With new COPs, visit tracking in 2008, could payment changes be on horizon?

Hospice Medicare cap poses current problems

Starting next month, hospices will have to report to Medicare all nursing, hospice aide, and social worker visits made for patients. Then a few months later, the new conditions of participation (COPs) will be finalized, which will require greater attention to documentation of services and quality.

If anything can be learned from the past, it's possible that some sort of Medicare payment changes will not be too far behind, experts predict.

"I think there's validity to the observation that Medicare might be thinking of doing something similar to the hospice environment that they've done already in home health," says Jeneane Brian, BSN, MBA, clinical executive of Misys Healthcare Systems of Raleigh, NC. Misys Healthcare markets Misys Homecare software, which provides financial and office management assistance to home care agencies and hospices.

"Look at what Medicare did with skilled nursing care," Brian says. "Even further back in the 1980s, Medicare put hospitals on the DRG reimbursement system, which has case rate payments."

Home care rates change — Is hospice next?

Most recently, the Centers for Medicare & Medicaid Services (CMS) required home care agencies to use a new assessment tool, named OASIS, and then switched payment to a case rate, Brian adds. "It's not too much of a stretch to say Medicare is looking to do the same thing in hospice," she says. "Just look backward."

On the positive side, if CMS changes the way hospices are paid, it could make transitions to and from hospice less complicated, she adds. "If everyone's payment is similar, then everyone's motives will be aligned, and then the decision will be clear without competing agendas," Brian says.

The Government Accountability Office (GAO) recommended in 2004 that there be a modification made to hospice payments, says Annette Lee, MS, RN, COS-C, clinical product development specialist for the Corridor Group of Overland Park, KS, which provides consulting services to the hospice and home care industry.

Although hospice reimbursement has not changed yet, the way hospices report data has changed. First, in 2007, CMS required hospices to start reporting where patients reside, and soon they'll have to report the visits made, she explains.

"We've never had to report this data because we're paid on a per diem basis," Lee says. "We're given a daily payment whether we saw the patient or not."

So while the reimbursement hasn't changed yet, the writing is on the wall, Lee says. "CMS is gearing up for quality in all areas right now, and that's their tag line: 'Getting the best care for the bills they're paying,'" Lee says. "But in other arenas, they're not tying that quality and measures of quality to payment."

While hospice directors and experts can only guess what the future will hold, it is clear that all hospices will need to maintain a steady and ongoing stream of referrals that give them the ability to manage their cost structure, says Michael Ferris, managing principal of Home Care and Hospice Marketing Solutions in Chapel Hill, NC. "One thing we can count on over the next five to 10 years is we have to be much better at running a hospice program or health care program, for that matter," Ferris says. "We have to be much better at generating those referrals with fewer resources, which means our sales people have to be better trained, more effective, and more efficient."

Staff who market hospices services will need to generate more business than they do now, and they need to look at some of the basic Business 101 strategies in doing so, Ferris recommends.

Data quality is top priority

The hospice community faces several important changes, says Jon Keyserling, JD, vice president of public policy and counsel for the National Hospice & Palliative Care Organization (NHPCO) of Alexandria, VA.

"I think there's a trend in health care over the past 10 years or so to both document quality and to substantiate outcomes for your protocols," he says. "And the hospice community is not going to be immune to that."

NHPCO has sponsored several data gathering tools and benchmarking tools to help hospices with quality data collection, he notes. The tools are available online to NHPCO members only. NHPCO membership starts at $200 per year and goes up, depending on a hospice's total annual patient census.

"We're very active in suggesting to CMS that they include a quality improvement plan in the new COPs that will be released next year," Keyserling says. "This is an industry that is well known for its reputation of delivering quality improvement care, and the patient satisfaction scores are unequalled in any area of health care."

For that reason, Congress and other policy-makers have recognized that the Medicare hospice benefit is a wonderful success story within Medicare, he adds. "It's important to make sure that whatever changes policy-makers undertake does not threaten the high-quality and comprehensive interdisciplinary approach to end-of-life care that millions of patients and families have availed themselves of over the past 25 years," Keyserling says.

Hospice Medicare cap changes discussed

One possible change that would be positive for hospices involves raising or eliminating the Medicare hospice cap, which is an aggregate per beneficiary limit on Medicare payments to hospices.

