HEALTH POLICY ALERT: MedPAC Discusses Hospice Payment Adequacy at December Meeting

The Medicare Payment Advisory Commission (MedPAC) met   for their December meeting and as part of that discussion the commissioners heard a staff presentation on payment adequacy for hospice.  NHPCO staff members were in the audience to hear the presentation. 

Download the slides used in the presentation (PDF). 

Download the full transcript from the meeting (PDF). 

Note: The hospice presentation and discussion among Commissioners begins on page 424.

Below is a summary of their findings and analysis:

Supply of Hospices

1. The number of Medicare certified hospices continued to increase.  There are more than 3,500 providers, an increase of 1,300 providers since 2000. 
2. Growth in total providers is driven largely, but not exclusively, by the growth in for-profits, which has continued in 2011.

Growth in Patients Served and Length of Stay

1. In 2011, 1,219,000 Medicare beneficiaries enrolled in hospice.
2. The percentage of Medicare decedents using hospice has increased from 22.9% in 2000 to 45.2% in 2011.
3. The average length of stay among Medicare beneficiaries was 54 days in 2000 and 86 days in 2010.  In 2011, the length of stay remained the same at 86 days.
4. Long stays have grown longer and short stays remain virtually unchanged.  The median length of stay decreased from 27 days in 2000 to 18 days in 2010, and dropped to 17 days in 2011, where the median length of stay has been  since 2000.

Total Medicare Spending

1. Medicare spending for hospice in 2011 was $13.8 billion, up from $2.9 billion in 2000.
2. The annual change in Medicare hospice spending from 2000 to 2010 is 16.1%.

Average Length of Stay Variation

1. Diagnosis:  Cancer – 52 days; Neurological – 137 days.
2.  Patient location:  Home – 88 days; Nursing facility – 111 days; Assisted living:  149 days
3. Type of hospice:  Provider-based – 65 days; Freestanding – 89 days.

Hospice Aggregate Cap

1. 10.2% of hospices exceeded the aggregate cap in 2010.
2. MedPAC reported above cap hospices are:

• Almost entirely for profit providers
• Have very long lengths of stay
• Substantially more patients are discharged alive
• Very high profit margins before the return of cap overpayments.

Hospice Quality of Care

1. There is no publicly available quality data covering all hospices.
2. Beginning in the last quarter of 2012, there will be data collected on two measures and reported to CMS in 2013. 
3. Anticipate a high rate of participation in quality reporting in 2013.

Margins

1. MedPAC reported that margins for all hospices ranged from 4.6% to 7.5% over the last eight years. 

   Year	Margins
   2003	6.6%
   2004	5.0%
   2005	4.6%
   2006	6.4%
   2007	5.8%
   2008	5.5%
   2009	7.4%
   2010	7.5%

2. Medicare margins vary by length of stay and site of service.
3. Margin projection for 2013 – 6.3%*

• This figure does not include the “costs” associated with bereavement services and non-reimbursable volunteer program costs, which MedPAC estimates to be 1.4% and 0.3%  respectively.  In addition, the MedPAC margin projection did not include the impact of the 2 percent statutory reduction in reimbursement to Medicare providers as provided for in the sequestration process, scheduled to occur on January 1, 2013.

Recommendations

The December meeting is the meeting where MedPAC commissioners hear recommendations for updates to each Medicare provider type’s marketbasket increase.  The recommendations can range from full marketbasket to no marketbasket increase.  This year’s MedPAC recommendation for commissioner consideration is:

“Eliminate the update to the hospice payment rates for fiscal year 2014.”

Comment on the Recommendations: 

There was robust discussion about hospice among the commissioners.  The final vote on recommendations will come at the January 2013 MedPAC meeting.

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Member with any questions should direct them to regulatory@nhpco.org. Thank you.