MedPAC to Recommend Zero Hospice Update for FY 2017
Future discussions to include hospice in NF, variation in utilization by provider type
December 11, 2015 12:00 PM
At its meeting held on December 10, 2015, the Medicare Payment Advisory Commission (MedPAC) discussed recent changes to the Medicare hospice benefit as well as reviewed data on payment adequacy and benefit utilization as part of its discussion on payment recommendations to be included in its annual March Report to Congress. After consideration of these factors, the panel gave preliminary approval to a recommendation that Congress eliminate the hospice payment update for fiscal year (FY) 2017. The Commission will meet in January to finalize its recommendations. MedPAC plans to monitor the redistributional impact of the payment reform changes scheduled to go into effect on January 1, 2016, as part of future payment adequacy discussions.
As part of its deliberations on payment adequacy, the panel reviewed factors related to access (including the supply of providers and volume of services provided), quality of care, access to capital, and hospice payments/costs. This is the standard framework MedPAC uses when developing payment recommendations for all provider types. MedPAC staff indicated that between 2013 and 2014:
The supply of hospices increased by 4 percent (driven by an increase in for-profit providers);
The percent of Medicare decedents using hospice increased by 0.5 percentage points;
The number of hospice users increased by 9,000;
Length of stay remains stable;
The hospice live discharge rate dropped by 0.8 percentage points; and
Access to capital appears to be adequate.
MedPAC staff projects that the financial margin for hospice providers in 2016 will be approximately 7.7 percent, as compared with an estimated margin of 8.6 percent in 2013. The projected 2016 margin takes the following factors into consideration: market basket, productivity, and other legislated payment adjustment; full elimination of the budget neutrality adjustment factor; and the sequester. Staff noted that the financial margin calculation rate excludes the cost of bereavement and certain volunteer services, which would further reduce the financial margin by 1.7 percent at most.
MedPAC also calculated a “marginal profit rate” for hospice providers of 12 percent; the “marginal profit rate” was defined as the degree to which Medicare payments exceed the cost of caring for an additional patient. This was the first year that MedPAC discussions on hospice payment adequacy included calculation of a marginal profit rate.
In expanded discussions, the panel expressed an interest in future discussion of hospice care for patients in nursing facilities, including length of stay, higher profits, and resulting efficiencies for both hospice and nursing home providers. Additionally, in light of differences in length of stay, margins, and other factors among different types of hospice providers, the panel expressed an interest in further discussion of hospice provider characteristics and business models.
It is anticipated that a transcript of the meeting and a copy of the presentation slides will be posted to the MedPAC webpage during the week following the December 10 - 11 meeting.