The Medicare Payment Advisory Commission (MedPAC) recently met to discuss issues surrounding Medicare spending and the limitations the cap places on the rapidly growing hospice industry.

In recent years, the cap has posed hardships for hospices that have seen dramatic changes in their patient population, including more noncancer patients than cancer patients for the first time since the Medicare hospice benefit was introduced. As a result, it's become more difficult to predict the length of stay of a particular hospice patient, and some hospices are being forced to pay about 1 million dollars because they've unwittingly exceeded their Medicare cap.

The Medicare cap is $21,410 per hospice patient, so a hospice that has 250 patients in one year will have a total cap of about $5.4 million, according to CMS.

"I don't believe MedPAC or CMS are at the point of taking action around the cap, but they're in an information gathering and analytical mode," Keyserling says. "At some point, I anticipate MedPAC will make some recommendations based on further analysis of data and changes in the hospice patient population that we've seen over the years."

For example, hospice was once a service provided to cancer patients. Now, fewer than half of hospice patients are dying from cancer. Since other chronic conditions and diseases, such as Alzheimer's disease, have a less predictable life expectancy, it means hospices have a more difficult time predicting costs, experts say.

Another problem is that the cap is not adjusted for high-wage areas even though Medicare payments are adjusted. This means that hospices in high-wage areas will be able to provide fewer visits than hospices in low wage areas before they reach the cap.

Hospices sometimes are told two years after a hospice patient has died that they must pay back some of the Medicare payments they received, even though the patient was eligible and the payments were legitimate, Keyserling reports. The repayments are in response to the flaws and complexities associated with the aggregate financial cap, he adds.

Medicare spending for hospice care was $5.6 billion in fiscal year 2003, and CMS estimates the spending will exceed $10 billion in fiscal year 2008. Meantime, the hospice benefit has been unchanged for 25 years, Keyserling notes.

Medicare cap is complicated

Since part of that Medicare hospice payment increase is due to more spending per beneficiary, it means that hospice providers increasingly are exceeding their allotted hospice cap. In fact, there was a 41% increase in hospice programs exceeding their cap in 2005 over 2004, Brian says.

Among the hospices that exceeded their cap, they were an average of $800,000 over the cap, per hospice, according to a major Medicare intermediary, she adds. "There are a lot more people in hospice who are staying longer, and it's very hard to manage under that cap," Brian says.

The cap is very complicated to compute even without the unknowns regarding patients, Keyserling says. For example, a hospice might admit a patient who has been served by another hospice. The hospice is required to apportion some part of that patient's Medicare cap to the other hospice, he explains.

"One of the suggested adjustments that may make real sense is to let hospice programs treat that patient as a whole patient rather than to share that patient's cap among other programs," Keyserling says.

One of our goals is to remove financial disincentive from the financial programs' sphere of issues and let it be a clinical decision, Keyserling says. "Nobody wants to game the system, but it's really an issue of making sure that eligible patients are able to be served without financial penalties being assessed well after the fact," he says.

Hospices should be able to serve eligible patients with quality services without being penalized because a group of patients had a longer than expected length of stay (LOS), he says. "There are different diseases, and different groups of patients have different trajectories, and it's those kinds of changes that the cap may not be keeping pace with," Keyserling says. "Ultimately, providers caring for eligible patients are being penalized for the services they are providing simply because the patient cap hasn't kept pace with the changing patient population."

Need More Information?

  • Jeneane Brian, BSN, MBA, Clinical Executive, Misys Healthcare Systems, 8529 Six Forks Road, Raleigh, NC 27615. E-mail: jeneane.brian@misys.com. Web: www.misyshealthcare.com.
  • Michael T. Ferris, Managing Principal, Home Care and Hospice Marketing Solutions, 103 Dorset Point, Chapel Hill, NC 27516. Telephone: (919) 933-6026. E-mail: mike@hchms.com. Web: www.hchms.com.
  • Jon Keyserling, JD, Vice President of Public Policy and Counsel, National Hospice & Palliative Care Organization, 1700 Diagonal Road, Suite 625, Alexandria, VA 22314. Telephone: (703) 837-1500. E-mail: jkeyserling@nhpco.org. Web: www.nhpco.org.
  • Annette Lee, MS, RN, COS-C, Clinical Product Development Specialist, The Corridor Group, 6405 Metcalf, Suite 108, Overland Park, KS 66202. Telephone: (866) 263-3795. Web: www.corridorgroup.com.