MedPAC Gives Initial Approval to Freeze FY2015 Hospice Payments - Inclusion of Hospice Under Medicare Advantage
Final Consideration will be Given at January Meeting
December 19, 2013 04:24 PM
At its December meeting, the Medicare Payment Advisory Commission (MedPAC) gave preliminary approval to inclusion of two recommendations directly related to hospice as part of its anticipated March 2014 report to Congress:
Inclusion of hospice as part of the benefits package under private Medicare Advantage (MA) plans (see NAHC Report, Nov. 19, 2013); and
A zero market basket update for fiscal year (FY) 2015 payments.
MedPAC chair Glenn Hackbarth noted that the Commission's zero update recommendation presumed no imposition of the 2 percent sequester. MedPAC hasn’t incorporated the sequester as a factor when it develops recommendations because it had been seen as a “temporary” measure on which Congress would likely take action.
Since it appears that the sequester may remain in place for the foreseeable future, MedPAC will likely include the impact of the sequester as a factor in developing its recommendations next year.
The Commission believes that hospice should be included under the MA benefit package to ensure that beneficiaries have seamless access to all Medicare benefits regardless of whether they are enrolled in traditional Medicare, a MA plan, or receive their care through an accountable care organization.
If MA plans are required to offer hospice services, they will maintain responsibility for all costs of care at the end of life. Under the recommendation MA plans would receive an increase in their capitated payments to cover the cost of hospice care. Med PAC envisions a structure under which, in most cases, MA plans would contract with Medicare-certified hospices to provide care. At this time it appears that MedPAC would recommend that this change be effective in 2017, the year in which MA capitated payments will be equivalent to per capita payments under Medicare FFS, as the change at that time would have limited budgetary impact (an earlier transition would increase projected overall Medicare expenditures).
As part of its analysis related to the financial status of hospice programs, MedPAC supplied data related to the Medicare hospice program for 2012:
1.27 million individuals were enrolled in hospice
Hospice cared for nearly 47 percent (46.7) of Medicare decedents
Medicare-certified hospices numbered more than 3,700
$15.1 billion in payments were expended for hospice
About $1 billion in Medicare payments were made to non-hospice providers for care unrelated to the terminal condition (payments from a combination of Parts A, B, and D)
Average length of stay was 88 days (up from 86 days in 2011)
Median length of stay was 18 days (up from 17 days in 2011)
Length of stay varied by diagnosis, patient location, ownership and type of hospice; the length of stay for the longest staying patients continued to increase
The average hospice Medicare margin in 2011 was 8.7 percent (up from 7.4 percent in 2010); if bereavement and volunteer costs were allowable, overall average margins would go down by 1.7 percent. However, if MedPAC adjusted payments for facility-based hospices to exclude the allocation of overhead from the parent, an additional 1.9 percentage points would be added back to the average margin.
MedPAC estimates that average hospice margins in 2014 will be approximately 7.8 percent, which includes market basket reductions mandated by the Affordable Care Act and the further phase out of the budget neutrality adjustment factor. The estimated margin also includes additional costs due to cost growth and increased regulatory requirements.
In recent discussions with MedPAC, NAHC’s Hospice Association of America (HAA) has expressed serious concerns about inclusion of hospice under the MA benefit package and its impact on beneficiary choice, the hospice benefit package, and the future of the hospice program.
The presentation slides used by MedPAC staff to guide discussion on the hospice recommendations are available online at the following locations: Medicare Advantage and Hospice Payment Update .
Additionally, at some point in the near future the transcript from the session should be posted on MedPAC’s website here.