Abt Explores Hospice Payment Options, Utilization in Technical Report for CMS
June 6, 2013 03:53 PM
Abt Associates, the Centers for Medicare & Medicaid Services’ (CMS) hospice payment contractor, has been conducting analysis of utilization and cost data to help inform discussions on ways to modify the current payment structure so that it better reflects actual costs incurred during a hospice length of stay.
Hospice payment reform was mandated by the Affordable Care Act (ACA) to occur no earlier than October 1, 2013. In a presentation at the National Association for Home Care & Hospice (NAHC) March on Washington earlier this year, an Abt representative discussed findings from their study related to:
Trends in Hospice Cost Reports
Trends in General Inpatient Utilization (GIP)
Impact of the Face-to-Face Requirement on Hospice Benefit Periods
More recently, CMS posted online a copy of a hospice payment technical report, “Medicare Hospice Payment Reform: Hospice Study Technical Report,” that contains study findings for the topics listed above, as well as Part D utilization while enrolled in hospice and discussion of payment reform options; these topics are covered as part of this article.
PART D EXPENDITURES FOR HOSPICE PATIENTS
Part D expenditures for hospice patients are of interest to CMS because per diem hospice payment amounts are supposed to cover all care costs - including medications - for the terminal and related conditions for which a patient elects hospice.
Previously, the Office of the Inspector General (OIG) had found that in 2009, “Medicare Part D was billed $33.6 million for prescription analgesic, antinausea, laxative, and antianxiety drugs, as well as prescription drugs used to treat COPD and ALS, that likely should have been covered under the per diem payments made to hospice organizations.”
Abt expanded on the OIG’s work, focusing on analgesics. They found that in 2010 112,555 hospice beneficiaries, 14.6 percent of those enrolled in Part D, received analgesic prescriptions through Part D. Total value for the medications is estimated at more than $13 million. Abt found that over four-fifths of this cost was paid by Part D.
PAYMENT REFORM OPTIONS
As part of the technical report, Abt provides a simulation of a potential tiered model for hospice payment and discusses rebasing of hospice payment rates as one possible component of payment reform.
TIERED PAYMENT MODEL
Using data for 2011, Abt constructed a tiered payment model for routine home care (RHC) days that represents a modified version of the U-shaped payment model first advocated by the Medicare Payment Advisory Commission in 2009.
According to Abt, “The general approach is to determine the average resource use for several different groups of hospice episodes…these groups correspond to the characteristics such as: where the hospice day is in relation to the start and end of the episode, whether a beneficiary is an extremely short stay hospice user, and whether the beneficiary received visits as recorded on the claim at the end of life.”
This tiered model is applicable for hospice stays that end in death. Future work could yield a somewhat different approach for hospice care that ends in live discharge.
Abt created seven potential payment “groups” or categories based on average daily resource use - each hospice day of care would be classified according to the category that best fits. Rates are set based on the relative costs of care for that day within the length of stay.
For the simulation, Abt established a relative or “implied weight” for each of the seven groups; the implied weight is equal to the ratio of the average resource use for the specific group divided by the total average resource use across all RHC days in the analysis. Payment for each day in the group would be equal to the RHC base rate multiplied by the implied weight.
Following are the seven groups with their associated “implied weight”:
Group 1: RHC care that occurs between days 1 and day 5 of a beneficiary’s lifetime length of stay. Implied weight: 2.30
Group 2: RHC care that occurs between days 6 and day 10 of a beneficiary’s lifetime length of stay. Implied weight: 1.11
Group 3: RHC care that occurs between days 11 and day 30 of a beneficiary’s lifetime length of stay. Implied weight: 0.97
Group 4: RHC care that occurs on day 31 or later of a beneficiary’s lifetime length of stay. Implied weight: 0.86
Group 5: RHC care that occurs during the last 7 days of a beneficiary’s lifetime length of stay and the beneficiary is discharged dead. Beneficiary receives visiting service - nursing, aide, MSS, therapy - during the last 2 days of life if the last two days of life are RHC or the last two days of life are not RHC. Implied weight: 2.44
Group 6: RHC care that occurs during the last 7 days of a beneficiary’s lifetime length of stay and the beneficiary is discharged dead. Beneficiary does not receive visiting service - nursing, aide, MSS, therapy - during the last 2 days of life. Last 2 days of life are RHC. Implied weight: 0.91
Group 7: RHC care when the beneficiary’s lifetime length of hospice is 5 days or less, each day of hospice is RHC, and beneficiary is discharged deceased. Implied weight: 3.64
According to the report, “There is little meaningful change in average daily resource following 30 days in hospice (when the beneficiary is no tin the last 7 days of life).” Presumably it is for this reason that Group 4 is open-ended.
Abt includes a summary table on page 49 of the report that provides insight into actual reported resource use for hospice days categorized according to the seven groups used in the simulation. Abt also discusses applicability of budget neutrality for the first year of payment reform, and provides an impact table (page 51) of how the tiered model in the simulation would impact different hospice subgroups. Abt is continuing its analysis in this area.
It should be noted that MedPAC recently put forth a potential “initial payment reform” step that includes a tiered approach to payment that has fewer tiers than has been simulated by Abt. For discussion of MedPAC’s model, please see: NAHC Report, April 5, 2013.
REBASING OF RHC
Abt suggests that better alignment of payment rates and actual costs through rebasing of hospice payment rates could be one component of payment reform efforts. Hospice base payment rates were initially set in 1983 based on the hospice demonstration agencies’ costs -- a sample of 26 hospices. Since that time limited changes have been made but hospice care and the population served has changed considerably. Abt provides an approach under which the three labor components of RHC - nursing, home health aide, social services/therapy - which comprise nearly 70 percent of the original base payment rate, could be rebased.
The data necessary to rebase the six other components included in RHC are not available at this time. Abt’s methodology for rebasing the labor components would result in a considerable reduction in payments for RHC – the rebased RHC rate in 2011 would have been $130.54, as compared with the actual rate for 2011 of $146.63.
In a proposed rulegoverning the FY2014 Hospice Wage Index and Payment Rate Update (see NAHC Report, April 30, 2013), CMS discussed options for payment reform and addresses work on rebasing conducted by Abt but states that they do not have a proposal at this time to rebase hospice payments but have indicated that it is one of several approaches to hospice payment reform that could be considered in the future. CMS notes that rebasing, as part of payment reform, would need to be done in a budget neutral manner – any savings achieved through the reduction of the RHC rate would need to be redistributed within the payment system.
Watch for future updates on CMS’ efforts to reform the hospice payment system in NAHC Report, Hospice Notes, and on the NAHC member listserv.