MedPAC Recommendations for Home Health and Hospice

On Dec. 12 and 13, VNAA attended a MedPAC meeting covering a number of issues of interest to members. At the December meeting, MedPAC staff presented recommendations to the commissioners for consideration and feedback. MedPAC Commissioners will vote on the recommendations in January 2014. A report with final recommendations will follow in March.

Below are highlights of the meeting as well as links to relevant handouts. Please note that MedPAC materials provided to the public do not contain draft recommendations or other more detailed materials provided to commissioners.

Overall, MedPAC noted that their analysis and recommendations do not take into consideration the two percent Medicare sequestration's impact.

CARE Tool:

In a session entitled “Post-Acute Care: Steps Toward Broad Payment Reform,” MedPAC Commissioners reviewed the Continuity Assessment Record and Evaluation (CARE). The handout provided at the meeting noted that the Centers for Medicare and Medicaid Services (CMS) is evaluating the use of the CARE elements in post-acute prospective payment systems over the next two years along with developing CARE based outcomes for measures for inpatient rehabilitation facilities (IRFs) and long term care hospitals (LTCH). CMS has no timeframe for final implementation of the CARE tool. Key elements of a common post-acute patients assessment tool include age, diagnosis and comorbidities, functional status, cognitive status, special services (such as a ventilator), pressure ulcers, physical impairment and proper functioning before hospitalization.

The draft recommendation stated that Congress set a deadline for a common patient assessment tool and begin to roll out the common element for home health, skilled nursing facilities, IRFs and LTCH in 2016. Please find the briefing paper “Post-acute Care: Steps Toward Broad Payment Reform" here.

Home Health:

According to MedPAC, in 2012, CMS spent $18 billion; there were 12,300 agencies with 6.7 million episodes for 3.4 million beneficiaries. In 2012, margins for all home health agencies were 14.4 percent. For-Profit margins were 15.2 percent but only 12 percent for non-profits. Unfortunately, MedPAC predicts that payment reductions in 2014 through 2017 will be modest. MedPAC noted that reducing readmissions is a priority for the Medicare program and that about 29 percent of home health stays result in re-admissions.

The new draft recommendation asks Congress to direct Secretary of Health and Human Services to reduce payments to home health agencies with relatively high-risk adjusted rates of readmissions. MedPAC suggested that agencies with excessive readmissions over a certain benchmark would incur a penalty. Elements of a potential readmission would include comparing providers to a peer group that serve a similar share of low-income beneficiaries and would include all of the home health stay in a 30-day follow-on period. The commissioners generally supported the direction of this recommendation but raised questions about implementation. More detail is available on MedPAC‘s website in “Assessing payment adequacy and updating payments: home health care services.”

Hospice and Medicare Advantage (MA):

Staff presented commissioners with an update on Medicare Advantage enrollment, availability, benchmarks, bids and payment. Enrollment in MA in November of 2013 is 14.5 percent. MA plans receive bonuses based on overall staff ratings that include clinical quality, patient experience /access and contract performance. Adraft recommendation to include hospice in Medicare Advantage came from discussion

Currently when MA enrollees elect hospice, fee-for-service (FFS) pays for hospice. MA plans have full financial responsibility for end-of-life care for some enrollees but not others depending on whether they elect hospice. According to MedPAC, including hospice benefits in MA plans would give them full responsibility for the full continuum of care. It would also permit plans to offer concurrent care as a supplemental benefit if they wished to. Plan payments for all members would increase to reflect the responsibility for a broader set of services.

Commissioners supported the direction of the draft recommendation to include hospice in Medicare Advantage plans and provided additional input to staff. More detail is available on MedPAC's website in “Assessing payment adequacy and updating payments: Hospice services”


Staff presented an overview of Medicare hospice in 2012. Over 1.27 million beneficiaries used hospice with payments of more than $15.1 billion to 3,700 providers for hospice care. MedPAC noted that the Center for Medicare and Medicaid Services (CMS) is responsible for developing a new payment system for hospice.

Staff noted that for-profit providers drive supply of hospices. Average margins in 2011 were 8.7 percent. Hospice spending grew in 2012 as the number of users and average length of stay (LOS) increased. LOS was 69 days for nonprofits and 112 days for for-profit providers. Length of stay also varied by location as follows: home 90 days, nursing facility 112 days, assisted living facility 154 days.

On quality, staff reported that replacement of two current measures by seven process measures will begin in July 2014 and an experience of care survey in 2015. Given the data, the draft recommendation is that Congress should eliminate the update for hospice payment rates for fiscal year 2015. Commissioners favorably received this recommendation. More detail is available on MedPAC‘s website in “Assessing payment adequacy and updating payments: home health care services.”


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