment to cover up to four hours of skilled care provided to patients in the last seven days of life subject to certain requirements. This new payment structure is aimed in part at addressing the challenges of a per diem reimbursement rate structure for hospice services with highly variable costs. The two-tiered routine home care rate and SIA payment are intended to better align reimbursement rates to costs incurred in delivering care throughout a patient’s length of stay. Another objective of the new payment structure is to help incentivize hospice agencies to serve short-stay patients, who often require significant resources at higher costs.

With regard to the two-tiered rate for routine home care, if a patient changes hospice agencies or is discharged and readmitted, the amount of time previously spent in hospice will follow the patient where the gap in the patient’s hospice enrollment is less than 60 days. However, where a patient has a gap of 60 days or more in hospice enrollment, the new hospice provider will be eligible for the higher rate for the first 60 days of the patient’s new enrollment.

The SIA payment will cover up to four hours of direct care provided by a registered nurse or social worker during a patient’s last seven days of life provided: (1) the patient is receiving routine home care for that day; (2) the day of care is within seven days of death and the patient is discharged or deceased; and (3) direct patient care is provided by an RN or social worker. This supplemental end-of-life payment will apply regardless of a patient’s length of stay. The amount of the SIA payment will be equal to the continuous home care rate multiplied by the number of hours of direct patient care provided by an RN or a social worker, up to a maximum of four hours per day. Questions remain about the details of how these significant changes to hospice reimbursement will be implemented. Although providers and others pushed hard for a delayed implementation period so that the new reimbursement structure could be piloted, CMS elected to forge ahead with the new two-tiered payment set to take effect January 1, 2016. CMS recently clarified that for services provided between October 1 and December 31, 2015, hospices will be paid a single routine home care per diem amount based upon the FY 2015 hospice payment rates.

Hospice Plus Treatment Pilot. Perhaps one of the most dynamic potential changes on the horizon is reflected in a five-year demonstration project set to begin in 2016, in which 140 hospices across the country will offer terminally-ill Medicare patients end-of-life care and counseling at the same time they offer those patients treatment to extend their lives. The Medicare Care Choices Model was established by the Affordable Care Act. Patients involved in this pilot would not have to make the difficult Hobson’s choice between palliative and life-extending care, as terminally ill Medicare patients typically must do. A leading reason Medicare patients with terminal prognoses historically have not elected hospice care until their final days is that they did not want to give up hope that curative treatments would work.

The overwhelming response of hospice providers interested in participating in this model program prompted CMS to increase the original limit of 30 hospice providers to 140 hospices. The program will be implemented in phases, with half of the hospices starting in 2016 and the other half beginning in January 2018. The demonstration hospice sites will be open to patients who have advanced-stage cancer, chronic obstructive pulmonary disease, congestive heart failure, or AIDS, with a prognosis of six months or less to live. Under the model, Medicare hospice patients will be able to continue to receive life-extending care such as physical therapy, prescriptions, medical equipment, physician services, and short-term hospital stays for pain or symptom management. The participating hospices will receive a monthly payment of $200 to $400 per patient for hospice care rather than a per diem payment, and other providers will be able to bill Medicare for curative services.

One hope behind this experiment is that if patients are allowed to pursue both care paths, more patients will choose to receive hospice services that improve the quality of their final months and days and reduce the cost of end-of-life care. Many hospice and palliative care experts believe more people would choose hospice care if they understood it better and did not have to give up treatments that could possibly extend their lives. Such a shift would have a substantial cost savings potential if patients ultimately opted for quality of life and decided to forego burdensome curative treatments. Nearly one-third of Medicare’s $600 billion annual budget is estimated to be spent on treatment in the last six months of life, much of which is spent on costly life-extending services with limited benefits.

The experience of hospices under the Medicare Care Choices Model will help determine whether and how this shift in policy would impact Medicare costs. Of course, in addition to the cost-saving potential, this project holds the potential to significantly improve patients’ quality of life by bringing more patients to hospice sooner – helping patients live life to the fullest in their final months and days as comfortably and free of pain as possible.

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