MedPAC Poised to Recommend Zero Update for Hospice for FY2016
January 8, 2015 04:54 PM
The Medicare Payment Advisory Commission (MedPAC) met in late December to discuss Medicare payment policy recommendations for inclusion in its forthcoming annual March Report (Report) to Congress. In making recommendations, the Commission uses a standard framework to assess payment adequacy, including provider access to capital, financial margins, access to care - including numbers and growth in providers, as well as growth in utilization - and quality. In addition to preliminary approval that the Report recommend elimination of the update for hospice payments in Fiscal Year (FY) 2016, Commissioners supported reprinting of previous MedPAC recommendations that have not yet been implemented.
Specifically, those recommendations state that the hospice payment system be reformed to better reflect the costs of hospice care over the course of the episode and that the Centers for Medicare & Medicaid Services (CMS) conduct medical review of hospice providers that have a high proportion of long-stay patients. It should be noted that the latter recommendation (related to medical review) had not been implemented by CMS due to a legislative drafting error; that error was corrected as part of the IMPACT Act, which was signed into law in October.
Presentation slides and a transcript of the discussion are available online. MedPAC’s next meeting, at which final votes will be taken on payment recommendations for FY2016, will be held on Jan. 15-16, 2015.
As prelude to discussion of its hospice recommendations, MedPAC staff provided insights into the current state of hospice care in the United States. During 2013, more than 1.3 million Medicare beneficiaries were provided hospice services by over 3,900 hospice organizations; Medicare hospice outlays for that year were approximately $15 Billion.
In recent years, the growth in hospice provider supply has been driven largely by entry of for-profit hospices into the field. Between 2012 and 2013, the percent of Medicare decedents using hospice services increased from 46.7% to 47.3%. Use of hospice has grown most rapidly among beneficiaries aged 85 and older. In 2013, 55 percent of these beneficiaries used hospice at the end of life. In recent years, average length of stay has remained relatively stable at about 17 or 18 days. About 25 percent of decedents have a length of stay of 5 days or less and lengths of stay for 10 percent of decedents exceed 246 days. For-profit providers generally have longer lengths of stay than non-profits -- averages of 105 days vs. 68 days.
MedPAC projects an average margin of 6.6 percent for hospices in 2015. This estimate takes the following into account: the 2012 margin, market basket updates, legislative adjustments, the impact of the sequester, the phase-out of the budget neutrality adjustment factor (BNAF), and assumptions about increased cost growth in 2014 and 2015 due to increased regulatory requirements. Absent the sequester, the average margin projection would be 2 percentage points higher.
Commission members engaged in additional hospice-related discussion on a number of issues. Of note were discussions of differences between for-profit and non-profit hospice organizations and their use of financial margins, concerns about the small amount of the total Medicare budget that is spent on hospice ($600 B. vs. $15 B.), discussion of how use of the hospice benefit could be expanded while maintaining the element of individual choice, and a broader discussion about provider and patient engagement in discussions of end-of-life choices.