MedPAC Discusses Hospice Payment, Live Discharge Rates and Nursing Facilities
Monday, April 8, 2013
by: VNAA Policy Team

Section: Public Policy and Advocacy

On April 4, the Medicare Payment Advisory Commission (MedPAC) met and discussed multiple issues related to hospice. The Commission received an update on the hospice payment reform required by the Affordable Care Act (ACA) including a new analysis of possible payment structure. The Commission discussed the high number of live discharges that accounted for 14 percent of hospice episodes in 2010. Finally, the Commission discussed hospice in nursing homes and potential policy options for reducing expenses in that area.

Of importance, MedPAC staff presented findings from a 2011 Office of Inspector General (OIG) study of hospices that focused on nursing facility patients. The study found that these hospices are more likely to be for-profit and treat patients with diagnoses likely to have long stays with a less complex service mix. The report also found that nursing facilities residents on hospice received more aide visits than patients at home even though they had access to nursing facility staff. The OIG made two recommendations: 1) CMS monitor these hospices and 2) CMS reduce the payment rate for hospice in nursing facilities based on concerns of duplicative payment of aide services. While the OIG report did not give specific amount of proposed payment reduction, MedPAC staff suggested a potential policy option of reducing the payment rate in nursing facilities between 3 and 5 percent.

Concerning hospice payment reform, the ACA gave the Centers for Medicare and Medicaid Services (CMS) the authority to revise the payment system in 2014 or later as the Secretary determines appropriate. CMS is researching options for payment reform and is considering the collection of additional data to help inform the process.

MedPAC is also reviewing data and a key element of their analysis is the cost of labor per visit. Six types of staff were included in the visit data and account for 68 percent of hospices’ direct costs. The data did not include non-labor expenses like drugs and supplies. The resulting cost of visits per day follows a “U” shaped trajectory with high costs at the beginning and end of an episode. This model would potentially eliminate the higher profitability of long stays.

The Commission also discussed an analysis of live discharge rates, noting that not all live discharges should be prevented. The analysis of live discharges found that in 2010 14 percent of hospice episodes among beneficiaries in hospice ended in live discharge. For-profit hospices were 20 percent more likely than nonprofit hospices to discharge patients live. A third of all live discharges spent over 180 days in hospice before discharge and most of those patients had long survival post-discharge. For patients with long stays before discharge, average post-discharge spending is less than the hospice payment rate; $156 per day in hospices verse $70 per day after hospice.

To review the slides for this MedPAC meeting, please click here.
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